Recently, the European Commission filed a complaint with the World Trade Organization (WTO), accusing Beijing of adopting “unfair and illegal” practices by unilaterally setting patent licensing rates for European Union companies. Experts believe that the Chinese Communist Party’s (CCP) misuse of legal instruments will intensify trade friction between China and Europe. The CCP’s theft of EU patents warrants retaliatory measures from the EU.
On January 20, the EU stated that Chinese authorities unlawfully granted their courts the power to establish global patent licensing rates for high-tech EU companies, particularly in the telecommunications industry.
According to the statement, Beijing set global patent licensing rates for EU high-tech companies, especially in the telecommunications sector, without the consent of the patent holders. This situation forces innovative European high-tech companies to reduce patent rates globally, allowing Chinese manufacturers to access European technology at lower costs, which is deemed unfair.
The European Commission has requested consultations with China, marking the first step in WTO dispute resolution. If a satisfactory solution is not found within 60 days, the EU Commission can request the establishment of a dispute settlement panel.
On January 22, prominent New York lawyer Ye Ning told Epoch Times that for Chinese court-set global patent licensing rates for EU high-tech companies to be enforced abroad, they first need recognition of their legality and effectiveness by foreign courts in the respective jurisdictions, willing to provide judicial assistance. Should foreign courts not recognize these rates, they are considered null and void.
Ye Yao Yuan, a professor of international studies at the University of St. Thomas in the United States, mentioned that the Chinese authorities are essentially stealing EU telecommunications patents, which would be enforceable in China, leading to two outcomes.
Firstly, the technology can be internalized, eliminating the need to pay patent fees for EU-developed technology in the future. Secondly, the use of EU patents in China would not pose legal issues.
Ye Yao Yuan explained that the EU naturally opposes such actions and may resort to measures such as filing complaints with the WTO. Typically, the WTO would conduct a preliminary investigation.
He stated that the EU must respond, suggesting that one direct approach would involve sanctioning Chinese telecommunications companies in the EU or restricting Chinese investment in the EU, potentially even limiting trade between China and the EU.
In its statement, the EU also referred to a related case filed with the WTO in 2022 concerning Beijing’s injunctions, limiting the ability of telecommunications patent holders to enforce intellectual property outside Chinese courts. A panel handling this case is expected to release a final report in the first quarter of 2025.
Since August 2020, Chinese courts have issued injunctions in four cases, preventing foreign companies from initiating lawsuits anywhere globally.
The EU believes that China is using legal tools to pressure EU companies with high-tech patents, preventing them from properly protecting their technology. Chinese courts are also using hefty fines as a threat to deter European companies from seeking justice in foreign courts, putting European high-tech companies at a distinct disadvantage. During licensing negotiations, Chinese manufacturers exert pressure by using injunctions to quickly obtain cheaper licensing fees or even access European technology for free.
Ye Ning expressed that China’s usurpation of the criminal lawsuit rights of foreign citizens is unreasonable, stating that such laws will not be recognized by Western countries and hence are unenforceable.
He further analyzed that injunctions may be effective within China but would deter American entities from doing business in China due to its arbitrary nature. The imposition of injunctions interferes with the sovereignty of third countries and violates the rights of citizens to seek legal redress, which is inherently unlawful.
Ye Ning emphasized that the abusive use of legal instruments by China would be ridiculed by other countries and be rendered ineffective, as such practices, although appearing authoritative and excessive, hold no real value in practice.
Ye Yao Yuan noted that China has persistently abused the law, and this fact is well-known. Events occurring overseas are beyond China’s jurisdiction.
He further analyzed that from the EU’s standpoint, everyone must abide by the rules of the game. However, China has consistently avoided playing by the rules, resorting to dishonest practices to unlawfully acquire EU technology and assets. This behavior does not promote fair competition on an open and just platform, as perceived by foreign observers.
He believes the EU will take corresponding measures, as actions like these by China would harm trade relations between Europe and China.
Ye Ning also mentioned that China’s actions would certainly escalate trade frictions between China and Europe, as such authoritative and aggressive practices would evoke resentment from other nations, particularly democratic countries. Thus, these actions would prove to be more detrimental than beneficial in reality.