China – Enforcement
of Intellectual Property Rights
Notification of an Appeal by the European Union under
Article 25
of the Understanding on Rules and Procedures Governingthe Settlement
of Disputes ("DSU"), paragraph 5 of the Agreed Procedures for Arbitration
under Article 25 of the DSU (the "Agreed Procedures") and Rule 20 of
the Working Procedures for Appellate Review
The
following communication, dated 22 April 2025, from the delegation of the
European Union, is being circulated to Members.
_______________
Pursuant to
paragraph 5 of the Agreed
Procedures,[1]
the European Union hereby notifies the Dispute Settlement Body of its decision
to initiate an arbitration under Article 25 of the DSU with regard to certain
issues of law and legal interpretations covered in the Panel Report in the
dispute China — Enforcement of
intellectual property rights (WT/DS611/FR).
Pursuant to
paragraph 5 of the Agreed Procedures and Rule 20(1) of the Working Procedures
for Appellate Review, the European Union simultaneously files this Notice of
Appeal and its Appellant Submission with China and the third parties in the
panel proceedings and with the WTO Secretariat. The Notice of Appeal includes
the final report of the Panel in the working languages of the WTO.
For the reasons further elaborated in its submissions to the
Arbitrators, the European Union appeals and requests the Arbitrators to reverse
the conclusions and related findings of the Panel containing the errors of law
and legal interpretations identified below and, where appropriate, to complete
the analysis on the basis of the Panel's findings and uncontested facts on the
record: [2]
1._
The Panel erred
in the interpretation of Article 1.1, first sentence, of the TRIPS Agreement by
determining that this provision merely requires WTO Members to implement the
provisions of the Agreement within their domestic legal systems and does not
require them to refrain from taking measures that undermine the protection and
enforcement of IP rights in the territories of other Members.[3] Accordingly, the European Union requests the Arbitrators to reverse
the Panel's findings on the interpretation of Article 1.1, first sentence, of
the TRIPS Agreement in paragraphs 7.217, 7.224 and 7.226 to 7.231 of the
Report.
2._ The Panel erred in the
interpretation of Article 1.1, first sentence, in conjunction with Article 28.1
of the TRIPS Agreement, by finding that these provisions merely require Members
to ensure that, within their domestic legal systems, a patent confers on its
owners the exclusive rights set forth in Article 28.1 and that the European
Union has not demonstrated that China's ASI policy is inconsistent with Article
28.1, whether or not read in conjunction with Article 1.1, first sentence.[4] Accordingly, the
European Union requests the Arbitrators to reverse the Panel's conclusion and
related findings on the interpretation of Article 1.1, first sentence, in
conjunction with Article 28.1 of the TRIPS Agreement in paragraphs 7.240 to
7.242 and 8.2.a. of the Report.
3._ The Panel erred in the
interpretation of Article 1.1, first sentence, in conjunction with Article 28.2
of the TRIPS Agreement by finding that these provisions only require a WTO Member
to ensure that, within its domestic legal system, patent owners have the right
to assign or transfer by succession their patent, as well as the right to
conclude licensing contracts in respect of patents granted by that Member, and
that the European Union has not demonstrated that China's ASI policy is
inconsistent with those provisions.[5] Accordingly, the
European Union requests the Arbitrators to reverse the Panel's conclusion and
related findings on the interpretation of Article 1.1, first sentence, in
conjunction with Article 28.2 of the TRIPS Agreement in paragraphs 7.247,
7.248, 7.250 to 7.252 and 8.2.b of the Report.
4._ The Panel erred in the
interpretation of Article 1.1, first sentence, in conjunction with Article 44.1
of the TRIPS Agreement by finding that these provisions do not require Members
to refrain from adopting or maintaining in force measures that prevent, or seek
to prevent, the judicial authorities of other WTO Members from ordering a party
to desist from a patent infringement in the territories of those Members and
that the European Union has not demonstrated that the ASI policy is
inconsistent with those provisions.[6] Accordingly, the
European Union requests the Arbitrators to reverse the Panel's conclusion and
related findings on the interpretation of Article 1.1, first sentence, in
conjunction with Article 44.1 of the TRIPS Agreement in paragraphs 7.260 to
7.262 and 8.2.c. of the Report.
5._ The Panel erred in the
interpretation and application of the second sentence of Article 41.1 of the
TRIPS Agreement by finding that enforcement procedures as specified in Part III
are limited to procedures launched by right holders seeking to stop, prevent,
deter or remedy infringement of IP rights provided for in the TRIPS Agreement
and that the second sentence of Article 41.1 is not applicable to the ASI
policy.[7] Accordingly, the
European Union requests the Arbitrators to reverse the Panel's conclusion and
related findings on the interpretation and application of the second sentence
of Article 41.1 of the TRIPS Agreement in paragraphs 7.284 to 7.312 and 8.2.d.
of the Report.
6._ Should the Arbitrators reverse the
Panel's erroneous legal interpretations of Article 1.1, first sentence, in
conjunction with either Article 28.1, 28.2 or 44.1, and of Article 41.1 of the
TRIPS Agreement, the European Union requests the Arbitrators to complete the
analysis and find that China's ASI policy and the five individual ASI court
decisions are inconsistent with China's obligations under those provisions.
Pursuant to Rule 20(2)(c) of the Working
Procedures for Appellate Review, the service address, telephone and facsimile
numbers of the European Union are:
European Commission
Permanent Mission of the
European Union to the World Trade Organization
Rue du Grand-Pré 64-66
CH-1211 Geneva 7
Switzerland
Telephone number:
+41.(0)22.918.22.11
Facsimile number: +41.(0)22.734.22.36
_______________
China
– Enforcement of Intellectual Property Rights
Report of the Panel
TABLE OF
CONTENTS
1 INTRODUCTION.. 18
1.1
Complaint by the European Union. 18
1.2 Panel
establishment and composition. 18
1.3 Panel
proceedings. 18
1.4 Agreed
procedures for arbitration under Article 25 of the DSU. 19
2 FACTUAL ASPECTS. 19
2.1
Standard essential patents (SEPs) 19
2.2 Fair,
reasonable and non-discriminatory (FRAND) licensing. 20
2.3
Anti-suit injunctions (ASIs) 20
2.4
Relevant aspects of China's legal system.. 22
2.5
Alleged unwritten ASI policy in SEP litigation (ASI policy) 27
2.6 Five
ASIs issued by the Chinese courts. 29
2.6.1
Huawei v. Conversant 29
2.6.1.1
Litigation proceedings. 29
2.6.1.2
Decision and reasoning given by the SPC. 29
2.6.1.3
Reconsideration proceedings. 30
2.6.1.4
Settlement 32
2.6.2
Xiaomi v. InterDigital 32
2.6.2.1
Litigation proceedings. 32
2.6.2.2
Decision and reasoning given by the Chinese court 33
2.6.2.3
Reconsideration proceedings. 33
2.6.2.4
Settlement 34
2.6.3 ZTE
v. Conversant 34
2.6.3.1
Litigation proceedings. 34
2.6.3.2
Decision and reasoning given by the Chinese court 35
2.6.3.3
Appeal on jurisdiction. 36
2.6.3.4
Settlement 36
2.6.4 OPPO
v. Sharp. 36
2.6.4.1
Litigation proceedings. 36
2.6.4.2
Decision and reasoning given by the Chinese court 37
2.6.4.3
Appeal on jurisdiction. 38
2.6.4.4
Settlement 38
2.6.5
Samsung v. Ericsson. 38
2.6.5.1
Litigation proceedings. 38
2.6.5.2
Decision and reasoning given by the Chinese court 39
2.6.5.3 AASI issued
by the US court 40
2.6.5.4
Reconsideration proceedings. 40
2.6.5.5
Settlement 41
2.7 Other
relevant litigation in China. 41
2.7.1
Lenovo v. Nokia. 41
2.7.1.1
Litigation proceedings. 41
2.7.1.2
Decision and reasoning given by the Chinese court 42
2.7.2
Bosheng v. Lianyue. 42
2.7.2.1
Litigation proceedings. 42
2.7.2.2
Decision and reasoning given by the Chinese court 42
2.7.3
Huatai v. Clipper 43
2.7.3.1
Legal proceedings in China. 43
2.7.3.2
Decision and reasoning by the Chinese court 43
2.8
Transparency. 44
2.8.1
Publication of final judicial decisions of general application. 44
2.8.2 The
European Union's request for information pursuant to Article 63.3 of the
TRIPS Agreement 44
2.8.3
China's response to the European Union's request for information. 48
2.9
Timeline. 49
3 PARTIES' REQUESTS FOR FINDINGS AND
RECOMMENDATIONS. 56
4 ARGUMENTS OF THE PARTIES. 58
5 ARGUMENTS OF THE THIRD PARTIES. 58
6 INTERIM REVIEW.. 58
7 FINDINGS. 62
7.1 Order
of analysis. 62
7.2 The
ASI policy challenged by the European Union. 63
7.2.1
Whether the European Union properly identified the ASI policy in its panel
request 63
7.2.1.1
Summary of the parties' arguments. 65
7.2.1.2
Panel's analysis. 67
7.2.1.2.1
The measure identified in the panel request 67
7.2.1.2.2
Whether the concepts of "encouragement"
and "necessary to protect China's
interests" are within the Panel's terms of reference. 70
7.2.1.2.2.1
Encouragement of Chinese courts to issue ASIs. 70
7.2.1.2.2.2
Necessary to protect China's interests. 70
7.2.1.2.2.3
Conclusion on "encouragement" and "necessary to protect China's
interests" 71
7.2.2
Precise content of the ASI policy. 71
7.2.2.1
Summary of the parties' arguments. 71
7.2.2.2
Panel's analysis. 74
7.2.2.2.1
Alleged incompatible and inconsistent iterations by the European Union in
setting out the precise content 74
7.2.2.2.2
Description of the precise content 77
7.2.3
Whether the European Union has demonstrated the existence of the ASI policy. 79
7.2.3.1
The European Union's substantiation of the precise content 80
7.2.3.1.1
Temporal overlaps and similarities of the five ASI decisions. 80
7.2.3.1.1.1
Summary of the parties' arguments. 80
7.2.3.1.1.2
Panel's analysis. 81
7.2.3.1.2
Designation of some court decisions as typical cases and promotion of cases by
superior courts and other institutions. 90
7.2.3.1.2.1
Summary of the parties' arguments. 90
7.2.3.1.2.2
Panel's analysis. 92
7.2.3.1.3
Calls from the SPC and the NPC Standing Committee to continue using and
improving the ASI policy. 96
7.2.3.1.3.1
Summary of the parties' arguments. 96
7.2.3.1.3.2
Panel's analysis. 97
7.2.3.1.4
Overall assessment of the European Union's substantiation of the precise
content 101
7.2.3.2
Specific nature. 106
7.2.3.2.1
Summary of the parties' arguments. 106
7.2.3.2.1.1
The ASI policy as a rule or norm of general and prospective application. 106
7.2.3.2.1.2
The ASI policy as ongoing conduct 108
7.2.3.2.2
Panel's analysis. 110
7.2.3.2.2.1
Legal standard for determining whether an unwritten measure is a rule or norm
of general and prospective application. 110
7.2.3.2.2.2
Whether the European Union has demonstrated that the ASI policy is a rule or
norm of general and prospective application. 111
7.2.3.3
Conclusion on the existence of the ASI policy. 113
7.3
Consistency of the ASI policy with the TRIPS Agreement 113
7.3.1
General interpretative issues relating to Article 1.1 of the
TRIPS Agreement 113
7.3.1.1
Summary of the parties' and relevant third parties' arguments. 113
7.3.1.2
Panel's analysis. 115
7.3.2
Whether the ASI policy is inconsistent with Article 1.1 in conjunction with
Article 28.1 of the TRIPS Agreement 119
7.3.2.1
Summary of the parties' arguments. 120
7.3.2.2
Panel's analysis. 121
7.3.3
Whether the ASI policy is inconsistent with Article 1.1 in conjunction with
Article 28.2 of the TRIPS Agreement 122
7.3.3.1
Summary of the parties' arguments. 122
7.3.3.2
Panel's analysis. 123
7.3.4
Whether the ASI policy is inconsistent with Article 1.1 in conjunction with
Article 44.1 of the TRIPS Agreement 124
7.3.4.1
Summary of the parties' arguments. 125
7.3.4.2
Panel's analysis. 126
7.3.5
Whether the ASI policy is inconsistent with Article 41.1 of the
TRIPS Agreement 126
7.3.5.1
Summary of the parties' arguments. 127
7.3.5.2
Panel's analysis. 130
7.3.5.2.1
Enforcement procedures as specified in Part III 131
7.3.5.2.2
Whether the ASI policy is an enforcement procedure as specified in Part III 136
7.4 The
European Union's claims concerning the five individual ASI court decisions. 137
7.4.1
Whether the Panel should make findings on the issuance of the five individual
ASIs. 138
7.4.1.1
Summary of the parties' arguments. 138
7.4.1.2
Panel's analysis. 140
7.5 The
European Union's claims under the transparency provisions of the
TRIPS Agreement 143
7.5.1
Whether China failed to publish final judicial decisions of general application. 145
7.5.1.1
Summary of the parties' and third parties' arguments. 145
7.5.1.2
Panel's analysis. 149
7.5.1.2.1 Final judicial decisions. 149
7.5.1.2.2
Of general application. 151
7.5.1.2.3
Made effective by a Member 154
7.5.1.2.4
Pertaining to the subject matter of the TRIPS Agreement 155
7.5.1.2.5
Shall be published or made publicly available. 156
7.5.1.3
Conclusion on Article 63.1 of the TRIPS Agreement 157
7.5.2
Whether China failed to be prepared to supply information on request 158
7.5.2.1
Summary of the parties' and third parties' arguments. 158
7.5.2.2
Panel's analysis. 159
7.5.2.2.1
Information of the sort referred to in Article 63.1. 159
7.5.2.2.2
Whether the information the European Union requested falls within the scope of
Article 63.3, first sentence. 160
7.5.2.2.2.1
First part of the communication. 161
7.5.2.2.2.2
Questions V to VIII of the Annex. 162
7.5.2.2.3
Shall be prepared to supply such information. 164
7.5.2.3
Conclusion on Article 63.3, first sentence of the TRIPS Agreement 165
7.5.3
Whether China was required to give access to specific judicial decisions. 165
7.5.3.1
Terms of reference objection. 166
7.5.3.1.1
Summary of the parties' arguments. 166
7.5.3.1.2
Panel's analysis. 166
7.6 The
European Union's claims under China's Accession Protocol 168
7.6.1
Whether the Panel should make findings on the European Union's claims against
the issuance of the five ASIs under China's Accession Protocol 168
7.6.1.1
Summary of the parties' arguments. 168
7.6.1.2
Panel's analysis. 168
7.6.2
Whether the issuance of the five ASIs was consistent with China's Accession
Protocol 170
7.6.2.1
Whether Chinese courts applied Chinese laws, regulations or other measures in a
"uniform" manner 172
7.6.2.1.1
Summary of the parties' arguments. 172
7.6.2.1.2
Panel's analysis. 173
7.6.2.1.2.1
Legal standard of "uniform" application and administration. 173
7.6.2.1.2.2
Purpose of China's legal regime governing act preservation measures in IP
disputes. 174
7.6.2.1.2.3
Issuance of ASIs exclusively in SEP litigation. 176
7.6.2.1.2.4
Cumulative daily fines. 177
7.6.2.2
Whether Chinese courts applied Chinese laws, regulations or other measures in
an "impartial" manner 180
7.6.2.2.1
Summary of the parties' arguments. 180
7.6.2.2.2
Panel's analysis. 180
7.6.2.2.2.1
Legal standard of "impartial" application and administration. 180
7.6.2.2.2.2
Issuance of ASIs at the request of parties not holding IP rights and only in
favour of implementers. 181
7.6.2.3
Whether Chinese courts applied Chinese laws, regulations or other measures in a
"reasonable" manner 182
7.6.2.3.1
Summary of the parties' arguments. 182
7.6.2.3.2
Panel's analysis. 183
7.6.2.3.2.1
Legal standard of "reasonable" application and administration. 183
7.6.2.3.2.2
Predictability of China's application of its legal framework governing act
preservation measures in IP disputes. 184
7.6.2.3.2.3
Amount of fines: disproportionality compared to securities required from
implementers. 188
7.6.2.3.2.4
Amount of fines: risk to SEP holders' interests. 189
8 CONCLUSIONS AND RECOMMENDATION.. 190
[1] WT/DS611/7, 4 July 2023.
[2] Pursuant to Rule 20(2)(d)(iii) of the Working
Procedures for Appellate Review, which apply mutatis mutandis to this arbitration pursuant
to paragraph 5 of the Agreed Procedures, this Notice of Appeal includes an
indicative list of the paragraphs of the Panel Report containing the alleged
errors, without prejudice to the European Union's ability to refer to other
paragraphs of the Panel Report during the arbitration proceedings.
[3] Panel
Report, paras. 7.217, 7.224 and 7.226 to 7.231.
[4] Panel
Report, paras. 7.240 to 7.242 and
8.2.a.
[5] Panel
Report, paras. 7.247, 7.248, 7.250
to 7.252 and 8.2.b.
[6] Panel
Report, paras. 7.260 to 7.262 and 8.2.c.
[7] Panel
Report, paras. 7.284 to 7.312 and 8.2.d.