Friday, March 12, 2021

Antisuit follow-up: deference to foreign jurisdictions ranges from 'never' to 'always'; and what role could standard-setting organizations play?

Having received some initial feedback to yesterday's post that outlined seven hypothetical approaches to the current multi-antisuit mayhem, I've identified a couple of aspects of this complex topic that I should address.

First, for the sake of completeness I must point out that the German zero-deference doctrine (sanctity of patents beats everything and warrants self-defense) and the multifactorial analysis performed by U.S. and Chinese courts are not the only two frameworks. There's a spectrum, and the longer it takes to resolve the current antisuit crisis, the more variants we will see.

The extent to which courts in one country defer to injunctions or ongoing SEP-related proceedings in another can range from 0% to 100%. I'll use four words without any intent to allude to a movie title:

  • "Never": Munich Higher Regional Court in Nokia v. Continental (while this regional appeals court didn't rule out that some foreign antisuit injuncions may be tolerable, the impact that an antisuit injunction preventing the enforcement of a potential SEP injunction has on the relevant German case is deemed unacceptable as it's a property right, period)

  • "Rarely": UK Supreme Court in Unwired Planet v. Huawei (that was not an antisuit injunction case, but the top British court took the extreme position that even a defendant who generates only 1% of its worldwide sales in the UK could be forced by a British court into a global portfolio license agreement; while the British standard for antisuit injunctions is structurally similar to the U.S. Gallo/Unterweser framework, such as by requiring that the enjoined foreign action by "vexatious and oppressive," the UK judiciary appears to consider its own country the proper venue for pretty much any SEP litigation, making it hard to imagine that an antisuit injunction obtained by Huawei against Unwired Planet in China would have been deemed acceptable by the judges in the UK)

  • "Sometimes": the U.S. and Chinese approach; comity does play a role, limiting but by no means precluding the grant of antisuit injunctions; while Judge Robart's Microsoft v. Motorola antisuit injunction was affirmed without the slightest concern, a subsequent Samsung v. Huawei antisuit injunction by Judge William Orrick might have been overturned (based on how the appellate hearing went and in light of a question the court asked post-hearing) had the parties not settled

  • "Always": European Court of Justice in Turner v. Grovit (courts of EU member states cannot order antisuit injunctions interfering with the jurisdiction of other member states' courts; the principle of "mutual trust" between EU member states rules this out "even where [the non-moving] party is acting in bad faith with a view to frustrating the existing proceedings")

In Germany it's now an all-or-nothing proposition: "never" with a view to other EU member states because of EU law, and "always" if the goal is to combat an antisuit injunction that has been or may be obtained in a non-EU member state. If someone brings a vexatious and oppressive case in a court of a relatively poor EU member state that normally doesn't get many patent cases, courts in other EU countries must have "trust"--but not if the other case is pending in the Northern District of California?

The EU should do something about Turner v. Grovit because sooner or later that carte blanche will be abused with terrible consequences. In that case, which didn't involve SEPs, the top EU court thought it would be OK to live with contradictory rulings. But what if courts in two (or more) EU member states set different royalty rates between the same parties for the same global SEP portfolio? Or possibly not just different royalty rates, but also other material terms? Then you get inconsistent rulings that could make it impossible for a party to comply with all those orders. On the other end of the range, German courts should further develop their case law and not rule out that a foreign court may make the right decision by prohibiting the enforcement of a German SEP injunction during a rate-setting proceeding that may legitimately resolve the entire global dispute.

As for a way out of the current mess, a loyal reader with a strong professional interest in this subject wrote me that the industry could "potentially" solve the problem at the level of standard-setting bodies. With a strong emphasis on "potentially" I would agree, given how hard it is to build consensus within standard-setting organizations, and only with respect to future standardization processes. The enforcement of whatever patents have been pledged under older FRAND policies would not be affected. Furthermore, implementers are merely third-party beneficiaries, so except in cross-licensing situations (reciprocity), the SEP licensing policies of SSOs could not prevent implementers from seeking antisuit injunctions. They could just deprive implementers of some of their rights if they did so, or authorize certain kinds of retaliation by SEP holders.

Antisuit and especially multi-antisuit injunctions are presumably an interesting topic for standard-development organizations to discuss, and they could, for example, require SEP holders to litigate country by country if they wanted. If.

There'll be more on that front this year. There's Samsung's pending Federal Circuit appeal of Ericsson's anti-antisuit injunction from Texas. Maybe Xiaomi will appeal, or has appealed, Interdigital's German A4SI to the Munich Higher Regional Court. And I would expect a lot of additional antisuit and anti-antisuit filings throughout this year, presumably too many that I could comment on every single one of them, but I'll try to keep an eye on those that could really make a difference.

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