Questions for DG Trade as DS632 heads to a WTO Panel

On 19 March 2026, the WTO Dispute Settlement Body established a panel in DS632, China – Worldwide Licensing Terms for Standard Essential Patents, the EU’s second SEP dispute with China. In the first dispute, DS611, an appeal arbitrator found in July 2025 that China’s anti-suit injunction policy was inconsistent with TRIPS. DS632 challenges a different practice: Chinese court decisions setting binding worldwide licensing terms, including royalty rates, for SEP portfolios which include non-Chinese patents.

Per DG Trade’s announcement, Chinese courts fix worldwide licensing conditions “without the consent of both parties” and “unduly interfere […] with the competence of EU courts for European patent issues”. The panel request invokes Paris Convention Article 4bis (independence of patents) and TRIPS Articles 1.1, 28.1, 28.2 and 44. The panel request identified the 2023 decision by China’s Chongqing First Intermediate People’s Court in Oppo v. Nokia to set worldwide licensing conditions over Nokia’s objections.

Whatever one thinks of Chinese rate-setting practice as a matter of policy, there are several questions arising from the complaint regarding the consistency of the EU and its member states’ practices with TRIPS obligations, the legal basis used to interpret national contract law, and the ramifications for standards organisations under the EC’s competition guidelines. Moreover, it is unclear to what extent DG Trade has engaged with the other directorates on these interdisciplinary questions or notified EU member state stakeholders that its positions may implicate or interpret national issues.

What are the implications of DG Trade’s arguments for EU courts?

The qualifier “without the consent of both parties” carries real weight: it implies the vice is extraterritorial reach over foreign patents absent consent. But has DG Trade considered its own courts’ assertion of non-consensual extraterritorial patent jurisdiction?

In BSH v Electrolux, the CJEU held that a court of the defendant’s EU domicile may adjudicate infringement of third-state patents (there, a Turkish and a UK one). That is the textbook definition of extraterritorial patent enforcement: an EU court pronouncing on the scope and infringement of a patent granted by another sovereign, over which the court has no registration competence. Similarly, under German and UPC SEP jurisprudence, courts will issue national injunctions unless companies agree to take a worldwide license. But this is merely a back door form of forcing global license terms even if the courts do not formally call it global rate-setting.

What limiting principle distinguishes these adjudications from the Chinese courts’? A possible rejoinder is that in these cases the SEP holder chose to litigate its foreign rights in the EU court, while in China it is bound as respondent to have aspects of its foreign rights adjudicated.  However, how is this consistent with DG Trade’s position in DS632 that consent of both parties is required for extraterritorial patent adjudication when European courts are engaging extraterritorial enforcement without consent from the defendants?

What is DG Trade’s basis for concluding the Oppo v. Nokia proceeding lacked “consent of both parties?”

The EC’s position appears to be that extraterritorial patent enforcement may be generally inconsistent with TRIPS obligations unless both parties consent. This is generally sensible. After all, if parties can agree to arbitrate by accord, then they can also consent to submit to the jurisdiction of a willing national court. However, what is DG Trade’s basis for concluding that the requisite consent is absent in a SEP license determination case?

In cellular SEP disputes, licensee-initiated rate-setting actions generally rest on the SEP holder’s irrevocable commitment under clause 6.1 of the ETSI IPR Policy — governed by French law — to license on FRAND terms. Courts on both sides of the Atlantic treat that undertaking as enforceable by implementers: the Paris court in TCL v Philips & ETSI qualified it as a stipulation pour autrui (third-party beneficiary mechanism) under Article 1205 of the Civil Code; U.S. District Judge Selna agreed in TCL v Ericsson; the UK Supreme Court proceeded on the same premise in Unwired Planet.

If the SEP holder has voluntarily and irrevocably promised, in a French-law contract, to offer a license on FRAND terms, on what basis does DG Trade find “no consent” when a beneficiary asks a court to determine what that promise requires? Is it DG Trade’s position that third-party beneficiaries cannot seek judicial determination of FRAND terms? Is this based on an interpretation of French law? Have they consulted with the French Ministry of Justice or independent French law experts before staking out a WTO position that turns on French contract law?

What are the implications of DG Trade’s position for standardisation with respect to compliance with competition law?

Suppose the ETSI undertaking does not amount to consent and cannot be enforced through judicial rate-setting. The implications extend beyond trade law by creating competition risk for ETSI and other Standard Development Organisations (SDOs). The Commission’s Horizontal Guidelines place standardisation agreements outside Article 101(1) TFEU where, among other conditions, the SDO’s IPR policy ensures effective access to the standard. This is secured through voluntary but irrevocable written commitments prohibiting SEP holders from pursuing license terms in excess of what is fair, reasonable, and non-discriminatory (FRAND). If those commitments cannot be enforced by the companies implementing the standard that the rules are meant to protect, in what sense does ETSI’s IPR policy “ensure” access? Is ETSI still within the safe harbour? Is SEP holders’ participation in standardisation newly exposed to Article 101 scrutiny?

ETSI has argued that contractual enforcement of its IPR policy is intertwined with ensuring that the policy complies with competition law. In TCL v. Philips & ETSI, ETSI argued that the FRAND undertaking must be enforceable by third-party beneficiaries to ensure consistency with EU competition law, as well as its own internal rules. Does a position that the ETSI IPR policy is not contractually enforceable by third party beneficiaries impact its compliance with competition law?

Has DG Trade consulted DG Competition on the implications of arguing that FRAND adjudication at a beneficiary’s request violates TRIPS? And have they consulted DG GROW on what an unenforceable FRAND promise would mean for European standardisation just as the EU works to preserve ETSI’s centrality in 6G? These questions expose deeper uncertainties about the EU’s own practices on consent, extraterritoriality and FRAND adjudication. Recent analysis of DS611 on anti‑suit injunctions and the Arbitrators’ “anti‑frustration” reading of TRIPS underscores how WTO SEP disputes already destabilise territoriality, reinforcing the need for DG Trade to articulate a coherent, system‑wide account of cross‑border FRAND enforcement.

DG Trade’s decision to pursue DS632 before the WTO may have an impact on multiple issues of law and policy beyond trade. Its stance on consent, extraterritoriality and FRAND adjudication will reverberate through EU patent, competition and standardisation practice. Before continuing down this path, DG Trade should work with DG Competition, DG GROW, as well as member states to ensure its positions not unintentionally undermine ETSI’s FRAND architecture by placing it outside the Horizontal Guidelines safe harbour or unintentionally misrepresent how member states’ contractual law applies to worldwide SEP licensing.