The EU filed a complaint Friday with the World Trade Organization (WTO), accusing China of preventing EU companies from approaching foreign courts to protect and use their patents.

Currently, China prevents EU companies with rights to essential technology such as 4G and 5G from enforcing their rights when their patents are infringed upon by foreign entities. The patent holders who approach foreign courts typically face huge fines in China, placing them under pressure to settle for licensing payments that are below market rates.

In August 2020, the Supreme People’s Court of China issued anti-suit injunctions involving three Chinese standard essential patents owned by Conversant. The court ruled that Chinese courts can grant an “anti-suit injunction” to prevent patent holders from going to foreign courts to enforce their patents. As per the EU’s request for consultations, Chinese courts have issued four such anti-suit injunctions against foreign patent holders since then.

Further, the EU claimed that this Chinese policy is particularly harmful to innovation and growth in Europe because it prohibits EU companies from exercising and enforcing the rights that give them a technological advantage. Although the EU has raised this matter with China on multiple instances, no solution has been reached. Since this policy violates the TRIPS Agreement, the EU has requested consultations at the WTO.

European Commission Executive Vice-President and Commissioner for Trade Valdis Dombrovskis said: “We must protect the EU’s vibrant high-tech industry, an engine for innovation that ensures our leading role in developing future innovative technologies. EU companies have a right to seek justice on fair terms when their technology is used illegally. That is why we are launching WTO consultations today.”

If the EU’s request for consultations does not yield a satisfactory resolution within 60 days, the EU can ask the WTO to convene a panel to decide on the issue.