A Secret Injunction – Ericsson Granted “Anti-Interference” Injunction Against Samsung in Global SEP Dispute

By Greg Ward, Senior Associate and Angus Milne, Solicitor

Overview

The decision of the District Court in the US means that Ericsson can continue to assert its US SEPs, despite an anti-suit injunction obtained by Samsung in secret parallel proceedings held in China.

The dispute throws into sharp relief the trend facing both SEP holders and SEP implementers – the increasing deployment of anti-suit and even anti-anti-suit injunctions in SEP litigation in courts around the world.

Case Summary

The Ericsson v Samsung dispute relates to telecoms standard essential patents (“SEPs”). The parties had entered a cross-licence for SEPs in 2014, however the licence was due to expire at the end of 2020 and re-negotiation had failed to reach a successful conclusion. In this context, on 7 December 2020, Samsung filed a Civil Complaint in Wuhan, China, to determine the terms of a new global licence for SEPs on fair, reasonable and non-discriminatory (“FRAND”) terms. No notice of this complaint was provided to Ericsson.

On 11 December, Ericsson (unaware of the Wuhan proceedings) sued Samsung in the District Court for the Eastern District of Texas (the “District Court”) for violating contractual obligations to negotiate in good faith and to license SEPs on FRAND terms. On 14 December, Samsung filed an anti-suit injunction application in Wuhan; again the application was filed without notice to Ericsson. Samsung eventually notified Ericsson of the existence of the action in Wuhan (but not of the anti-suit injunction application) on 17 December.

On Christmas Day (25 December), Ericsson received notice of the granted anti-suit injunction. In granting the anti-suit injunction, the Wuhan Intermediate People’s Court (the “Wuhan Court”) restricted Ericsson from seeking global injunctive relief on its 4G and 5G SEPs. The Wuhan Court’s order prohibited Ericsson from seeking a FRAND ruling anywhere other than Wuhan, and prohibited Ericsson from seeking an anti-anti-suit injunction to neutralise the Wuhan Court’s ruling. To enforce the anti-suit injunction, fines could be levied against Ericsson for breaches.

Ericsson didn’t take long to react and, on 28 December, successfully applied for a temporary anti-anti-suit injunction (or “anti-interference” injunction) in the District Court allowing its FRAND claims to continue.

On 11 January 2021, the District Court made permanent the order barring Samsung from enforcing the anti-suit injunction that it had secretly obtained from the Wuhan Court. The reasons for the US ruling included that “(a)llowing Samsung to enjoin Ericsson from asking this Court to adjudicate legally cognizable claims under United States law would frustrate this Court’s compelling interest in ensuring that litigation within its legitimate jurisdiction proceeded in this forum”. The issues before the Wuhan Court and the District Court were considered by the District Court to be different, and the anti-suit injunction from the Wuhan Court was considered by the District Court to impose an inequitable hardship by preventing Ericsson, without notice, from attempting to obtain redress for claims it has the right to bring under US law.

The District Court therefore enjoined Samsung from taking action in the Wuhan Court that would interfere with the US action, or that would interfere with the right of Ericsson to assert their US patent rights. Samsung were also required to indemnify Ericsson from any fines (or other penal assessments) resulting from enforcement of the Wuhan Court’s anti-suit injunction in respect of actions taken by Ericsson in the US action.

Impact Analysis

The use of anti-suit and anti-anti-suit injunctions appears to be increasingly relied upon in global SEP disputes. The present case follows a similar pattern to Xiaomi v InterDigital, in which the Wuhan Court granted Xiaomi an anti-suit injunction against InterDigital and, in response, InterDigital successfully obtained an anti-anti-suit injunction from the Delhi High Court in India.

The Wuhan Court can be seen as particularly attractive to those seeking anti-suit injunctions because of the apparent willingness of the Wuhan Court to accept global SEP actions and grant anti-suit injunctions without notice to the respondent. However, both anti-suit and anti-anti-suit injunctions are available in a number of courts and jurisdictions. Recent disputes have seen similar injunctions obtained from the Chinese Supreme People’s Court (in Huawei v Conversant) and the Munich Higher Regional Court (in Nokia v Continental).

It is therefore clear that the use of anti-suit and anti-anti suits in SEP cases is a growing trend across a number of key patent jurisdictions. The use of such global suits points to the increasingly assertive approaches to deciding global SEP cases followed in major patent jurisdictions, with the decision of the UK Supreme Court in Unwired Planet v Huawei (see here for a summary of this decision) providing a further demonstration of this assertive approach in another key patent jurisdiction.

There are tactical advantages available to parties who are ‘first to file’, in obtaining anti-suit injunctions, which may encourage a rush to court for potential litigants. The tactical advantage may be offset to some degree by the counterbalancing impact of anti-anti-suit injunctions, albeit courts vary in their approach to granting these remedies.

On a broader scale, the cases referred to above highlight the use of forum shopping in global SEP litigation. This may bolster calls from some quarters for the development of an international tribunal for the purpose for adjudicating FRAND licensing rates for SEPs.