The EU Complaint Against China - Update

Way back in the early days of this blog, I wrote an article about the EU’s complaint in the World Trade Organization (“WTO”) against China ( First Pop Quiz Revisited - The EU Complaint Against China).  The EU complaint alleged that China violated the Trade-Related Aspects of Intellectual Property Rights “TRIPS” agreement primarily through Chinese courts’ use of anti-suit injunctions.  I wanted to give an update on that case:  it appears that the EU has lost.

Although a public decision is not currently available (apparently because the EU wants to keep it secret), there is a summary of the key findings on the WTO website (WTO | dispute settlement - the disputes - DS611: China – Enforcement of intellectual property rights).  To summarize the summary, the panel found that China’s anti-suit injunction policy was not inconsistent with China’s obligations under the TRIPS agreement. “In particular, the Panel found that the obligation in Article 1.1, first sentence stating that Members must “give effect” to the provisions of the TRIPS Agreement requires Members to implement the provisions of the TRIPS Agreement within their own domestic legal systems.”  The Panel did find that China had evidenced a lack of transparency by not making certain court decisions public (including the decision granting an anti-suit injunction in Xiomi v. Interdigital).

This seems like 100% the right result. As I pointed out in my earlier post, China was not the first to use anti-suit injunctions in SEP cases.  The United States was. Nor was China the first to arrogate for itself the power to grant global SEP licenses.  The U.K. was.  Yet, the EU has not pursued cases against either country for their actions.  There is no valid reason for the EU to single out Chinese courts on these issues. 

I also applaud the Panel’s decision on transparency.  Decisions in SEP matters should be published and readily available to everyone.  It is ironic therefore that the entity complaining of a lack of transparency is now the party obfuscating the decision in this matter.[1]  Transparency should include publication of the Panel’s decision. 

Instead of pursuing this meritless case against China, the EU should be looking inward.  Germany and some panels of the Unified Patent Court, influenced by German judges, are outliers because they grant near automatic injunctions in SEP cases.  This is not and should not be the law.  In 2021, the German Parliament changed the patent law in an attempt to require the courts to consider proportionality and weigh the interests of both parties.  But German courts routinely ignore this requirement to weigh the interests of the parties and proportionality in favor of the judicially made-up doctrine of willingness (see Time to Throw Away the Willing/Unwilling Paradigm). 

China (and the U.S.) only started granting anti-suit injunctions because they recognized the fundamental unfairness of allowing a party that agreed to accept a FRAND license from all implementers to get an injunction.  Rather than end anti-suit injunctions, it is time to end these nearly automatic injunctions in SEP cases.  They distort SEP licensing and SEP portfolio valuations and are unfair, unreasonable and a disproportionate remedy in the context of FRAND committed SEPs. 

Although the EU has already appealed the Panel’s decision (see EU appeals panel report in WTO dispute with China on anti-suit injunctions - European Commission), the EU would be better served policing its own.  Anti-suit injunctions would not be necessary if not for the aberrant behavior of a few EU courts.

[1]          I would also note that many EU court decisions, although technically public, are very hard for the public to access.  It would be extremely useful, and possibly, per the Panel’s decision, an obligation under the TRIPS agreement, for each country to set up an open-access, online docket system for court cases similar to what the United States has for federal cases.  That would support transparency by making court decisions truly publicly available and accessible.