Wednesday, October 9, 2019

Judge Koh denies Continental's anti-anti-antisuit TRO motion against Avanci, Nokia, Sharp, others: complex legal issues require hearing from defendants

Late Tuesday afternoon by local time, Judge Lucy H. Koh of the United States District Court denied automotive supplier Continental's motion for a temporary restraining order (TRO) against the Avanci patent pool firm and several of its members (Nokia, Sharp, Conversant, Optis). The motion had been brought earlier in the day and sought not only to prevent defendants from pursuing injunctive relief against Continental supplier Daimler but also to bar them, by means of an ex parte TRO, from seeking yet another anti-antisuit-injunction injunction (AAII) in Munich or from another German court.

I have uploaded the decision to Scribd, but it is short enough that I'll copy the text of the decision below and insert my commentary:


On June 12, 2019, Plaintiff filed a motion for anti-suit injunction against some of the defendants in the instant case. ECF No. 32. On July 23, 2019, Plaintiff's First Amended Complaint added an additional defendant. ECF No. 97. On September 10, 2019, the Court denied without prejudice Plaintiff's motion for anti-suit injunction. ECF No. 173. The Court stated that, if Plaintiff elected to refile its motion for anti-suit injunction, Plaintiff should do so against all Defendants, and that all Defendants should file one consolidated opposition. Id. As of October 8, 2019, Plaintiff has failed to file a new motion for an anti-suit injunction. Instead, Plaintiff filed an ex parte application for a temporary restraining order and order to show cause why an anti-suit injunction should not issue against Defendants on October 8, 2019. ECF No. 185.

[COMMENT] Not only is Judge Koh an extremely analytical and meticulous judge but she also has a reputation for being a very strict judge. Here, she says Conti filed a motion for a TRO instead of a motion for an injunction. While she hadn't expicitly authorized a TRO motion, it is practically a motion for an injunction, given that any TRO would either have to be converted into an injunction after a couple of weeks or it would automatically go out of effect.

In the exemplary SEP-related antisuit case in the Ninth Circuit, Microsoft v. Motorola, Judge James L. Robart of the United States District Court for the Western District of Washington entered an injunction before his original order--a TRO--would have expired. A technical difference is that Microsoft had filed a motion for a preliminary injunction (PI) simultaneously with its motion for a TRO. And an important procedural difference is that even the TRO didn't come down without the non-movant being heard. [/COMMENT]

Federal Rule of Civil Procedure 65(b) provides that a court may issue a temporary restraining order ("TRO") without notice to the adverse party in limited circumstances where "specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant result to the movant before the adverse party can be heard in opposition." Fed. R. Civ. P. 65(b)(1)(A) (emphasis added). The movant must also certify in writing any efforts made to give notice and the reasons why it should not be required. Fed R. Civ. P. 65(b)(1)(B).

Plaintiff has not provided specific facts in an affidavit or a verified complaint that show why irreparable harm will result to Plaintiff if the Court does not issue a temporary restraining order before Defendant can be heard in opposition. Nor has Plaintiff certified in writing any efforts made to give notice and the reasons why it should not be required. The Court therefore DENIES Plaintiff’s ex parte application for a temporary restraining order and order to show cause why an anti-suit injunction should not issue against Defendants. Additionally, the Court DENIES as moot Plaintiff’s corresponding motion to seal, ECF No. 184.

[COMMENT] Conti's motion came with a legal memorandum, with three declarations, and with a host of documents attached to them. But any such requirement is qualitative, not quantitative. What Conti did make clear is that, absent an anti-anti-antisuit TRO, the other parties would likely move for another anti-antisuit injunction in Germany (and there, almost certainly in Munich, where Nokia has already succeeded twice and an appellate hearing has been scheduled for Halloween). Obviously, with a German anti-antisuit order in place against the pursuit of a U.S. antisuit injunction, the three Avanci members already suing Daimler in Germany--Nokia, Sharp, Conversant (a total of 16 cases between the three)--, and possibly others, will be free to seek and enforce injunctive relief against Conti's customer, which would most likely force Daimler into a license deal on Avanci's supra-FRAND terms.

What Judge Koh's order makes clear is that she wasn't satisfied with how Conti described the situation. She might have missed an affidavit (that word is part of a passage she highlighted when quoting the Federal Rules of Civil Procedure) specifically for the purpose of coherently and compellingly laying out the facts that Conti believes warrant a TRO. Indirectly and implicitly, Conti did; but that wasn't enough.

What might also have played a role is Conti's footnote that the ten already-pending German Nokia cases were, for the time being (awaiting the outcome of the Munich anti-antisuit appeal) excluded. Those are the cases were the Avanci group of companies is most likely to obtain and enforce a first German SEP injunction against Daimler. But due to the Munich anti-antisuit order, Conti had to exclude them (otherwise a contempt proceeding in Munich would surely have started). So the TRO motion was just about five Sharp cases, one Conversant case, and any future or unknown cases, not to the ten more advanced Nokia cases.

Conti's TRO motion was very reasonable in terms of the breadth of the relief sought--unlike the original antisuit motion, which I had criticized for being ridiculously overreaching. But they still face a couple of problems they could have avoided by making better and faster decisions earlier on. There's only an indirect connection--one has to walk around a few corners to reach the destination--between the plaintiff in the U.S. case, a Michigan-based Conti subsidiary, and the legal entities facing a potential indemnification claim from Daimler. They could have avoided this by having the German group parent, and/or some other legal entities, join the U.S. entity in the NorCal case. Another problem here is timing: they should have brought their U.S. complaint far earlier, and probably should have targeted more Avanci members from the get-go (such as Sharp) if part of the plan was to seek a U.S. antisuit injunction against German SEP cases. Judge Koh's order doesn't mention or allude to timing. I believe she simply didn't even reach that point because the causal nexus between the denial of a TRO and alleged irreparable harm from those German Avanci companies v. Daimler cases was missing, and that part was dispositive in and of itself. [/COMMENT]

Given the complexity of the legal issues raised in Plaintiff’s application, the Court finds that hearing from Defendants will likely be necessary for resolution of any future application for a temporary restraining order.

[COMMENT] That final paragraph of the order suggests that even if Conti had gone to extreme lengths to provide an affidavit on the facts requiring a TRO without a hearing, Judge Koh would almost certainly have denied the motion because this is a complex matter that she's not going to decide in violation of the principle of audiatur et altera pars.

An antisuit order is an extraordinary remedy, and an ex parte (= without hearing the other side) TRO is no less extraordinary. What Conti asked for would have been doubly extraordinary--actually, extraordinariness even grows exponentially.

Judge Koh's denial of the motion means she declines any invitation to go to a sandbox and play with her colleagues in Munich. While the Munich I Regional Court appeared fairly passionate about those anti-antisuit injunctions, Judge Koh is above the fray. She's never allowed anyone to use her court as a tool. In that context, I remember how Judge Robart in Microsoft v. Motorola, a case that really made FRAND history, told counsel for both parties of an Irish proverb that when the chess match is over, the king and the pawns return to the same box--and complained that he felt his court was basically being used as a pawn in a global chess match. The presiding judge of the panel that hears Munich patent appeals has a mentality that appears closer to Judges Koh and Robart than the lower Munich court, so if the German appeals court, too, wants to stop playing transoceanic torpedo games, the two antisuit orders currently in force in Germany may be lifted on Halloween.

Both Conti and Nokia face difficult decisions now. Conti could easily derive a motion for a preliminary injunction from its just-failed motion for a TRO, and refile--but they might be well-advised now to firstly await resolution of the German appeal (in three weeks from tomorrow). Nokia, Sharp and Conversant could show Conti's latest U.S. attack on its German cases to the lower Munich court immediately and seek a new anti-antisuit order, which they'd almost certainly be granted, but they, too, might await the Halloween hearing. [/COMMENT]

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