EU launches new WTO case against China high-tech patent rules

The European Union launched a new challenge at the World Trade Organisation (WTO) on Monday against China’s rules on royalty rates for high-tech patents, amid escalating trade tensions between Beijing and Brussels.

The European Commission accused China of pressuring innovative European high-tech companies into lowering their fees by allowing its courts to set binding worldwide royalty rates.

“The EU’s vibrant high-tech industries must be allowed to compete fairly and on a level playing field,” said Maros Sefcovic, the EU’s trade commissioner.

“Where this is not the case, the Commission takes decisive action to protect their rights”.

The action comes as trade tensions are soaring worldwide with tariff-loving Donald Trump set to be inaugurated as US President.

It adds to a longer-running spat between Beijing and Brussels, which has seen the pair accuse each other of unfair practices and take a series of tit for tat measures.

The EU slapped hefty tariffs on electric cars made in China last year. In turn Beijing targeted European brandies and launched probes into EU subsidies of some dairy and pork products.

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The latest challenge revolves around so-called “standard essential patents” protecting technologies enabling the manufacturing of goods to meet a certain standard.

European companies hold many such patents, notably in the telecom sector, according to the EU.

By letting its courts set worldwide royalty rates, China was forcing EU companies to give its firms cheaper access to those technologies, the 27-nation bloc alleged.

The practice also unduly interfered with the competence of EU courts for European patent issues, according to the commission.

Brussels said it requested consultations at the WTO — the first step of the international body’s dispute settlement procedure — as “no satisfactory negotiated solution has been forthcoming from China”.

Under WTO rules, the two parties have 60 days to settle the matter before the claimant can request that a panel is set up to rule on it.

The case is related to another challenge launched in 2022 where Brussels accused Beijing of barring EU owners of high-tech patents from turning to European courts to protect their intellectual property.

China is the EU’s second largest trading partner for goods after the United States. Bilateral trade reached €739 billion ($762 billion) in 2023, according to the commission.