Tuesday, October 6, 2020

The day that international comity died was when the UK Supreme Court handed down its injudicious Unwired Planet ruling

There's a lot of talk now about a couple of Chinese antisuit injunctions (Huawei v. Conversant and Xiaomi v. InterDigitroll) preventing the enforcement of standard-essential patent (SEP) injunctions in Germany and India. I don't know the details of those cases, thus can't take a position on them. I did, however, predict and comment favorably on the antisuit injunctions Microsoft obtained against Motorola in the Western District of Washington (Judge Robart, affirmed by the Ninth Circuit) and Samsung against Huawei in the Northern District of California (Judge Orrick). But I was rather skeptical of automotive supplier Continental's case against Nokia in the Northern District of California (and Judge Koh denied a motion for a temporary restraining order). Anyway, antisuit injunctions are not a Chinese invention for sure.

This is a rather short post because it's simply meant to be food for thought.

We all miss the point if we focus just on those two specific cases involving Chinese smartphone makers. The grand picture is that territorial overreach has become a characteristic of the international patent litigation system that just manifests itself differently depending on the jurisdiction we're talking about:

  • U.S. courts have granted antisuit injunctions for a long time, but they do so very judiciously and based on a comprehensive analysis way more sophisticated than a German appeals court's overly simplistic, black-or-white approach to an anti-antisuit injunction last year.

    Say what you will about the U.S. patent litigation system, but as Judge Robart explained at a Munich conference last year, U.S. judges generally decline to rule on foreign patents, sometimes even when both parties ask them to.

  • The German patent litigation system is in dire need of reform, which may or may not be coming.

    I remember listening to Judge Dr. Peter Tochtermann (now presiding over the 7th Civil Chamber of the Mannheim Regional Court) at an Amsterdam SEP conference in 2012. While Mannheim was many SEP holders' preferred venue at the time, Judge Tochtermann's position at the said conference was that an implementer of a standard could have an availing antitrust defense even if only willing to license a particular patent-in-suit, and only in Germany. But over the years, German courts have become ever less reasonable about SEP enforcement, and nowadays they require a defendant to take a global portfolio license in order to avoid an injunction. That's territorial overreach, plain and simple. And it's part of the "forum selling" German patent judges notoriously engage in, even to the point where they do massive damage to their own country's largest industry (automotive). They're self-serving, irresponsible, and while one might defend some German case law as being "dogmatic," there's actually nothing principled about it. The only principle is to attract patent litigation to certain courts. Judge Albright of the United States District Court for the Western District of Texas is an outlier in the U.S., and German judges would be slightly more subtle at public events, but their extremist rulings speak louder than any roadshow possibly could.

  • I've saved the most important point for last: what opened the floodgates against all warnings was this year's Unwired Planet v. Huawei/Conversant v. ZTE ruling by the UK Supreme Court, upholding the lower courts' decisions according to which UK courts can set global portfolio rates and obligate defendants to take a license on such terms under the threat of a UK patent injunction.

    During the four-day hearing, there actually were moments when I thought those UK judges would see the light, but ultimately they did not, as their unanimous decision shows. They just didn't want to overturn their new colleague Lord Kitchin, who had been the "mastermind" of the appellate decision. So they ignored all warnings that such territorial overreach by the UK would draw a response from other jurisdictions--such as China, where the defendants in those UK cases are based.

What's going on now is a global race to the bottom. The patent system is broken. And international comity in patent litigation is history. We can complain about the chaos resulting from this. My position is that neither the U.S. (where the first major SEP antisuit injunctions came down, but as I wrote above, subject to a complex test) nor whatever jurisdiction issues the latest antisuit injunction (now some focus on China, but who knows who will be next) are the source of the problem--instead, the territorial overreach that German courts have engaged in for years and, even more so, the crazy UK Unwired decision are to blame.

And, by the way, has the European Commission ever done anything to combat territorial overreach in patent litigation? It hasn't because it's always been lobbied heavily by Nokia and Ericsson, whose own patent trolls like Conversant and Unwired persuaded a UK court with little experience in patent matters to hand down a decision that may have thrown the cross-jurisdictional patent litigation world into chaos.

Share with other professionals via LinkedIn: