Monday, February 5, 2018

Samsung asks U.S. court to bar Huawei from enforcing a Chinese standard-essential patent injunction

So far, Huawei v. Samsung hasn't been given much attention (not even on this blog), though it definitely is a major dispute when the two largest Android device makers--or, from another perspective, the largest Korean company and the leading Chinese mobile device maker--are suing each other in the Northern District of California over standard-essential patents and, especially, the related FRAND (fair, reasonable and non-discriminatory) licensing issues. The year before last I subscribed to automated notifications and couldn't find anything exciting there until I spotted this in my inbox:

"Samsung's Motion to Enjoin Huawei from Enforcing the Injunction Issued by the Intermediate People's Court of Shenzhen"

Professor Thomas Cotter, on his Comparative Patent Remedies blog, provided multiple links to reports on the injunction decision.

An antisuit--or, more precisely, anti-enforcement--injunction relating to the enforcement of a foreign standard-essential patent injunction is not unheard of, much less in the Ninth Circuit. Indeed, Samsung's motion against Huawei is, by and large, a sequel: Microsoft v. Motorola Reloaded. The only noteworthy difference is that this involves two Asian companies, not a negotiation between two U.S. companies as in the Microsoft case.

The irony of fate here is that either of the two firms that represented Microsoft (Sidley) and Motorola (Quinn Emanuel) now has the shoe on the other foot. It happens all the time that firms have to take different positions in different cases, but a role reversal like this rarely occurs. Quinn Emanuel, which unsuccessfully opposed the "Robart injunction" almost six years ago, has now brought that kind of motion on Samsung's behalf, while Sidley, which had a spectacular success in the patent litigation arena when it barred Motorola from taking some key Microsoft products (most notably Windows and the XBox) off the German market, is now--on Huawei's behalf--on the opposing side. Thanks to my independence as an app developer who quit consulting in 2014, I can and will take positions on the current case that are simply consistent with the ones I had back in 2012.

Here's Samsung's motion (this post continues below the document):

18-02-01 Samsung Motion to Enjoin Huawei by Florian Mueller on Scribd

In the build-up to Judge William Orrick's decision, there'll be more opportunities to discuss the legal theories and case-specific facts, especially after Huawei's opposition brief. But I'd like to highlight a few interesting aspects already:

  • Huawei itself made the first filing in the Northern District of California, and it included infringement as well as FRAND rate-setting issues, though Huawei sought an immediate stay of the former, which looked a bit like procedural gamesmanship. Samsung responded with FRAND and patent infringement/validity claims. By contrast, in Microsoft v. Motorola it was Microsoft (the SEP defendant) who won the race to the courthouse and brought a FRAND case in the Western District of Washington prior to any SEP infringement claim by Motorola in any jurisdiction whatsoever.

    The fact that Huawei itself--the enforcing party--wanted the U.S. court to make a FRAND determination is a strong argument for saying it should now let the U.S. court do its job and not seek decisive leverage in China before. Otherwise the FRAND issues in the U.S. will be--in a problematic sense--"mooted" by a settlement at the threat of a Chinese injunction, which (as Samsung's motion points out) would even affect the U.S. market because of Samsung manufacturing devices for the whole world in China. Those two differences from Microsoft v. Motorola--that the enforcer himself brought the FRAND case and that the U.S. market will be affected by a foreign injunction--appear more important to me, at least for the time being, than the fact that this is not a U.S.-U.S. dispute like Microsoft v. Motorola.

  • It surprises me that, according to a sworn declaration attached to Samsung's motion, Huawei filed its Chinese cases the day after the U.S. filing. Due to the time difference, the filings may have been more or less simultaneous, but calendar dates can play a role, and seeking an antisuit injunction in an earlier-filed case is more likely to succeed than in a later-filed one.

  • Footnote 8 of the motion clarifies that Samsung's motion is distinguishable from last year's denial of an antisuit injunction sought by Qualcomm against Apple in the Southern District of California. Clearly, Samsung's motion against Huawei is the closest thing so far to Microsoft v. Motorola, while Qualcomm's motion was all about precluding Apple from pursuing antitrust cases (not from enforcing patent injunctions) in multiple jurisdictions. Qualcomm's motion was broader, and the nature of the issues and other factor were totally different.

  • Samsung accuses Huawei of "making trivial concessions over the parties' long history of negotiations" and then filing various cases, including the ones that led to two Chinese SEP injunctions. Based on what I read on the Comparative Patent Remedies blog, Huawei alleges that Samsung was slow-rolling the negotiations. Since I have no idea what exactly happened, it could be that there is truth in either party's historic account. Whether someone is constructive in negotiations is a question of both substance and timing. The hurdle for claiming that someone is an "unwilling licensee" must be reasonably high, however, and at this juncture, Samsung clearly meets that definition by the standards of all jurisdictions except the Chinese district in which Huawei won its injunctions. Samsung appears to be fine with the U.S. district court resolving the FRAND issues. That makes it a willing licensee, unless and until it refuses to take a license even after such a determination and a liability finding. If Samsung did that, then even Judge Posner, the FRANDliest judge I could think of, would potentially deem a patent injunction warranted. But there is no indication right now that this would ever be an issue in this dispute.

How will Huawei respond to that motion? Is Sidley going to downplay the importance of Microsoft v. Motorola? Without totally understating or outright misrepresenting what the appeals court had decided back then, I can't see how the two cases could be distinguished to Huawei's benefit. That's why my current prediction (subject to change if important new facts are put on the table or major new decisions come down) is that Judge Orrick will grant Samsung's motion and that Huawei will try but fail to get Judge Orrick reversed by the Ninth Circuit. Maybe this will go all the way up to the Supreme Court then.

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