China Stands Firm: Developments in SEP Anti-suit Injunctions

By Angus Milne, Solicitor

Recent developments have demonstrated the need for a political solution to the escalating use of anti-suit injunctions in standard essential patent (SEP) litigation. But they also demonstrate how far away such a solution appears to be.

Anti-suit injunctions in SEP litigation

In SEP litigation, including infringement proceedings and determinations of fair, reasonable and non-discriminatory (FRAND) licensing terms, issues relating to overlapping national jurisdiction are increasingly common. For background to the increase in overlapping national jurisdiction in SEP litigation, see the article ‘Chinese Courts Confirm Jurisdiction to Set Global FRAND Terms‘ by Greg Ward.

One approach to resolving such overlapping jurisdiction between two or more national courts is for one court to issue an anti-suit injunction. In essence, this is a court order which seek to prevent a litigant from bringing or continuing with legal proceedings in the national court of another jurisdiction in relation to overlapping issues.

A growing number of such anti-suit injunctions have been granted in SEP litigations in the last couple of years, particularly in the national courts of China. For example, the Wuhan Intermediate People’s Court (the “Wuhan Court”) granted anti-suit injunctions in Xiaomi v InterDigital (September 2020) and Ericsson v Samsung (December 2020)*. The Shenzhen Intermediate People’s Court granted an anti-suit injunction in Oppo v Sharp (October 2020).

The Wuhan Court has been 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.

Escalation

However, rather than resolving issues caused by overlapping jurisdiction, the use of anti-suit injunctions has instead led other national courts to resort to competing injunctions to protect their jurisdiction. This has led to increasingly complicated injunctive orders.

For example, in Xiaomi v InterDigital, the Wuhan Court had sought to prevent InterDigital: (a) from enforcing its SEPs against Xiaomi anywhere in the world until the Wuhan Court had ruled on Xiaomi’s global FRAND licence (i.e. an ‘anti-suit injunction’); and (b) from taking legal action against the anti-suit injunction itself in any other country (i.e. an ‘anti-anti-anti-suit injunction’). InterDigital applied to the Munich Regional Court, which ordered that Xiaomi was prohibited from enforcing the anti-suit injunction and the anti-anti-anti-suit injunction granted by the Wuhan Court (i.e. an ‘anti-anti-anti-anti-suit injunction’).

Impact

The increased deployment of anti-suit injunctions is a trend which causes problems for both SEP holders and SEP implementers. 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. It is also likely to encourage ‘forum shopping’ by parties seeking to utilise the differing approaches adopted by national courts to issues of SEP infringement and FRAND determination.

The tactical advantage of an anti-suit injunction may be offset to some degree by the counterbalancing impact of anti-anti-suit injunctions (and other variations), albeit courts vary in their approach to granting these remedies. However, SEP holders and SEP implementers will still need to be aware of the potential additional complexity and cost involved in SEP litigation.

Moreover, the use of anti-suit injunctions raises issues for policy makers about the system of international patent enforcement. Anti-suit injunctions (and their variations) are a risk to the comity between national courts. They also impact upon a patentee’s right to judicial protection for its property.

Recent developments

In July 2021, the EU expressed its concerns to China. It did so, via the procedures of the World Trade Organization (WTO), in a “request for information pursuant to Article 63.3 of the TRIPS Agreement“. The request contained various questions, including regarding China’s approach to anti-suit and anti-anti suit injunctions, and daily fines for non-compliance, as well as China’s adjudication guidelines for deciding on such matters and the legal basis for doing so.

China’s response, dated 7 September 2021, is brief and unambiguous. China replied to say that, in its view, it is not obliged to respond to the EU’s request for information. Indeed, the response did not provide answers to any questions about China’s approach to anti-suit and anti-anti suit injunctions. Instead, China asserted that, in its view, it is acting in full compliance with the TRIPS Agreement and any further questions or concerns should be raised directly between the EU and China through existing bilateral channels (rather than through the WTO).

Analysis

With China having rejected the WTO dialogue, it appears that the bilateral talks referred to in China’s response represent the only realistic avenue for arresting the current escalation in SEP anti-suit injunctions. To be effective in resolving issues of overlapping jurisdiction, such talks would inevitably also need to incorporate the views of other countries whose national courts are actively engaged in SEP litigation (particularly the courts of the UK and US). This would involve significant complexity in attempting to reach a compromise between the differing approaches currently adopted by those courts. As such, it appears inevitable that a solution is a long way off.

In the meantime, both SEP owners and SEP implementers will need to be alive to the additional complexity and cost caused by anti-suit injunctions in SEP litigation.

*We reported developments in the Ericsson v Samsung litigation separately here.

This is for general information only and does not constitute legal advice. Should you require advice on this or any other topic then please contact hlk@hlk-ip.com or your usual Haseltine Lake Kempner advisor.