Sunday, January 22, 2023

Burgeoning IP and antitrust jurisdiction: Brazil's Superior Court of Justice allowed Ericsson to enforce preliminary injunction against Apple over FRAND-pledged standard-essential patent

The dispute between Ericsson and Apple that got settled last month has put two Latin American jurisdictions on the standard-essential patent (SEP) litigation map:

Here's the original decision (in Portuguese):

December 6, 2022 ruling on internal appeal ("agravo interno") in Ericsson v. Apple by Brazil's Superior Tribunal de Justiça (unanimous decision by Reporting Judge Antonio Carlos Ferreira, Presiding Judge Raul Araújo, and Judge Marco Buzzi)

A recording of the STJ ruling is available on the court's YouTube Channel (starting at 29:39).

Little was known about the Brazilian proceedings during the course of last year. About a year ago, I reported on the fact that some PI motion(s) had been filed, and followed up when Apple mentioned in a U.S. court filing that Ericsson was also seeking a PI against a Brazilian Apple distributor.

The fact that the Brazilian STJ decision was rendered three days prior to the global Ericsson-Apple settlement is certainly interesting, but there also was a Texas trial underway, so I believe it was one relevant factor that informed the parties' positions (but obviously not the only one). Looking beyond this particular dispute, it is fair to say that Latin America is an increasingly interesting continent for technology law (IP and antitrust), and Brazil is an up-and-coming jurisdiction for technology disputes:

  • The reasoning behind the Brazilian STJ's decision was that Apple should not be allowed to continue to infringe Ericsson's patents without paying any royalties. A court in Rio de Janeiro had granted a PI over a 5G patent (Reporting Judge: Claudio Dell'Orto), requiring Apple to either leave the Brazilian market or to make payments in accordance with the prior global patent license agreement (apparently $200 million per year). But on a Sunday on which Brazil's most recent presidential elections began (October 2, 2022), enforcement was stayed. Licks Attorneys--the firm that according to my research has represented patent holders in all (23) information and communications technology patent infringement cases in Brazil so far--kept on fighting and got an unusually soon hearing date (December 6).

    The key rationale on the STJ's part was that there is no reason why PIs should not be granted over SEPs (with the FRAND pledge being deemed a matter of contract law that does not weigh against injunctive relief), and to encourage negotiations. Ericsson never wanted the Brazilian courts to set a royalty: it sought to stop infringement until a new agreement would be struck.

    Under the STJ's decision, Apple would not have been required to make royalty payments based on its global use of Ericsson's patent portfolio, but would have had to compensate Ericsson for the use of its patents in Brazil (to the tune of $3 per device, with the concomitant inconvenience of having to make royalty reports). In other words: no more hold-out. Damages owed at the very end of infringement litigation were not considered an adequate remedy.

    That reasonably IP-friendly judicial philosophy contrasts with what you find in some other jurisdictions. For instance, a Dutch court denied Nokia a PI against OPPO, and the same judge had previously denied Ericsson one against Apple even over a non-SEP, based on a balancing of the hardships.

    That said, it's not a cakewalk for plaintiffs: a PI is granted only if there is a strong prima facie showing of a likelihood of success on the merits. The threat of an injunction does, however, bring infringers to the negotiating table.

  • On Thursday I reported on a decision by Brazil's antitrust authority (CADE) to open formal investigations of Apple's App Store terms and policies further to a complaint by MercadoLibre (Mercado Livre in Portuguese) and another regional e-commerce company, Clique.

  • In October, I was favorably impressed with CADE's well-reasoned decision to grant unconditional clearance to Microsoft's acquisition of Activision Blizzard.

Getting back to Ericsson v. Apple, there was also a 4G PI that likely would have become enforceable in the wake of the STJ decision in the 5G case. And on the day of the STJ decision (December 6), a Rio de Janeiro district court entered a PI against Apple over two non-SEPs.

Three other information and communications technology patent holders also obtained PIs in Brazil: DivX (against Netflix and Amazon), Philips (against TCL), and G+ Communications against Samsung. In a procedurally unusual case, Disney sought a declaratory judgment of non-infringement against DivX (apparently out of fear of being enjoined there), but a settlement fell into place shortly thereafter.

An injunction that VoiceAge EVS obtained against HMD in Brazil was mentioned in a post on that dispute last year.

Sophisticated patent holders increasingly bet on Brazil, and I have a hunch that it won't be long before this blog will learn about the next interesting complaint or decision in that jurisdiction.