This month's article is contributed by Ted Rand, a 3L at UNH Franklin Pierce School of Law.
On December 28, 2020, the United States Federal District Court for the Eastern District of Texas (E.D. Texas) granted the issuance of a temporary restraining order against Samsung in a lawsuit filed by Ericsson on December 11, 2020. The emergency ex parte temporary restraining order and anti-interference injunction (i.e., an “anti-anti-suit injunction” or “AASI”) come in response to an anti-suit injunction (an “ASI”) issued by the Wuhan Intermediate People’s Court of China court early on Christmas morning. The ASI from the Wuhan court sought to prevent Ericsson from seeking injunctive relief on its 4G and 5G standard-essential patents (SEPs) outside of China. While the suit’s specifics are tantalizing and controversial (Ericsson claims to have not received notice before the ASI issuance, and neither company has headquarters in China, for starters), this article aims to take a step back and think about how we got here. Particularly in the age of “standards wars” over SEPs relating to 4G, 5G, and other globally ubiquitous technological standards, a procedural mechanism for preventing parallel litigation over these globally essential patents has been on the rise. The History of Anti-Suit Injunctions Anti-suit injunctions prohibit litigants from initiating or continuing parallel litigation in a different jurisdiction. The practice is not new. As early as the 15th century (and possibly even earlier), English courts would issue “writs of prohibition” to prevent other courts in the country from expansively asserting jurisdiction. First, England’s common law courts issued these writs against ecclesiastic courts (i.e., court Christian or court spiritual). Then the Court of Chancery invoked them to prevent litigants from bringing common law cases in bad conscience. At some point, the practice of issuing these writs (which later came to be known as ASIs) extended to halting proceedings in foreign countries. In recent centuries, ASIs have been used mostly by the U.S. and the UK and looked upon with civil law countries’ disfavor. However, as parties increasingly invoke the procedural tactic in litigation over SEPs and fair, reasonable, and non-discriminatory (FRAND) licensing commitments, countries like France, Germany, and China, among others, have joined in on the practice. The Benefits of Anti-Suit Injunctions and the Gallo Framework At this point, you may be asking how courts can justify issuing ASIs, which appear at first blush to be a protectionist ploy to keep cases within a particular jurisdiction. The reality is not so simple, and courts are often reluctant to issue such an “extraordinary remedy.” There are material benefits to the use of ASIs. While some scholars have described the standard as “ambiguous and fragmented,” these benefits can be neatly illustrated by walking through the three-step framework outlined in E. & J. Gallo Winery v. Andina Licores, 446 F.3d 984 (9th Cir. 2006), where the Eastern District of California denied a wine distributor’s request to enjoin Ecuadorian litigation. While other countries follow different standards for issuing ASIs, the core criteria are roughly equivalent. Gallo Factor (1): whether or not the parties and the issues are the same in both the U.S. and foreign actions, and whether or not the first action is dispositive of the action to be enjoined. One of the main benefits of ASIs is that they can reduce duplicitous litigation. Patent litigation has become one of the most gamified corporate warfare forms for high-tech companies with global patent portfolios. One way to cause maximum pain for a competitor is by forcing the competitor to incur litigation costs in multiple forums. The critical determination that a court must make at this stage of the analysis is whether the litigations are “functionally equivalent.” Importantly, functionally equivalent parties can include members of the same corporate family even if based in different jurisdictions. Applied Med. Distrib. Corp. v. Surgical Co., 587 F.3d 909, 915 (9th Cir. 2009). Gallo Factor (2): whether at least one of the Unterweser factors applies. After making an initial determination as to whether each forum’s actions are “functionally equivalent,” courts next look to the factors set out in In re Unterweser Reederei Gmbh, 428 F.2d 888 (5th Cir. 1970). Under the Unterweser factors, U.S. courts analyze whether an ASI is proper by determining whether the foreign litigation would:
Another factor that courts will consider in determining whether the Unterweser factors apply is whether a forum selection clause or other contractual obligation exists that would support an ASI issuance. Even in the absence of such a contractual obligation, a court may find that parties “indicated their desire that [an] action should result in a ‘global resolution.’” TCL Comm. Tech. v. Telefonaktiebolaget LM. Ericsson, et al. (C.D. Cal. 2017). The contractual issues that continue to murk the waters of FRAND licensing exemplify why the actions have become so common in the legal landscape of SEPs. For instance, in Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012) (known as “Microsoft II”), the Ninth Circuit issued an ASI against Motorola’s attempt to seek injunctive relief in Germany. The Ninth Circuit determined that regardless of whether and how the parties calculated a FRAND royalty, Motorola’s contractual commitment to various Standard Development Organizations (SDOs) was incompatible with seeking the German injunction. Notably, in a somewhat similar circumstance, a court denied an ASI when the party bringing the suit was not the SEP licensor. In Apple v. Qualcomm, the Southern District of California denied issuing an ASI, in part because “Apple, unlike Motorola and Qualcomm, ha[d] made no binding commitment that limit[ed]” seeking relief jurisdiction-by-jurisdiction. Apple had filed suits in the U.S., UK, Japan, China, and Taiwan, alleging complaints related to Qualcomm’s licensing practices of its SEPs for 3G and 4G standards. Gallo Factor (3): whether the injunction will have a significant impact on international comity. “Comity of nations” can be defined as “the courtesy and friendship of nations marked especially by mutual recognition of executive, legislative, and judicial acts.” In a recent LinkedIn post, former Federal Circuit Judge Randall R. Rader observed: Too often anti-suit injunctions and anti-anti-suit injunctions are used in an effort to acquire some procedural leverage in global patent litigation. As these lawyerly tactics become more common place, they lose much of their perceived advantage. Meantime courts and judges trumpet the supremacy of their own expertise and power over disputes. Are these tactics having any long-range effect beyond shredding principles of comity? (emphasis added). And indeed, many scholars share Rader’s concern that the potential benefits of ASIs do not outweigh the disrespect they convey to the foreign court enjoined. For instance, the UK Supreme Court has recently ruled on several FRAND issues related to standards governed by the European Technology Standards Institute’s (ETSI’s) IPR policy. The UK court in Unwired Planet v. Huawei ruled it appropriate for the Kingdom to set worldwide FRAND rates. France’s laws govern the ETSI, and France has notably experienced friction with the UK due to Brexit negotiations. Germany has also thrown itself into the fray in resolving how the interpretation of ETSI’s policy in FRAND disputes. Some scholars are concerned that these external factors may exacerbate the use and effect of ASIs in FRAND disputes to be harmful to the countries’ international relations. Stateside, there has been jockeying between courts like E.D. Texas and courts of China, a country that is notably at odds with the U.S. on issues such as securities regulation and data privacy. There is a growing concern that as more countries’ courts become entangled in ASI rulings, the practice will become global and widespread. Indeed, one scholar noted that it was “entirely predictable” that China would begin jockeying for jurisdiction over SEP litigation, as there is no logical reason why the U.S. and UK courts should be the exclusive venues for resolving the disputes. “Anti-Conclusion”: Is it ASIs all the way down? As Professor Jorge Contreras noted in a July research publication: “If there is no theoretical limit to the procedural machinations to which parties can go in [ASI] disputes, it may, indeed, be injunctions ‘all the way down.’” One can observe, for instance, the dispute between Samsung and Ericsson discussed at the beginning of this article. There is little logical reasoning that the Wuhan court will not issue an anti-anti-anti-suit injunction (AAASI) based on the procedural posture and the logic in each of the previous opinions. The question is, where does it all end, and what will result from this “procedural ping pong” to determine what a fair and reasonable royalty for SEPs is?
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