On 20 January 2025, the European Commission reported that it requested consultations at the World Trade Organisation (WTO) to address what it sees as unfair and illegal trade practices by China regarding intellectual property. If a resolution is not found within 60 days of the request, the Commission can ask for a WTO panel to step in to adjudicate the dispute, although in that event, a decision could take at least a year to issue.

The Complaint
The WTO currently has a busy inbox, with the latest complaint by the Commission following its previous challenges to Chinese anti-dumping measures on brandy in November 2024, and to Chinese anti-suit injunctions in December 2022. A decision on the latter is expected shortly. 

The Commission's latest complaint focuses on China's practice of setting global royalty rates for standard essential patents (SEPs) without the patent owners' consent. The Commission argues that by setting such global royalty rates, Chinese courts are effectively pushing European companies to give Chinese manufacturers cheaper access to European technology than they would otherwise be prepared to offer.  The Chinese Ministry of Commerce (MOFCOM) disagrees, and maintains that China's practice is consistent with WTO rules. 

The Commission refers in particular to a decision by the Chongqing First Intermediate People's Court on November 28, 2023, which set global licensing rates for use of Nokia's patented technology in 2G, 3G, 4G and 5G mobile devices manufactured by Chinese implementer OPPO. The Court's decision set rates much lower than those expected by Nokia (in excess of $3 per 5G unit), and in particular, the Court included China in a group of countries in which a lower rate ($0.707 per 5G unit) applied than in Western countries ($1.151 per 5G unit). Rates in such disputes should be Fair, Reasonable and Non-Discriminatory (FRAND), but China argues that such pricing discriminations are in line with global trade practices.

What about the UK?
China's willingness to set global royalty rates follows the lead of the UK's landmark Supreme Court decision in Unwired Planet (2020), the first decision of this type anywhere in the world. Before initiating such a seismic change to the jurisdictional landscape of SEP litigation, the Supreme Court did in fact consider whether Chinese courts were a more appropriate forum in which to hear the dispute. However, since China had not, at that time, determined that it could determine global royalty rates, the UK instead took this determination for itself.

The upcoming Lenovo v. Ericsson case, set for trial in the UK later in 2025, will offer the UK Court another opportunity to set global royalty rates, but this time the rates will apply to an EU patentee. The decision will undoubtedly attract the Commission's attention, and potentially that of the WTO, if the Commission perceives that Ericsson is forced to offer low royalty rates by a non-EU court.

Conclusion
The European Commission is taking a robust approach to defending its R&D activities and the freedom of EU patent holders to negotiate licensing contracts. The Commission objects to what it sees as perceived interference by non-EU courts with the competence of its own courts in European patent issues. EU-based patentees and innovators will no doubt welcome their backing by the Commission in the form of the complaint to WTO.

The willingness of the UK and China to declare global royalty rates does, however, cement their current position as leading jurisdictions for SEP disputes. China accounts for approximately 40% of 5G patents worldwide, and is therefore well-represented by both implementers and patentees. All eyes will be watching the outcome of the Lenovo v Ericsson case in the UK, while India is also positioning itself to set global royalty rates in the future. The recent activity of the Trump administration in relation to trade tariffs suggests that the US is unlikely to take a back seat in global SEP disputes. As such, in the absence of any intervention by the WTO, the challenge to the EU's jurisdiction is unlikely to diminish in the near future. The WTO's inbox may soon be full.