EU Files WTO Complaint Against China Over Patent Royalty Practices

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The European Commission has officially lodged a complaint with the World Trade Organization (WTO) against China, alleging that the country has engaged in "unfair and illegal" practices regarding the establishment of global royalty rates for standard essential patents (SEPs) owned by EU companies. The Commission claims that China's actions compel innovative European firms, particularly in the telecommunications sector, to lower their royalty rates, thereby providing Chinese manufacturers with unfair advantages in accessing advanced European technologies.

According to the Commission, China's courts have been empowered to determine worldwide rates for high-tech patents without the consent of patent owners, including major European players such as Nokia and Ericsson. In response, China's Commerce Ministry expressed regret over the EU's decision and stated that it would address the issue in accordance with WTO regulations while protecting its legitimate rights.

This dispute marks the first step in potential WTO proceedings, with the Commission requesting consultations with China. If these negotiations do not yield a satisfactory resolution within 60 days, the EU may escalate the matter to seek an adjudicating panel, which generally takes about 12 months to reach a conclusion. The current case builds upon previous disputes between the EU and China, including a related complaint regarding Chinese anti-suit injunctions.

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