EU Blames China For Aggressively Acquiring Smartphone Patent Licensing

While the EU’s official complaint against China to the World Trade Organization (WTO) is very formal and diplomatic, different tones are being played behind the scenes. We are talking about a “power grab” here. The conflict essentially centers on the accusation that China is effectively expropriating European patent holders and preventing them from defending their interests before independent courts. That sounds quite abstract but is easy to explain in current practice.

The Beijing Supreme Court made it clear some time ago that allegations of patent infringement against a Chinese company can only be heard in a court in China. The patent holders, therefore, do not have a free choice of jurisdiction here, which means that they could, for example, settle the case before a European court. In the course of the complaint recently lodged with the WTO, the responsible EU Commissioner Valdis Dombrovskis noted quite diplomatically that European companies have the right to complain about fair terms. In the background, however, it sounds clearer: “This is part of a global takeover by the Chinese government by legal means,” said a European Commission official, according to a report in the British business newspaper. Financial times “It is a means of crowding out Europe.”

When you look at the market, it is not surprising that people in Brussels are annoyed. Because the once successful European manufacturers have all disappeared, at least from the smartphone market. Instead, Chinese brands are increasingly dominating the company – and they rely on European developments. They can only partially keep the low prices because they have to pay in full neither the development costs nor the usual licensing costs.

For example, Oppo, Xiaomi, ZTE, and Huawei can already very cheaply use the protected inventions of several European companies. Ericsson and Nokia, among others, are affected here. Europe is not alone in this. The US also wants to join the complaint to the WTO. Under the organization’s regulations, China now has 60 days to respond to the allegations and seek a friendly solution. If this does not lead to a result, a procedure can be started.