According to the EU, China intimidates European companies with litigation bans on patent infringements and threatens them with fines. The EU is therefore now initiating WTO proceedings against China. The reason given is the country's attempts to prevent European companies from enforcing their patent rights. Specifically, telecommunications companies that hold patents in connection with mobile communications standards such as 5G are said to be particularly affected.

Patent holders who go to court outside of China are often subject to substantial fines in China, forcing them to settle for royalties below market rates, the Brussels-based authority explained. Fines of up to 130,000 euros per day could be imposed for violations of China's litigation ban. The Supreme People's Court in China has already issued such a litigation ban against foreign patent holders in four cases.

"This Chinese policy is extremely detrimental to innovation and growth in Europe and de facto deprives European technology companies of the ability to exercise and enforce the rights that give them a technological edge," the EU Commission criticized in a statement.

If no agreement can be reached in the negotiations that are now imminent, punitive tariffs on Chinese imports imposed by the EU through arbitration could be imposed.

"EU companies are entitled to sue for their rights on fair terms when their technology is used illegally," commented EU Commissioner Valdis Dombrovskis. "That is why we are launching WTO consultations today."