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EU launches WTO dispute against China over telecom patents -Breaking

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© Reuters. FILEPHOTO: This logo was pictured at the World Trade Organisation’s (WTO), building, before a meeting of ministers to discuss a proposed agreement on reducing subsidies in the fisheries sector, Geneva, Switzerland. July 15, 2021. REUTERS/Denis Balibouse

Philip Blenkinsop

BRUSSELS, (Reuters) – The European Union filed a lawsuit against China Friday at the World Trade Organization. It claimed that Chinese courts are preventing European telecom companies from protecting their patents.

On behalf of 27 EU members, the European Commission filed the challenge. It claimed that EU companies had been discouraged from seeking out foreign courts to defend their standard-essential Patents (SEPs).

Additionally, the Commission has consulted Japan (whose standard-essential Patent Holders face similar challenges) and other countries that want to establish global tech standards rather than relying on Beijing.

For their phones to comply with international standards, manufacturers of mobile phones must apply for licences to operate as SEPs.

According to the Commission, Chinese courts have issued “anti-suit orders” since August 2020. These injunctions prohibit EU companies and their lawyers from going before foreign courts.

One case saw a fine of 130,000 Euros ($147,758) per day. This practice hampered the negotiation on license fees with Chinese smartphone manufacturers, an EU executive stated.

China expressed regret at the EU’s challenge and said it would continue to uphold the multilateral trading system.

European Commission does not identify companies. China’s top smartphone manufacturers are Oppo (OTC:), Vivo, Xiaomi, Xiaomi (OTC-) and Honor. Honor was formerly owned Huawei. European SEP holders include Nokia, Ericsson and Vivo (NYSE:).

According to the Commission, it raised this issue with China on several occasions without success.

China violates the WTO agreement (TRIPS) on intellectual property rights and trade.

WTO disputes begin with formal consultations lasting 60 days between the parties. After that, the EU may request a WTO panel decision. This process can include possible appeals and may take many years.

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