Samsung has asked a US judge to delay an injunction on two standard-essential patents Huawei won in China.
In January, the Intermediate People’s Court in Shenzhen ruled Samsung infringed two of Huawei’s SEPs involving 4G wireless standards and failed to comply with obligations to negotiate on fair, reasonable, and non-discriminatory (FRAND) terms.
As Samsung’s last move in years-long legal battle over licensing deals for the two smartphones makers’ portfolio of SEPs, Samsung asked U.S. District Judge William Orrick to delay Huawei’s enforcement of the Chinese injunction while the two companies fight it out in his courtroom.
In the meantime, Samsung is appealing the Shenzhen court’s ruling.
Anti-Suit Injunction Is Becoming A Popular Mechanism To Manage Multi-jurisdictional SEP Litigation
Litigation concerning standard-essential patents (SEPs) has become increasingly global, with parallel litigation occurring over the same issues in multiple jurisdictions throughout North America, Europe, and Asia. For example, Apple and Samsung litigated their smartphone patent dispute in the U.S., Germany, France, Italy, the Netherlands, UK, Korea, Japan, and Australia. As a result, litigant have sought mechanisms to coordinate these actions both to manage costs and to avoid inconsistent and incompatible results. One procedural mechanism that has been used to manage multi-jurisdictional litigation in SEP disputes in the anti-suit injunction.
An anti-suit injunction is an interlocutory remedy issued by a court in one jurisdiction which prohibits a litigant from initiating or continuing parallel litigation in another jurisdiction. Anti-suit injunctions thus contain litigation costs and reduce the likelihood of inconsistent results by ensuring that issues are resolved in one jurisdiction before they are litigated elsewhere.
In the SEP context, anti-suit injunctions can be particularly powerful for prospective licensees alleging that SEP holders have failed to comply with their FRAND licensing obligations. Specifically, a court reviewing a SEP holder’s compliance with a FRAND licensing commitment may issue an anti-suit injunction to prevent the SEP holder from bringing foreign patent infringement claims until the FRAND licensing dispute has been resolved in the issuing jurisdiction.
Currently, there are three approaches for analyzing anti-suit injunctions prohibiting foreign suits. The three approaches are commonly referred to as the liberal, the conservative, and the middle-ground approach. The liberal approach as been adopted by the Fifth, Seventh, and Ninth Circuits, while the conservative approach has been adopted by the District of Columbia, Third, Sixth, and Eighth Circuits. The middle-ground approach has been adopted by the First and Second Circuits.
Two Threshold Criteria
The three approaches begin with two common threshold criteria. Specifically, (1) whether the parties are the same; and (2) whether a resolution of the U.S. action is determinative of the foreign action. These threshold criteria have been construed broadly and are satisfied when the party seeking the injunction is significantly involved in or affected by the foreign litigation and the “resolution of the case before the enjoining court [would] be dispositive [for] the enjoined action.” China Trade and Dev. Corp v. M. V. Choong Yong (2d Cir. 1987, 36).
Divergence
Once the threshold criteria have been satisfied, the approaches diverge.
Under the liberal approach, the court may grant an anti-suit injunction if any one of the following factors is sufficiently satisfied: “whether the foreign action frustrates a policy of the United States; (2) whether the foreign action is vexatious; (3) whether the foreign action is a threat to the rem or quasi in rem jurisdiction of the U.S. court; (4) whether the proceedings in the other forum prejudice other equitable considerations; pr (5) whether adjudication of the same issues in separate actions would result in delay, inconvenience, expense, inconsistency, or a race to judgment.”
Under the conservative approach, courts emphasize “comity dictates the foreign anti-suit injunctions be issued sparingly and only in the rarest of cases.” Goss Int’l Corp. v. Man Roland Druckmaschinen Aktiengesellschaft (8th Cir. 2007, p.359) (quoting Gau Shan Co. v. Bankers Trust Co. (6th Cir. 1992, p.1354)). Accordingly, courts adopting the conservative approach usually rely exclusively on “whether the foreign action frustrates a policy of the United States” and “whether the foreign action is a threat to the rem or quasi in rem jurisdiction of the U.S. court” because these factors are critical enough to justify the compromise of deeply held principles of international comity.
Under the middle-ground approach, there is “a rebuttable presumption against the issuance of an [anti-suit injunction]” due to comity concerns. Quaak v. Klynveld Peat Marwick Goerdeler Bedrijfsrevisoren (1st Cir. 2004, p.18). The presumption can be overcome by analyzing the five factors elaborated by the liberal approach and weighing them against competing comity concerns. Id.
Finally, under all three elements, if the court determines that the threshold criteria are satisfied and the pertinent factors weigh in favor of issuing an anti-suit injunction, the court considers whether the anti-suit injunction’s “impact on comity is tolerable.” E. & J. Gallo Winery v. Andina Licores S.A. (9th Cir. 2006, p.991).
China Antitrust 