In son second legal challenge against the country in the last months, the European Union takes China to the World Trade Organization (WTO) for would have limited the power European companies must protect their patents in foreign jurisdictions, the European Commission announced Friday.
Telecommunications companies such as Ericsson and Nokia, which hold rights to key mobile call technologies like 5G.
The European Commission said China prevents EU companies “from protecting these rights when their patents are used illegally or without proper permission.” compensation by, for example, Chinese mobile telephone manufacturers.
If patent owners go to court outside China, they are often subject to substantial fines, forcing them to pay license fees below market rate, said the European Commission.
An offense of the order can be sanctioned with a daily fine of 130,000 euros ($147,540).
“This Chinese policy is extremely detrimental to innovation and growth in Europe, effectively depriving Europeans technology companies of the possibility of exercising and enforcing the rights which give them a technology edge“, said the European Commission.
Dispute Settlement Consultations with China is the first step in WTO procedures. If he is refused by Beijing or if he does not lead to a “satisfactory solution”, the EU could take the matter to panel arbitration, which could then lead to retaliatory measures such as punitive tariffs on Chinese imports.
“EU companies have the right to request justice on fair terms when their technology is used illegally. This is why we are launching consultations at the WTO,” said European Commission Vice-President Valdis Dombrovskis.
It’s the second legal challenge launched by the EU at the WTO in less than a month. At the end of January, the EU opened a file against China for hindrance trade with Lithuania in retaliation after Vilnius deepened ties with Taiwan.