On Febr. 18, 2022 the European Union (“EU”) requested consultations with China before the World Trade Organization (“WTO”) regarding the issuance of anti-suit injunctions (“ASIs”) by the Chinese courts in standard essential patent (“SEP”) litigations. After the consultations failed, pursuant to the EU’s request, WTO members agreed to establish a dispute panel to examine China’s enforcement of intellectual property rights at a meeting of the Dispute Settlement Body (“DSB”) of WTO on Jan. 27, 2023.[1] The panel was composed on Mar. 28, 2023.[2] AIPPI’s Standing Committees on TRIPS and FTA paid attention to this WTO DS611 case and made comparable study on the anti-suit injunction practice in SEP litigations of major jurisdictions as follows.
China
“Though Chinese judicial actions have been the targets of ASI motions in U.S. cases since at least 2015, it wasn’t until 2020 that Chinese courts began to issue ASIs of their own.”[3] ASI is regarded as a type of act preservation measure in China, the legal basis of which can be found in Article 100 of the applicable Civil Procedure Law 2017.[4] On Aug. 28, 2020, China’s Supreme People’s Court (“SPC”) handed down the first ASI ruling in Huawei v Conversant.[5] In that case, Conversant sought to license some patents which were claimed as SEPs to Huawei. After negotiations failed, Huawei requested the Nanjing Intermediate Court on Jan. 25, 2018 to set licensing terms in China and the licensing terms decision made by the Nanjing court on Sep. 16, 2019 was appealed to the SPC then. In parallel, Conversant took action on Apr. 20, 2018 to sue Huawei in the Court of Düsseldorf, Germany for infringement of its SEPs. On Aug. 27, 2020, the Court of Düsseldorf granted Conversant an injunction order against Huawei’s sale, use and importation in Germany of devices infringing one of Conversant’s patents, and on the same day, Huawei applied to the SPC seeking an ASI. On Aug. 28, 2020, the SPC issued an ASI ruling, prohibiting Conversant from enforcing the injunction order issued by the Court of Düsseldorf. In case of violation of the ruling, a daily fine of RMB 1 million shall be imposed from the date of violation. On Sep. 2, 2020, Conversant filed a request for reconsideration and the ASI ruling was maintained by the SPC after a hearing in the reconsideration procedure.
In the ruling, the SPC provided a five-factor test in issuing an ASI:
- Impact of enforcing the German injunction on the ongoing Chinese lawsuit
The parties were the same and the objects of the Chinese and German actions were partially overlapping. Enforcement of the German injunction would interfere with the hearing and judgment of the Chinese actions.
- Necessity of granting an ASI
Huawei might suffer irreparable harm if no ASI was granted. Under the German injunction, Huawei had to withdraw from the German market or accept the royalty rate which was 18.3 times higher than the rate set by the Nanjing court.
- Balance of both parties’ interests
As a SEP right holder, Conversant’s interest in the German action was to obtain monetary compensation. The temporary suspension of the enforcement of the nonfinal German injunction would cause limited damage to Conversant. But Huawei might suffer severe damage if the injunction was to be enforced.
- Public interest
The purpose of ASI was to prohibit Conversant from enforcing the German injunction before the Chinese actions were concluded. The public interest would not be affected.
- International comity
The issuing of ASI would not affect international comity, as the Chinese action started three months before the German action. And the ASI would neither affect the subsequent proceedings of the German action nor impair the legal effect of the German judgement.
Following the above ruling made by the SPC, several other ASIs were issued in the intermediate court level.
France
In the past years there have been a string of decisions by French courts issuing injunctions against SEP implementers, such as Paris First Instance Court, 9 September 2008, Sisvel, France Telecom, TDF, Audio MPEG, Institut für Rundfunktechnik GmbH and Philips Electronics NV v. M Amar Zafrane; Paris First Instance Court, 23 July 2011, Koninklijke Philips Electronics NV v. TX Western Europe and Africa and CDVD SL. For preliminary injunctions see, among others, President of the Paris First Instance Court, 1 February 2011, Sisvel, France Telecom, TDF, Audio MPEG, Institut für Rundfunktechnik GmbH and Philips Electronics NV v. Carrefour; Paris Court of Appeal, 27 April 2011, Sisvel, France Telecom, TDF, Audio MPEG, Institut für Rundfunktechnik GmbH and Philips Electronics NV v. Carrefour; President of the Paris First Instance Court, 28 June 2011, Sisvel, France Telecom, TDF, Audio MPEG, Institut für Rundfunktechnik GmbH and Philips Electronics NV v. Electro Depot.
While in the past such frequent granting of injunctions hindered the development of SEP-implementing technologies, in recent years French courts have expressed a growing reluctance to issue preliminary injunctions in SEP cases. In Samsung v. Apple [6], the Paris First Instance Court found that the seeking of preliminary injunction was ‘disproportionate’ and would disturb the FRAND negotiations and give one of the parties too much of an advantage.[7], [8]
French courts have, however, found ‘anti-anti-suit’ injunctions proper to preserve France’s jurisdiction over SEP disputes. For example, in IPCom v. Lenovo[9], a SEP holder sought an anti-anti-suit injunction from French courts to be able to enforce its SEP in France after a licensee sought an anti-suit injunction in the US. In this case, the court and the subsequent court of appeals found anti-suit injunctions in patent cases to be an interference of the proper jurisdiction of French courts and an encroachment on property rights. Therefore, the court awarded the anti-anti-suit injunction against the sought US motion for an anti-suit injunction.
Germany
In Germany, courts have granted injunctions excluding license seekers from the market based on finding one single national SEP to be infringed. Many of these injunctions are even granted without any prior assessment whether the terms requested by the SEP-holder are in fact FRAND. In fact, the German Federal Supreme Court argued in its two decisions of Sisvel v. Haier I and II[10] that “in a complex situation, as is typically the case in the licensing of standard essential patents, it is as a rule not obvious what contractual terms in the specific case meet the requirements of an appropriate balance of interests (…).”[11] Thus, in particular, German courts have restricted or in fact circumvented the limited safe harbor that the European Court of Justice (“ECJ”) sought to establish in its decision of Huawei v. ZTE. Judge Meier-Beck, the presiding judge at the respective senate of the German Federal Supreme Court at the time of the two decisions, was pretty outspoken about the court’s intention in an interview claiming that “courts are badly-placed to determine the right price for a FRAND license,” labelling the ECJ decision of Huawei v. ZTE as “cryptic” and “a reason that all the experts would have stopped thinking about an appropriate solution to the current problem.”[12]
German courts therefore base the decision of an injunction first of all on a “willingness test” following the decisions of Sisvel v. Haier I and II stating that an injunction would already be justified whenever a license seeker – according to the court’s understanding – has not participated in the negotiations in a purposeful manner and has thus proven unwilling to license the SEP-holder’s portfolio. In these cases, an injunction is granted by German courts without an assessment of the requested terms and whether they are truly FRAND. To avoid such an injunction, license seekers are generally required to seek a worldwide license with global rates also for non-German SEPs.[13] Thus, German courts ultimately approve global licensing terms unilaterally set by the SEP-holder, in most cases without any assessment of those global licensing terms at all, and without any assessment of the essentiality, validity or value of the portfolio-patents, let alone the non-German patents. License seekers who want to avoid such injunctions are ultimately forced to accept worldwide licenses with global rates under the threat of market exclusion.
German courts have even sought to protect their regime by limiting foreign courts issuing ASIs. Last year, the Regional Court of Munich issued an “anti-anti-suit” injunction prohibiting Continental from petitioning a U.S. court for an ASI on the grounds that a foreign ASI tortiously interferes with German patent rights.[14] In other cases reflecting this trend, German courts even granted pre-emptive anti-anti-suit injunctions to deter defendants from even considering a motion for an ASI, even though they acknowledged that such motion could be admissible under the respective foreign law, such as U.S. law.[15] Moreover, several German courts even linked seeking an ASI to the concept of the “willing licensee,” and thus, to the success of the FRAND defense. They held that the application for an anti-suit injunction must be considered as definite evidence that the defendant was not a “willing licensee,” and as a consequence, the FRAND defense must be dismissed due to the defendant’s motion for an anti-suit injunction alone and without any further review. German courts have upheld that result, even though they acknowledged that ASIs might be a foreseen legal instrument in many foreign jurisdictions, such as under U.S. law.[16]
The United Kingdom
In the United Kingdom, the Supreme Court’s decision in Unwired Planet v. Huawei approved issuing what the lower court termed a “FRAND injunction”, where a defendant is enjoined based on the finding of infringement for one SEP unless it agrees to a court-determined license for a global SEP-portfolio.[17] Consistent with the European Union’s criticism of Chinese anti-suit injunctions, in its Article 63.3 request for information of July 2021 and the recent request for consultations, the Unwired Planet regime means that UK courts are setting global rates for non-UK patents.
The UK courts paid lip service to considering the patent merits by providing that after entering the global license, a licensee can seek to invalidate licensed patents in courts around the world. At the same time, UK courts acknowledge that it would be “madness” for the licensor to have to negotiate patent licenses country by country,[18] which then obviously holds true for invalidating portfolio patents country by country as well. Based on the Unwired Planet decision, the UK has become a more favorable venue for SEP- holders because by obtaining an infringement finding on a single SEP, they can put a defendant to the choice of an injunction or a court-determined global license.
The United States
The United States has a long-standing practice of utilizing ASIs in many areas of the law, including in disputes involving standard essential patents (SEPs), whose owners typically agree to license them on terms that are fair, reasonable, and non-discriminatory (FRAND).[19] U.S. courts have appropriately issued ASIs in SEP cases where necessary to preserve jurisdiction. Courts in the U.S. have issued ASIs, for example to prevent disruptions from patent infringement cases filed in Europe to their ability to adjudicate FRAND litigation to which both parties had consented.
Prominent examples of ASIs granted by U.S. courts that enjoined SEP-holders from enforcing their patent rights in member states of the European Union are the decisions of Motorola v. Microsoft, Samsung v. Huawei and TCL v. Ericsson by different U.S. district courts.[20] Importantly, in Microsoft v. Motorola, 696 F.3d 872 (9th Cir. 2012), a federal district court issued an ASI to prevent Motorola from pursuing injunctive relief against Microsoft in Germany after Microsoft filed a breach of contract claim case against Motorola in the United States and agreed to pay a FRAND royalty determined by the court for Motorola’s portfolio. As reflected in U.S. case law, the appropriateness of an ASI depends on a variety of fact-intensive factors.
Comment
Licensing of SEPs is particularly intricate and normally involves a family of patents being or to be implemented globally. The gist of these licenses is as much commercial as it is legal. Setting a global royalty rate in one jurisdiction will inevitably step into the territory of another. As indicated by the above decisions, although ASI was used by different courts as an instrument to preserve jurisdiction and solve disputes of global royalty rates for SEPs, its effectiveness remains unclear in the near future. Coordination and harmonization is desirable among judicial systems in different countries/regions and even on the international platform like WTO to promote good-faith negotiations between the SEP holders and the implementers and to reach FRAND licensing. A move to a globalized solution is still on the way.
[1] WTO | 2023 News items – Panels established to review EU complaints regarding Chinese trade measures.
[2] https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds611_e.htm.
[3] Anti-Suit Injunctions and Jurisdictional Competition in Global FRAND Litigation: The Case for Judicial Restraint – NYU Journal of Intellectual Property & Entertainment Law.
[4] Article 100 of the Civil Procedure Law reads: in the event that the judgment on the case may become impossible to enforce or such judgment may cause damage to a party because of the conduct of the other party to the case or because of any other reason, the people’s court may, upon the request of the said party, order the preservation of the property of the other party, specific performance or injunction; in the absence of such request, the people’s court also may, where it deems necessary, order preservation measures.
[5] Supreme Court of the People’s Republic of China, Civil Ruling of 28 August 2020, in cases between Huawei Technology Co. LTD and Conversant Wireless Licensing S. à r. 1. (2019) Zui Gao Fa Zhi Min Zhong No. 732, No. 733 and No. 734, Zhi yi.
[6] Paris First Instance Court, 8 December 2011, Samsung v. Apple, No. 11/58301.
[7] President of the Paris First Instance Court, 29 November 2013, Ericsson v. TCL.
[8] President of the Paris First Instance Court, 20 January 2020, IPCom v. Xiaomi and IPCom v. Lenovo; Paris Court of Appeal, 3 March 2020, IPCom v. Lenovo.
[9] Id.
[10] The decisions are officially named FRAND-objection I and II but will be referred to as Sisvel v. Haier I and II herein.
[11] Sisvel v. Haier II, KZR 36/17, ¶¶ 70 (German Federal Supreme Court, November 24, 2020).
[12] https://www.juve-patent.com/news-and-stories/people-and-business/peter-meier-beck-from-a-german- perspective-anti-suit-injunctions-should-not-exist/.
[13] Sisvel v. Haier II, KZR 35/17, ¶¶ 110 – 123 (German Federal Supreme Court, November 24, 2020) finding “defendants’ contractual offer – formulated independently of the text last proposed by the plaintiff – does not provide for the defendants’ parent companies or the Haier Group as licensees, but only the defendants themselves” ultimately to be a further proof of defendant’s unwillingness.
[14] Nokia v. Continental, 21 O 9333/19 (Regional Court of Munich, October 2, 2019).
[15] InterDigital v. Xiaomi, 7 O 14276/20 (Regional Court of Munich, February 25, 2021).
[16] GE Video Compression et al. v. Xiaomi, I-2 U 25/21, I-2 U 27/21 (Higher Regional Court of Düsseldorf, February 7, 2022); InterDigital v. Xiaomi, 7 O 14276/20 (Regional Court of Munich, February 25, 2021).
[17] Unwired Planet International Ltd et. al v Huawei Technologies (UK) Co Ltd et al., [2020] UKSC 37 (Supreme Court of the United Kingdom, August 26, 2020).
[18] Id. at ¶ 25.
[19] Peter K. Yu, George L. Contreras, and Yu Yang, Transplanting Anti-suit Injunctions, 71 AM. U.L. REV. 1537, 21 n. 121 (2022), https://aulawreview.org/blog/transplanting-anti-suit-injunctions/.
[20] Microsoft Corp v Motorola Inc, 871 F. Supp. 2d 1089 (W.D. Washington 2012); Huawei Technologies Co Ltd v Samsung Elecs Co Ltd, Case No 3:16-cv-02787 (N.D. California 2018); TCL Comm Tech Holdings Ltd v Telefonaktiebolaget LM Ericsson, Case No 8:14-cv-00341 (C.D. California 2017).