One of the world's most consequential conflicts is completely unknown to the vast majority of Americans. Nineteen countries -- including the UK, Canada, Australia, and Japan -- are currently battling in the World Trade Organization over an issue that could dictate the future of global trade, innovation and the rule of law.
Most are opposed to China's position; the Biden administration is not. It's a major unforced error, and risks aiding Beijing in its efforts to cripple innovators in rival nations around the globe.
At issue are "anti-suit injunctions," court-issued legal measures that prevent a party engaged in a lawsuit in one jurisdiction from simultaneously pursuing the case elsewhere. In recent years, Chinese courts repeatedly issued anti-suit injunctions, without notice or transparency, in patent lawsuits to protect Chinese companies from foreign court cases.
These legally binding orders from Chinese courts cripple the ability of foreign innovators to be compensated, and ultimately support China's goals of global technological dominance. China is violating long-standing international norms and forcing the rest of the world to play by its own, self-serving rules.
Consider recent cases accusing Chinese companies, Oppo and Xiaomi, of patent infringement. When the cases were raised in China, the courts responded by issuing anti-suit injunctions against the alleged victims of infringement, Japanese company Sharp and American company InterDigital. These orders prohibited them from seeking justice outside of China. The court threatened fines for violations.
In another case, a Chinese court issued an injunction barring Swedish Ericsson, which has its biggest market in the US, from pursuing its patent infringement suit anywhere outside of Wuhan, including in the United States. China's attempt to dictate judicial proceedings in the United States is a major intrusion into our sovereignty.
China's use of anti-suit injunctions doesn't occur in a vacuum. In China, unlike the United States, courts aren't independent from the other parts of the government. Chinese courts are subject to oversight at national and local levels by the Communist Party and its leaders. They have made no secret of their hope to out-compete China's rivals in high-tech fields.
To make matters worse, Chinese courts and trade agencies have refused to publish rulings in many patent-related cases -- allowing China to deny a formal "policy" of anti-suit injunctions, in furtherance of President Xi Jinping's open intention to "promote the application of Chinese laws and regulations on IP abroad."
China's procedures and lack of transparency, in the words of one Indian judge, constituted a "fraud on the court." China also sees no issue with this lack of transparency. A former senior Chinese patent judge told a U.S. court that in these cases, "the plaintiff is not obliged to notify the defendant, nor does he have to provide the defendant with the complaint or evidence that he submitted."
China's refusal to publish cases also clearly violates the WTO's TRIPS Agreement, which demands transparency and basic due process from all WTO members. This situation should be deeply concerning to the U.S. government. And as recently as 2021, it was. That year, the Biden administration called China's use of anti-suit injunctions a "worrying development."
Yet when the European Union filed a case at the World Trade Organization objecting to China's anticompetitive practices and demanding transparency, the Biden administration through its office of the US Trade Representative ("USTR") did an about-face.
Instead of backing our allies, the administration submitted a document questioning "whether the EU has sufficiently explained why the existence of the unwritten measure is not undermined by the fact that all the instances identified by the EU took place over a relatively short period of time and have not been repeated since.
In other words, administration officials seem to think that China's practices aren't problematic because the cases in question happened during a brief period and because Chinese courts have not yet repeated their demands since the EU filed its WTO dispute and international pressure has been placed upon it.
Chinese courts have also responded by making determinations involving global royalty rates -- thereby determining rates for the world, without considering that U.S. courts should normally decide whether U.S. patents are infringed and what the compensation should be.
These arguments miss the forest for the trees. These issues are also not outliers confined to one obscure but important area of intellectual property. As Joe Whitlock, a former senior USTR official has recently noted "[T]he USTR's trade policy is increasingly unpopular" and "raised alarms among academics; civil society think-tanks; human rights and civil rights groups; strategic, cybersecurity and national security experts; small businesses; individual enterprises; economy-wide and sectoral associations; CEOs; and some 50 business groups.
They also represent a retreat from over 30 years of bipartisan efforts to encourage China to engage in transparency and responsive enforcement of IP rights. Fortunately, other allies support the EU's position. Australia, for example, backs the EU's position that China's activities have "undermine[d]" the ability of the EU and other countries to enforce IP protections within their own jurisdictions.
The White House's stance is inexplicable. China's intention is plain, and its anti-suit injunction policy has a negative global impact. China is now upping the ante by setting global royalty rates for certain high-tech patents.
China must be held accountable. We must work with our allies to hold China to basic standards of transparency, due process and non-interference with the parties and courts of our own legal systems.
If we don't act soon, the next time a U.S. lawyer wants to try a patent dispute he may have to travel to Beijing.
Mark Cohen is director of the Asia IP Project at the Berkeley Center for Law and Technology at the University of California, Berkeley. Co-author Andrei Iancu is co-chair of the Council for Innovation Promotion and served as the undersecretary of Commerce for intellectual property and director of the USPTO from 2018 to 2021.
