Tuesday, December 29, 2020

Samsung won the race to the courthouse against Ericsson--but notoriously patentee-friendly Judge Gilstrap acts as if the U.S. were a banana republic

It's not always true that "the second is the first of the losers," but when there are only two in a race, then there's simply one winner and one loser. On December 11, Ericsson brought a new FRAND lawsuit against Samsung in the troll-friendly Eastern District of Texas. The parties had been negotiating a renewal of their patent cross-license, but their positions were apparently too far apart for them to come to an agreement this year. Therefore, they need guidance from courts to resolve their dispute.

It now turns out that Ericsson wasn't first to go to court. Instead, Samsung pre-empted Ericsson by almost a week, filing a case with the Wuhan Intermediate People's Court in China as an Ericsson filing in Texas revealed yesterday.

Not only did Samsung seek a global FRAND determination in China but, shortly after Ericsson's filing in the Eastern District of Texas, the Korean electronics giant sought an antisuit injunction in China, which was granted on the morning of December 25, says Ericsson.

According to Ericsson, "the Wuhan injunction (1) bars Ericsson from seeking injunctive relief on 4G and 5G SEPs around the world (including in [the Eastern District of Texas]); (2) bars Ericsson from seeking a FRAND adjudication anywhere other than Wuhan (including in [the Eastern District of Texas]); and (3) bars Ericsson from seeking an anti-anti-suit injunction requiring Samsung to stop using the Wuhan Court to neutralize Ericsson’s legal remedies in other forums, including [the Eastern District of Texas].

The third item is an anti-anti-suit injunction: at Samsung's request, the Chinese court barred Ericsson from seeking an anti-antisuit injunction. That is, by the way, consistent with something I had written in October: antisuit injunctions are of no more value unless they are accompnied by anti-anti-antisuit injunctions. In that same post I lashed out at the insansity of the global patent litigation system and proposed "a more mathematical notation" like "A3SI" so one wouldn't have count all those consecutive occurrences of "anti" all the time. Samsung had obtained everything it needed to ensure that the Chinese court could set a global FRAND rate without Ericsson undermining the Chinese proceedings by means of a U.S. antisuit injunction, but Ericsson simply disregarded the Chinese decision and filed an anti-antisuit motion in the Eastern District of Texas yesterday (December 28, 2020; this post continues below the document):

20-12-28 Ericsson Motion fo... by Florian Mueller

It's brash and brazen to respond to an antisuit injunction from a court in one country (here, China) by rushing to a court in another venue (here, the Eastern District of Texas) and doing precisely what's prohibited. But Ericsson made this choice that many other litigants would not have dared to make. Ericsson simply didn't want to give up the battle over the FRAND forum. If Ericsson respected the Chinese order, it would have to withdraw its Texas complaint. Instead, Ericsson decided to disrespect China as a jurisdiction. If anyone ever asked me to provide an example of "contempt of court" in a cross-jurisdictional litigation context, I couldn't possibly come up with a more illustrative one than what Ericsson has just done.

Ericsson's message to Judge Gilstrap was that it needed not only a preliminary injunction but, until one would issue, a temporary restraining order (TRO) in order to keep its Texas case alive. Given that the Chinese injunction had already come down, Ericsson's motion fails to specify why it needed a decision within a matter of hours and without giving Samsung a chance to respond. Ericsson presumably relied on Judge Gilstrap's wilingness to do pretty much anything that attracts patent cases to, and keeps them in, his court.

Here's Judge Gilstrap's order granting Ericsson's motion all the way (this post continues below the document):

20-12-28 Order Granting TRO... by Florian Mueller

Three aspects of this order are particularly troubling:

  1. Judge Gilstrap knew that Ericsson was violating an order by another court in bringing this motion. I'm sure he'd be disappointed if a colleague of his in another jurisdiction saw that a party brings a motion in direct contravention of an order by Judge Gilstrap. But a patent extremist whose number one ambition it is to preside over as many patent cases as possible, and to have a reputation for helping patent holders in any way he can, obviously wouldn't care.

  2. While a TRO should merely preserve the status quo for a (typically two-week) period until a decision is made on whether to grant a preliminary injunction, Judge Gilstrap granted Ericsson a TRO that goes way beyond: not only is Samsung required to indemnify Ericsson for any fines imposed by the Chinese court (which is a far more problematic order than just asking Samsung not to take further steps in China) but Judge Gilstrap also orders Samsung to "send to Ericsson, within 24 hours of [yesterday's order], by email a copy of all filings made or received in the Wuhan Action" and to do so "promptly" with respect to all future filings.

    Give me a break. This is not just outrageous. It's totally insane. What does a requirement to provide court documents from another jurisdiction have to do with the objective of a TRO to preserve the status quo during a judicial process?

    No, Judge Gilstrap, the U.S. is not a banana republic. Decisions like this can bring an entire country--the world's oldest democracy--into disrepute on the world stage.

  3. The briefing schedule he set for the preliminary injunction (which would have to replace the TRO shortly) is also reflective of his fundamental unfairness. He entered that order yesterday and gave Samsung until 5 PM local time on New Year's Day (!), while giving Ericsson another four days for a reply brief. Any remotely reasonable decision would at least have given Samsung signicantly more time for its opposition filing than Ericsson for the reply brief. But what's an even clearer indication of Judge Gilstrap's unbalanced approach is that the page limit for Samsung's opposition brief and for Ericsson's reply brief is the same: 15 pages. This means Ericsson got to file a 23-page motion, but Samsung gets only 15 pages to respond, and to those 15 pages Ericsson gets just as much space to reply.

    It's a safe assumption that the PI process (briefing and January 7 hearing) is going to be completely farcical. It's a foregone conclusion that Judge Gilstrap is going to be 100% unreceptive to even the best factual or legal argument Samsung's lawyers could possibly make. He's determined to convert the TRO into a PI. The East Texas proceeding can't be taken seriously, and the real fight will only begin when Samsung appeals Judge Gilstrap's PI decision to the Fifth Circuit. (A TRO can't be appealed.)

The Fifth Circuit is among the more antisuit-friendly circuits in the U.S.--as Ericsson's motion accurately suggests. But the fact that Samsung's Chinese complaint was filed almost a week prior to Ericsson's Texas case is going to matter. It won't matter in Judge Gilstrap's court, I guess. But it will help Samsung at the next procedural stage.

In the meantime it remains to be seen what the Chinese judiciary will do. Samsung would have to reimburse any fines to Ericsson under Judge Gilstrap's order, which may however be overturned soon (I'm sure that at least some parts are so outrageous that the appeals court is not going to affirm them). Sooner or later, the Chinese court may be able to penalize Ericsson for its extremely disrespectful conduct.

My own position is that no court anywhere in the world should set a global FRAND rate unless so requested by both parties or unless the parties contractually agreed upon a judicial determination. It doesn't matter whether it's a UK court, U.S. court, German court, Chinese court, or a court on Mars. Each court should normally make determinations only with respect to patents that are valid and enforceable in that particular court's jurisdiction. And no defendant should have to enter into a global license only to avoid an injunction in one jurisdiction.

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