The WTO panel decision in DS 611, the case filed by the EU challenging China’s antisuit injunction practices involving standards essential patent (SEP) has now been made available on the WTO website.  The dispute had been previously discussed in various blogposts on this website.

The WTO panel upheld the EU’s position that China must be more transparent by transmitting to the EU and other WTO members court judgments and other information on ASIs and intellectual property.  The panel also referred to CJO (China Judgments Online) as the official vehicle for releasing these judgments.

The panel did not uphold the EU’s position that China was required to refrain from adopting or maintaining measures regarding SEP ASIs that undermine other WTO members’ IP territorial sovereignty.  According to the panel, the TRIPS Agreement does not oblige WTO members to abstain from adopting measures that prevent other WTO members from issuing ASIs in their territories.   This latter aspect of the decision is also likely relevant to a more recent case filed by the EU (DS 632)  regarding global rate setting by Chinese courts. The panel decision is now being appealed by the EU to an arbitral body in accordance with Article 25 of the Dispute Settlement Understanding.  

The 191-page decision deserves a careful review of its implications for transparency, ASIs, and overall transparency of Chinese courts and administrative agencies in IP matters (See DS 362).  The panel‘s chair, Adrian Macey as well as panelist Mathew Kennedy, were both involved in the much older DS 362 decision.  The transparency obligations are particularly important today in light of China’s evolving approach towards the role of case law in SEP and IP disputes.

How will the Trump administration react to this latest development? In testimony last year, current U.S. Trade Representative Jamieson Greer had publicly criticized China’s lack of transparency, including its use of unwritten rules, in testimony. He noted that “many U.S. companies report facing vague and unwritten rules, as well as local rules that diverge from national ones, which are applied in a selective and non-transparent manner by Chinese government officials to pressure technology transfer.”  This position departs from the Biden administration’s submission to the WTO panel on China’s non-obligation to publish internal policies.  The Biden administration’s submission was also hardly referenced in the panel decision.  Equally important, however, is that if one accepts the assumption that China is curating its published cases, it becomes nearly impossible to monitor outcomes from bilateral and multilateral agreements on IP with China due to the lack of transparency and evident selection bias.  This was a glaring gap in the Phase 1 Trade Agreement signed by Donald Trump during his first administration, with no Chinese commitment to deeper IP-transparency, the enforcement of the agreement could not be adequately monitored.

My read of the panel’s decision is that Chinese courts can issue ASIs, that such ASIs don’t interfere in other courts’ jurisdiction/violate TRIPS, and that they can even set rates for that country which may be lower than other jurisdictions.  Different licensing rates for different countries raise interesting theoretical concerns regarding most-favored-nation treatment obligations by Chinese courts.  The panel did not discuss the industrial policy motivations for China to do this for its cell phone industry. It did not address concerns about differential rates for standardized technology that supports those industrial policies.  In discussing the binding effect of cases or China’s policies towards ASIs, there are few references to the party’s role in providing legal guidance.  There is also little consideration given to how judges try to follow decisions even without a binding effect – e.g., to limit reversal possibilities.  By hardly discussing these political realities, it appears excessively legalistic.