Did "the Earth Move Out and Away from" China at the WTO? Anti-Suit Injunctions and Standard Essential Patents
Arthur Appleton
July 28, 2025

Introduction

On 21 July 2025, three arbitrators operating under the Multi-Party Interim Appeal Arbitration Arrangement handed down their decision in China — Enforcement of Intellectual Property Rights.¹ Their consequential decision partially reverses an earlier WTO panel findings against the European Union.

The case involved China's use of anti-suit injunctions (ASI) to prohibit enforcement of "standard essential patents" (SEP) abroad while related litigation is pending in Chinese courts. SEPs are patents essential for meeting a given standard and are common in the telecommunications, Wi-Fi, media streaming, and automotive sectors. Normally SEP owners are involved in the standard-setting process and agree to license their technology on "fair, reasonable, and non-discriminatory terms" (FRAND). Problems arise when negotiations fail, or SEP owners that did not participate in the standard-setting process choose not to license their patents on FRAND terms.

Among other Chinese ASI cases, the European Union raised Huawei vs. Conversant in the WTO proceedings. Huawei vs. Conversant involved a Chinese ASI against a Luxembourg company (Conversant) which owned SEPs that a German court found Huawei infringed. In the Chinese ASI proceedings, the Supreme People's Court authorised the imposition of a daily fine of 1 million RMB (approximately 138,000 Euro) should Conversant apply for the enforcement of the German court's injunction against Huawei for patent infringement.² In its First Written Submission in the WTO proceedings, the European Union criticized China's use of anti-suit injunctions "to force SEP owners to reach settlements and sign licensing contracts …. "³

WTO Dispute Settlement

In 2022, the European Union initiated a WTO dispute against China challenging China's use of worldwide anti-suit injunctions targeted at EU SEP holders seeking to enforce their SEPs in other jurisdictions while SEP litigation is pending in China. The EU alleged that:

"China has introduced and maintains a policy which in the context of judicial procedures concerning the enforcement of intellectual property rights in China prohibits patent holders from asserting their rights in other jurisdictions by commencing, continuing or enforcing the results of legal proceedings before a non-Chinese court. This prohibition materialises through Chinese courts issuing so called "anti-suit injunctions" enforced through daily penalties in case of infringement, which are typically set at the maximum level allowed for under Chinese Civil Procedure Law, and accumulate daily."

The WTO Panel adjudicating the EU claim held for China ruling in paragraph 7.240 that with respect to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS):

"…Article 1.1, first sentence read in conjunction with Article 28.1 requires Members to ensure that, within their domestic legal systems, a patent confers on its owner the exclusive rights set forth in Article 28.1.662 Those rights are independent of patents obtained for the same invention in the territories of other Members, in accordance with Article 4bis of the Paris Convention (1967), which is incorporated into the TRIPS Agreement through Article 2.1 thereof. In that respect, it is important to emphasize that the territorial nature of patent rights means that the exclusive rights identified in Article 28.1 are only valid within the territory of the granting Member. There is, therefore, no basis to interpret these provisions as addressing patent owners' rights in the territories of other WTO Members." [footnotes omitted]

On appeal, the MPIA arbitrators rejected the Panel's narrow territorial interpretation of Article 28.1 TRIPS, concluding in paragraph 4.84 and 4.86 that:

"4.84 … the proper interpretation of the term "give effect" in Article 1.1, first sentence requires WTO Members, to make operative the provisions of the TRIPS Agreement in their own national systems and to do so without frustrating the functioning of the systems of IP rights protected pursuant to the implementation of the TRIPS Agreement by other WTO Members in their territories. This includes the rights of patent owners bestowed upon them by virtue of the implementation of Article 28.1 by Members in their territories."

"4.86 … we find that Article 28.1, read in conjunction with Article 1.1, first sentence, requires that Members not frustrate the patent owner's ability to exercise the exclusive rights conferred on it by another WTO Member under that provision, i.e. to prevent third parties not having the patent owner's consent from making, using, offering for sale, selling, or importing the patented product."

In summary, the arbitrators reversed the Panel's findings, holding instead that Article 1.1 requires WTO Members to "give effect" to patent obligations present in the TRIPS Agreement:

"…the corollary of the obligation in Article 1.1, first sentence of the TRIPS Agreement to 'give effect' to the provisions of that Agreement in a WTO Member's territory is to do so without frustrating the functioning of the systems of protection and enforcement of IP rights implemented by other Members in their respective territories."⁴

Commentary

The arbitrators' decision must be read as an important victory, not just for the EU, but also for SEP holders. It constitutes a reaffirmation of EU and US practice whereby anti-suit injunctions should be utilised in SEP disputes with great caution and only in exceptional circumstances.

While there may be arguments in favour of anti-suit injunctions in SEP disputes; for example, to consolidate litigation before one tribunal, to reduce litigation costs, and to challenge SEP holders that are not complying with FRAND obligations,⁵ the downside risks are greater. Anti-suit injunctions limit immediate relief for SEP holders in foreign jurisdictions. They also leave SEP holders at the mercy of foreign tribunals that may be less transparent and independent. They subject SEP holders to undue coercion in the form of potential financial penalties for exerting patent rights before foreign tribunals. Anti-suit injunction may also hinder SEP negotiations, create barriers to trade, encourage forum shopping in FRAND litigation, undermine international comity, and result in time-consuming and costly "anti-ASI" proceedings in multiple jurisdictions.⁶

Although Article 28.1 of the TRIPS Agreement may not have been written with SEP holders in mind, the decision of the MPIA arbitrators is consistent with the object and purpose of the TRIPS Agreement. In the long run, this decision (even if only binding on the parties to the dispute) should reinforce the position of SEP holders seeking to negotiate licenses on FRAND terms, divert power from the courts to SEP negotiators, and absent the coercive element present in ASI proceedings, encourage tribunals to make well-reasoned determinations in FRAND proceedings. Implementation of the MPIA decision is now in China's hands.

Arthur Appleton, JD, PhD, is a Senior Adjunct Professor at SAIS Europe, and a founding Partner of Appleton Luff – International Lawyers. Arthur is also a member of the Visiting Faculty and the Advisory Board of the World Trade Institute (University of Bern) and a Faculty Member of the Academy of International Economic Law and Policy (AIELPO) in Athens.

Footnotes

1. WT/DS611/ARB25 partially reversing findings contained in WT/DS611/11 (24 April 2025), Link.

2. Huawei Technology Co. Ltd vs. Conversant Wireless Licensing Sàrl. (Luxembourg), Civil Ruling of The Supreme People's Court of the People's Republic of China (28 August 2020). The translated judgment is available at Link.

3. China – Enforcement of Intellectual Property Rights, WT/DS611/, First Written Submission by the European Union, 8 June 2023, at para. 393, Link. The sizeable potential fine is cited by the EU in its Request for Consultations, China – Enforcement of Intellectual Property Rights, Request for Consultations by the European Union, WT/DS611/1; IP/D/43; G/L/1427 (22 February 2022), Link.

4. WT/DS611/ARB25 at para. 5.1(b).

5. See Igor Nikolic, "Global Standard Essential Patent Litigation: The Anti-Suit and Anti-Anti-Suit Injunctions" 30:2 George Mason Law Review 427, 429 (2023).

6. See also Nikolic at 430.