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EU seeks access to China's secretive Oppo-Nokia global FRAND rate decision

Post Time:2024-01-19 Source:IAM Author: Views:

The European Union has made a formal request via the World Trade Organization for access to the global FRAND rate judgment recently handed down by the No. 1 Intermediate People's Court of Chongqing Municipality. This is against a background of growing geopolitical tensions between the EU and China on IP issues. 

The decision in question, the first ever issued by a Chinese court, relates to the multi-jurisdictional 5G patent licensing battle currently being waged between Nokia and Oppo, and may affect the EU's rights under the TRIPS agreement, the European bloc stated. The request came shortly after the Delhi High Court also demanded access to a copy of the document, which has been released only in a heavily redacted form and has been withheld from the parties themselves. 

Only the parties' Chinese counsel have been allowed access to the unredacted version of the ruling, which the EU is now seeking. 

It has been revealed, however, that the Chongqing court has set a global licensing rate dramatically lower than the European patentee's requested rate of $3.27 per 5G unit. Moreover, the Chinese judgment has set a lower rate for using Nokia's IP in China and other 'price-sensitive' territories than for jurisdictions like the EU, where prices are higher. 

Oppo must pay Nokia $1.151 per 5G unit and £0.777 per 4G unit in countries with higher-than-average sales prices, according to the Chongqing court. But it is only required to pay $0.707 per 5G unit and $0.477 per 4G unit in what the court has deemed price sensitive countries. Given the fact that the bulk of Oppo's sales are in China and other price sensitive jurisdictions such as India and Indonesia, the judgment is a major blow to Nokia. 

The EU is sufficiently concerned by the ruling that it has used the Council for Trade-Related Aspects of Intellectual Property Rights to ask China for a complete version of the judgment. 

Making its request under Article 63.3 of the TRIPS agreement, the EU "believes this specific judicial decision affects its rights under the TRIPS agreement" because "this judicial decision sets worldwide rates, including for patents issued within the jurisdiction of the European Union". Submitted on 20 December, the document asks China to supply the full text within 30 days of the request.

The move came less than a month after the Delhi High Court, which has also been asked to set a global FRAND rate in the dispute, directed both of the companies to provide it with unredacted copies of the judgment. However, both companies and their Indian lawyers were unable to obtain a full copy of the ruling. Even though it has consented to have the global dispute (including India) resolved by a Chinese court, Oppo has said it would only be prepared to accept an Indian ruling relating to Indian patents and sales. 

This is not the first time that concerns have been raised about the transparency of Chinese patents decisions. Back in 2021, the EU filed a similar information request regarding Chinese courts' approach to anti-suit injunctions, requesting access the country's four ASI decisions handed down in 2020, only one of which had been published. Under TRIPS, WTO members are required to make available "final judicial decisions…of general application, made effective by a Member pertaining to the subject matter of this agreement", despite which China had been publishing roughly half of its patent decisions according to data published by IAM in late 2021. 

In that case, China denied access to the decisions, replying that while the EU had the right ask for access to the judgments, "there is no such obligation under the TRIPS agreement for China to respond". 

It was against this background that the EU – which has come to recognise IP as geostrategic issue in recent years – made a formal WTO complaint against China in early 2022. 

Referring to the four ASIs handed down in quick succession, the complaint accused China of "restricting EU companies from going to a foreign court to protect and use their patents". The ASIs had been used "to exert pressure on EU companies with high-tech patents and to prevent them from rightfully protecting their technologies", the EU claimed. "Chinese courts also use the threat of heavy fines to deter European companies from going to foreign courts," it added. 

Proceedings for that complaint remain ongoing, following the establishment of a Dispute Settlement Body panel in January 2023. The two parties agreed to a set of procedures for arbitration in July last year, but the panel announced in November that it would not be able to issue its final report to the parties before the second half of 2024. 

The EU, in the meantime, continues to take a close interest in how Chinese SEP/FRAND decisions impact European companies and patents, as is evidenced by its recent request. It appears to be keen to advocate for European business's IP interests at the WTO. 

However, this is somewhat ironic given the EU's own proposal to regulate SEP licensing, which has been widely interpreted as hostile to the interests of SEP owners such as Nokia and friendly to implementers like Oppo. Nokia declined to comment on the EU's request.