Brussels shows the muscles against Beijing. The European Union seized on Friday the World Trade Organization (WTO) against China, accused of obstructing legal action by European companies whose patents, particularly in telecom technologies, are used illegally by firms of the Asian giant. Beijing prevents companies “holding rights to crucial technologies, such as 5G“to seek justice outside China, “when their patents are used illegally or without appropriate compensation, in particular by Chinese smartphone manufacturers,” said the European Commission in a press release.
French side, same story. On Twitter, the Minister Delegate for Foreign Trade and Attractiveness, Franck Riester, writes: “The European Union recalls that all partners must respect the same rules. A new concrete action to put an end to naivety.”
- What does Brussels blame Beijing for?
Since August 2020, following a ruling by China’s Supreme People’s Court, courts across the country have the ability to prohibit patent holders from going to a non-Chinese court to enforce their rights through an “injunction against proceedings” in a third State. Any violation of this injunction can be punished with a daily fine of 130,000 euros, according to the EU. What dissuade the Europeans to act.
In its request to the WTO, Brussels mentions four injunctions of this type, issued in China against the Japanese electronics group Sharp, the Swedish telecom equipment giant Ericsson, and the Americans InterDigital (mobile telephone technologies) and Conversant (formerly Valueclick, online advertising technologies). On the front line, crucial cutting-edge technologies for telecom networks and the Internet: “the patents concerned are essential for the manufacture of products that meet certain international technical standards”, in particular smartphones, we explain in Brussels.
- What are the consequences of this obstruction of justice?
Through this practice, the Chinese authorities put pressure on European groups so that Chinese players are granted license rights at prices below those of the market. This is why the Old Continent sees red. According to Brussels, “Chinese manufacturers are asking for these anti-lawsuit injunctions in order to benefit from cheaper, or even free, access to European technology”, which puts Western groups in an “extremely unfavorable” position. “Companies have the right to seek justice under fair conditions when their technology is used illegally,” insisted Commission Vice-President Valdis Dombrovskis.
Beijing’s policy is “extremely detrimental to innovation and growth in Europe”, as it prevents EU technology companies from taking advantage of the competitive advantage granted to them by their patents and “pushes them to accept rights license fees below market prices”, deplores the European executive. The holders of these patents deemed essential for compliance with these universal standards “undertake to grant them to manufacturers on fair, reasonable and non-discriminatory terms”, but a mobile phone manufacturer is still required to obtain a license for these patents, in negotiation with their holder, recall the Europeans.
However, Chinese smartphone manufacturers, including global giants Huawei, ZTE and Oppo, have taken advantage of these injunctions to halve the fees they pay for these Western patents, European sources estimate. “This is part of a global takeover by the Chinese government through legal means,” a European Commission official said on February 18 in the columns of the British financial daily. FinancialTimes. “It’s a way to push Europe out.” Foreign groups are also rushing into the breach: the South Korean technological colossus Samsung has seized a Chinese court in order to block a dispute over the patents of its rival Ericsson before the courts of other countries, including Germany.
- In what context does this new pass of arms occur?
This new procedure comes at a time when the EU is already engaged in a showdown at the WTO with Beijing, accused of blocking Lithuanian imports amid diplomatic tensions over Taiwan. After 20 years of membership in the WTO, the United States and Europeans regularly accuse China of circumventing the rules of the institution to protect its companies, by strictly controlling access to its market for foreign groups and by amplifying the domination by the state of whole sections of its economy. Critics deemed “unfounded” by Beijing.
In The Express, Christian Saint-Etienne, professor emeritus at the National Conservatory of Arts and Crafts, maintained at the end of January that China’s entry into the WTO was “a mistake”. According to the specialist, “The entry of the Chinese into the WTO allowed them to destroy whole sections of our industry over the last twenty years, because we did not force them to comply with certain rules, in particular those on public aid to companies. The “consultations” requested by the EU are the first step in the dispute settlement procedure within the framework of the WTO. If these consultations fail within 60 days, the EU may request the establishment of a group to decide on the matter.