Thursday, July 28, 2022

U.S. court declines to complicate Ericsson's enforcement of Colombian 5G iPhone/iPad sales ban, warns Apple against sanctions for misuse of court rules

Earlier this month, Ericsson secured a preliminary injunction against Apple in Colombia over a 5G standard-essential patent (SEP), in response to which Apple ran to the United States District Court for the Eastern District of Texas and requested an antisuit damages order. Ericsson's enforcement is ongoing, and the impact can be seen on Colombian store shelves--and is furthermore evidenced by media coverage, such as an opinion piece in Colombia's largest newspaper. It's a high-profile achievement for Ericsson's Colombian counsel, OlarteMoure's Carlos R. Olarte.

While Apple generates only about a fifth of a percent of its global sales in the South American country, the patent license fees Ericsson is seeking on a worldwide basis are modest compared to the average selling price of an iPhone.

Judge Rodney Gilstrap held a motion hearing one week ago, and this morning published his decision. The antisuit part was denied, and only a limited part of a discovery-related request by Apple was granted. Technically, this means the motion was granted-in-part and denied-in-part, but rather tellingly, the docket text of the order emphasizes the denial of the antisuit-related core part of the motion:

"ORDER denying 116 Motion for Relief Against Ericssons Attempt to Use Secret, Ex Parte Actions in Bogota, Colombia to Subvert Proceedings in This Court. Signed by District Judge Rodney Gilstrap on 7/28/2022. (nkl, ) (Entered: 07/28/2022)"

Footnote 5 distinguishes this matter from last year's anti-antisuit injunction (or "anti-interference injunction") in Ericsson v. Samsung, and notes the following:

"Here, Apple invites this Court to inject itself into an ongoing proceeding in Colombia. The Court declines Apple’s invitation."

While expressing "some level of for the frustration visited upon Apple by Ericsson’s strategic conduct in other diverse forums," Judge Gilstrap doesn't think it constitutes "imminent, irreparable harm" to Apple that it may--as a result of enforcement actions in other jurisdictions--have to sit down and negotiate a license with Ericsson. The Texas FRAND case will go to trial in December, and no later than September, Apple and Ericsson have to engage in formal mediation.

It almost sounds like Apple is an unwilling licensee. Ericsson v. Apple cases are pending in three German courts, and should Apple be deemed an unwilling licensee there, it will feel far greater settlement pressure than presently in Colombia.

There's also a procedural issue. Apple should have brought a regular motion as opposed to an emergency motion. "Emergency motions are to be filed only in truly extenuating circumstances and should not be used as a means to secure an expedited briefing schedule and hearing before the Court," Judge Gilstrap clarifies--and "finds that Apple has misused and misapplied the rules for emergency motion practice in this Court." Therefore, he places Apple "on notice that further such conduct will warrant, and likely result in, sanctions against it."

The antisuit damages order that Apple wanted--which wouldn't have formally barred Ericsson from continuing its Colombian PI enforcement, but would have made it costly--was the motion's primary objective. In addition, Apple wanted the U.S. court to "expand the terms of [its] [P]rotective [O]rder to permit Apple to provide its Colombia counsel [who personally attended last week's hearing in Texas] with copies of the Colombia filings Ericsson recently produced in this litigation together with the two Ericsson-Samsung licenses also produced." While I've seen § 1782 discovery requests for use in foreign litigation on a number of occasions, this one seemed a bit odd to me. According to the order, Apple withdrew "its request to share license agreements with Colombian counsel." So, in the end it was just about 76 documents from the Colombian part of the dispute--where Ericsson had brought multiple ex parte motions--that Apple listed in a notice last week. Pursuant to Judge Gilstrap's order, "[s]uch documents shall be delivered by Apple to its Colombian counsel only upon condition that those receiving them are fully bound by, and subject to, the Protective Order entered in this case."

Arguably, this consolation prize for Apple also constitutes some form of interference with proceedings in a foreign jurisdiction. From a U.S. perspective, defendants' limited access to ex parte injunction requests in Colombia may appear unfair. But if that's the law in Colombia, it might be appropriate to defer to that country's legislature, given that the U.S. proceedings aren't affected. And it's hard to see how that part of Apple's motion would satisfy the standard for emergency motions in the Eastern District of Texas, which the antisuit part failed to do.

Whether Apple will get any mileage out of the provision of those documents to its Colombian counsel is doubtful.

If Apple wants to sell 5G iPhones and iPads in Colombia again, it either has to successfully appeal in Colombia--or take a license, which will be the outcome anyway (the question is just when and on what terms).

Finally, let me show you the court order: