WTO Arbitral Panel Says China's Anti-Suit Injunction Policy Doesn't Violate TRIPS
Arbitrators issued an award in the EU's dispute on China's enforcement of intellectual property rights under the World Trade Organization's Multi-Party Interim Appeal Arbitration Arrangement (MPIA). The arbitrators said that the EU showed that China has an anti-suit injunction policy for its courts and that parts of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) aren't confined to ensuring a patent owner's exclusive rights in each member's domestic legal system.
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However, the arbitrators ultimately held that China's anti-suit injunction poilcy doesn't violate the TRIPS Agreement.
The EU opened the arbitral proceedings following a dispute panel ruling in the EU's case against the Chinese IP measures, which include Chinese courts' use of anti-suit injunctions in patent cases (see 2504250008). Specifically, the EU challenged five Chinese court decisions granting anti-suit injunctions and an "alleged unwritten" anti-suit injunction policy, claiming the measures violate China's obligations under the TRIPS Agreement.
The arbitrators found that the dispute panel erred in three ways in its ruling. Most notably, the arbitrators said Article 28.1 of the TRIPS Agreement, which says a patent for a product shall confer on its owner the right to "prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, selling, or importing for these purposes that product," isn't limited to ensuring a patent owner's exclusive rights in each member's domestic legal system and nothing more.
The arbitrators said Article 28.1 "requires that Members not frustrate a patent owner's ability to exercise the exclusive rights conferred on it by another WTO Member under that provision."
The ruling also discussed Article 28.2, which says patent owners "shall also have the right to assign, or transfer by succession, the patent and to conclude licensing contracts." The arbitrators said this provision isn't limited to ensuring a patent owner's right to conclude licensing contracts in each member's domestic legal system and "nothing more." Instead, the provision "requires that Members not frustrate a patent owner's ability to exercise its 'right … to conclude licensing contracts' as conferred in the territory of another WTO Member under that provision."
The MPIA arbitrators also upheld the dispute panel's finding that the EU provided sufficient evidence to show the existence of an anti-suit injunction policy "and that its specific nature is that of a rule or norm of general and prospective application." However, the panel said the EU didn't show that the anti-suit injunction policy is inconsistent with TRIPS Article 44.1, which says judicial authorities shall have the authority to order a party to desist from infringing on a patent.