Tuesday, July 12, 2022

Texas court to hear Apple's grievances about Colombian 5G iPhone/iPad sales and import ban on next week's Thursday (a week later than Apple requested)

Ericsson is presently enforcing a Colombian patent injunction over a 5G standard-essential patent (SEP). As a result, Apple can't sell any 5G iPhones (iPhone 12 and 13) and iPads in Colombia. It can't even import them into the South American country because the injunction simultaneously instructs Colombia's customs authority to seize any shipments. Apple is now trying to get help from the United States District Court for the Eastern District of Texas, and requested an emergency hearing before the end of the week, while Ericsson wanted to firstly complete fact discovery (the deadline is on Friday, July 15). After Apple demanded that a hearing be held this week, Ericsson informed the court that its lead counsel "has tested positive for Covid and due to quarantine requirements would not be available for an in-person hearing before July 18," and that "lead counsel and other members of Ericsson’s legal team are scheduled for an all-day hearing July 21 in another matter."

Judge Rodney Gilstrap then came down closer to Ericsson's than Apple's position. He agreed that Ericsson should get one week from the filing of the motion (which was last Friday) to file a response. While Ericsson wanted the right to file a sur-reply in case of Apple filing a reply brief, Judge Gilstrap does not want the parties to file a reply or sur-reply "unless so ordered by the Court." The hearing will be held on next week's Thursday (July 21, 2022) at 9 AM Central Time.

I doubt that Apple will be able to solve its Colombian problem through its action in Texas. But the Colombian judiciary will be none too pleased that Apple is trying to get a foreign court to interfere with a Colombian matter.

U.S. patents are valid only in the U.S., and therefore enforceable only in U.S. courts.

Colombian patents are valid only in Colombia, and therefore enforceable only in Colombian courts.

I know I was just stating the obvious to all patent practicioners (and even many people with a non-professional interest in the subject), but it bears remembering in this context.

Apple portrayed Ericsson's litigation tactics as outrageous, though it and its counsel have previously done the same, or even worse (it's arguably worse to shop the same patent around in Germany, failing in one court and retrying in another).

There can be special circumstances that justify actions in one jurisdiction relating to what's happening in another. However, any encroachment on another jurisdiction's sovereignty must be carefully considered. Extraterritorial overreach complicates SEP enforcement and has already resulted in some escalation, which is why there are now not only antisuit injunctions but even anti-anti-anti-antisuit injunctions (as absurd as it may sound).

If Apple had previously made the commitment that Ericsson sought in Texas, some cross-jurisdictional interference might be justified. Ericsson wanted Apple to commit that it would take a license (at a rate of $5 per iPhone) if the outcome of the Texas case was that Ericsson acted in compliance with its FRAND licensing obligations when asking for that royalty. However, the Texas court had no other choice but to deny Ericsson's motion to firm up Apple's commitment to be bound by the Texas ruling, as Apple remains free not to take a license even if Ericsson's rate is determined to be FRAND. I expect that question to come up in Ericsson's opposition brief and at next week's hearing.

I'm not sure it was the right decision on Apple's part to seek an antisuit damages order in Texas. This is certain to alienate the courts in Colombia as I mentioned further above--and it's actually in Colombia where Apple should now try to appeal the decision (and have faith in the judges down there, even though this may be the first SEP case in Colombian history). It's also going to be viewed unfavorably by judges in other places whose jurisdiction could be affected in a similar way next time--such as Germany, where this may contribute to a finding that Apple is an unwilling licensee (and may give rise to an anti-antisuit injunction in case Ericsson tries).

The same logic with which courts in Germany and elsewhere (inspired by the Munich court) have granted anti-interference injunctions to fend off foreign antisuit injunctions would also apply to what Apple is trying to get in Texas (antisuit damages). It just takes a broader wording now to prevent foreign antisuit injunctions as well as foreign antisuit damages orders.

With respect to the term "antisuit damages" I would like to point to this post by Professor Thomas Cotter on his Comparative Patent Remedies blog. He notes that it may not be the same as wrongful-enforcement or other consequential damages, as the requested relief "specifically refers only to 'fines, fees, penalties, and costs,' though it also states that Ericsson should 'take financial responsibility for the consequences here of its action in Colombia' (emphasis in original)."

It is indeed unclear right now what Apple would seek from Ericsson. All that we know for sure is that Apple isn't seeking an antisuit injunction, which would be an outright violation of the Colombian anti-antisuit injunction. It could be that in Apple's preferred scenario, Ericsson would have to pick up any contempt-of-court sanctions (contempt fines) from Colombia. In that case there wouldn't be any wrongful-enforcement damages, as Apple would continue to violate the injunction, but Ericsson would bear the costs.

The problem is that at some point Apple's continued contempt of the Colombian court--even if Ericsson had to reimburse Apple for any monetary sanctions--could lead to the imprisonment of Colombia-based Apple executives, and there is no way that the Texas court could decide that Ericsson--not Apple--executives would have to go to jail in Colombia...

Apple is afraid of the Colombian situation repeating elsewhere, and particularly mentioned Ericsson's Brazilian action. Also, the European Court of Justice decided earlier this year that preliminary injunctions must be available to patentees who show a likelihood of success on the merits, so in Germany and other EU member states we may also see SEP injunctions soon (if not in Ericsson v. Apple, then in other disputes).