USTR Report May Stem Trade Partners’ Weak-Patent Agenda

China, the EU and the UK are quietly rewriting the rules on standard-essential patents (SEPs) in ways that strip value from U.S. innovators’ technology. As the Office of the U.S. Trade Representative (USTR) finalizes its 2026 Special 301 Report, Washington has a rare chance to call out these trading partners for turning global licensing into a government-managed exercise that drives royalty rates below market value.

In addition, implementers seek to make injunctions less available. Proponents want to export the unavailability of injunctive relief for patent owners facing infringement that eBay v. MercExchange has brought about domestically.

Those affected most by limiting injunctive relief are private parties that voluntarily agreed to contractual terms to participate in a standards-development organization (SDO). Their contractual obligations are predicated on fair, reasonable and nondiscriminatory (FRAND) licensing terms, arrived at by private negotiations within an SDO’s contractually binding terms. But joining an SDO is not giving up one’s patent rights.

Trade and Intellectual Property

The trading partners involved in these IP rights-weakening initiatives are bound by the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement, whose purpose is to raise the level of respect for IP rights in the laws of countries that are party to the World Trade Organization (WTO). Thus, it seems these IP-weakening efforts run counter to TRIPS, and may be subject to WTO sanction.

The USTR annually composes a Special 301 Report. This report presents specific foreign laws, policies and practices that fall short of countries’ effectively protecting and enforcing the IP rights of U.S. inventors, creators and others. Special 301 Reports expose inadequate or violative conduct of foreign countries, promoting transparency and accountability. The 2026 301 process is underway following USTR’s recent hearing.

Judicial Activism and Cartels Writ Global

Foreign courts—particularly in China and the UK—brashly assert power to dictate licensing terms and royalty rates for patents and claim jurisdiction to enforce their rulings worldwide. They issue injunctions prohibiting patent owners from asserting their patent rights in any other jurisdiction’s courts, including denying assertion of U.S. patents in the United States. Affected patent owners haven’t consented to any of this.

These antisuit injunctions (ASIs) encroach on national sovereignty and suck the value from patents and innovative technologies. This arrogation of power over individual patents and patent portfolios, SEPs or otherwise, is highly questionable on the grounds of legality, TRIPS compliance, due process, property rights and the rule of law.

Moreover, leading the charge to effect government rate-setting schemes are China and the European Union. In 2023, the EU drew up a plan for government determining patents’ essentiality to a technological standard, supplanting realistic, market-based rates agreed to by the parties. This bureaucracy would dictate an aggregate royalty rate. Government rate-setting will hurt all innovators, such as European firms Ericsson and Nokia.

The stakes are high and the value of cutting-edge technologies hangs in the balance. In 2023, a Chinese court dictated a royalty rate to SEP owner Nokia in a case involving Chinese firm Oppo. The Chinese royalty was less than the rate an EU court had already awarded. That Chinese court’s ASI bound Nokia globally to its arbitrarily low rate.

Implementers increasingly employ globally the strategies and tactics Big Tech and its allies have used domestically to weaken patent rights. Jonathan Barnett’s book, The Big Steal, lays out those tactics. Another TRIPS-related target is innovators’ access to injunctive relief in patent infringement cases.

“Recent discussions around the EU’s IPR Enforcement Directive illustrate the problem,” Brian Pomper, executive director of the Innovation Alliance, said at the USTR’s 301 hearing. “A report issued earlier this year by DG GROW argues that injunctions are too ‘readily available’ or ‘automatic,’ offering only a single undisclosed report as evidence for this blanket assertion. The report also ignores procedural differences across member states that affect the rate at which injunctions are granted.”

The pressure campaign, coordinated among implementers and sympathetic interests, is being waged in Europe and the UK, targeting legislatures, regulators and courts. It aims to make injunctions harder to obtain for patent owners. Notably, a number of the anti-injunction implementers are state-funded. Their success would mean compulsory licenses, artificially set by government entities at ultralow levels, all moving in the opposite direction of the TRIPS Agreement.

Enhancing Special 301 Reports

These trends among Western and TRIPS nations have sparked pushback. The Innovation Alliance proposes that USTR include a new section in the 2026 Special 301 Report. The new section would focus on the efforts undertaken by certain U.S. trading partners intent on undercutting private patent licensing negotiations and restricting patent owners—especially American innovators—from employing their rightful patent rights. Some sunlight might put pressure on the weak-IP crowd.

USTR should seize this moment to defend U.S. patent rights before they’re further eroded abroad.

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Author: iqoncept