Context: In the summer. the United States Court of Appeals for the Federal Circuit heard Lenovo’s appeal of a district court’s denial of an antisuit injunction against Ericsson’s enforcement of Brazilian and Colombian standard-essential patent (SEP) injunctions (August 7, 2024 ip fray article). As ip fray noted at the “time, the issuance of an antisuit injunction still didn’t appear to be the most likely outcome, but Lenovo got “more [traction] than one would have expected” and ip fray found it ” surprising that the appellate panel (Judges Lourie, Prost and Reyna) didn’t express stronger skepticism of Lenovo’s argument than it actually did.”
What’s new: Today. the Federal Circuit handed down its decision vacating District Judge Terrence W. Boyle’s decision (February 15, 2024 ip fray article). But what Lenovo really wanted was for the Federal Circuit to hold that it was entitled to an antisuit injunction. However, the appellate decision makes it clear that the district court will have to resolve the second and third steps of the antisuit injunction framework on remand. The decision furthermore clarifies that the Federal Circuit is in no way taking a position on whether Ericsson discharged its FRAND licensing obligations.
Direct impact: Assuming that this is the final appellate word, the district court will, on remand, have to analyze whether Ericsson’s Latin American injunctions are, for instance, vexatious and oppressive, and it will also have to decide the question of comity (i.e., whether it is appropriate to interfere with foreign jurisdictions). Those are still significant hurdles for Lenovo to overcome, and even though the Federal Circuit went so far as to take a position on access to injunctions under the ETSI FRAND pledge, its opinion provides zero guidance concerning the second and third antisuit factors.
Wider ramifications: The Federal Circuit today established a lower standard for the first antisuit factor (whether a U.S. case is dispositive) than what Judge Rodney Gilstrap decided in Ericsson v. Apple (which was adopted by Judge Boyle in North Carolina in Ericsson v. Lenovo). This means there could be more U.S. antisuit injunctions impacting global SEP disputes in the future. Interestingly, the European Commission is complaining to the World Trade Organization (WTO) over Chinese antisuit injunctions, but may have to consider bringing a similar complaint over U.S. antisuit case law if today’s decision is symptomatic of a trend. And there is not just this U.S. antisuit injunction bid: Lenovo is also trying to obtain an interim-license declaration in the UK along the lines of what Xiaomi won against Panasonic three weeks ago (October 3, 2024 ip fray article), just that there, again, the key difference is that both parties had committed to take a license on court-determined terms.
Here’s the Federal Circuit opinion:
The Federal Circuit adopted both the Ninth Circuit’s Microsoft v. Motorola decision (which it wouldn’t have had to do, given that the Ericsson-Lenovo case is pending in the Fourth Circuit) and Judge William H. Orrick’s decision in Samsung’s favor against Huawei, which was just a district court decision and which the Federal Circuit at the time viewed skeptically (but never ruled on because of a settlement).
It then disagreed with Ericsson on how to interpret Microsoft v. Motorola in terms of whether the enjoining U.S. action must be (and this is now ip fray‘s way of putting it) necessarily and fully dispositive of the enjoined foreign action(s):
- Not necessarily dispositive: Ericsson argued that in Microsoft v. Motorola, the outcome was going to be a license agreement because both parties had committed to enter into one on terms to be determined by the United States District Court for the Western District of Washington (Judge James L. Robart). But the Federal Circuit said today that it’s enough for one potential outcome (that the court finds Ericsson breached its FRAND commitment) to be dispositive, even if other outcomes would not be. The decision explicitly states that the Federal Circuit is not suggesting that Ericsson did fail to comply with its obligations. It’s worth nothing that at least the ITC Staff believes Ericsson is in full compliance (September 18, 2024 ip fray article), though its opinion is obviously not binding.
- Not fully dispositive: The Federal Circuit opinion says Ericsson argued the U.S. case would have to be dispositive of the entire foreign action, but in Microsoft v. Motorola, the question was only whether it was dispositive of the SEP holder’s access to injunctions. That’s the difference between an antisuit injunction in a broader sense and a more narrowly-tailored anti-enforcement injunction (a term that does not appear in today’s Federal Circuit opinion).
The Federal Circuit didn’t want to resolve the entire antisuit motion but leave the second and third antisuit injunction factors to the district court to determine. But at least it wanted to resolve the first factor, dispositiveness, and to get there, it interpreted the ETSI FRAND pledge in the sense of a FRAND offer being an indispensable prerequisite to the pursuit of an injunction.
The decision notes that an appeals court can opine beyond the questions addressed in the appealed decision. But reasonable people can disagree on whether it was appropriate in this case, considering that the ETSI FRAND pledge must be interpreted under French law, which is actually a matter of fact (and not law) in the U.S., therefore normally requiring expert testimony on French contract law. All that the Federal Circuit relies upon are other interpretations by non-French courts (such as the UK Supreme Court) of the ETSI FRAND pledge.
The combination of lowering the dispositiveness bar (thereby potentially enabling more and more U.S. antisuit injunctions, even if not necessarily here) and interpreting a French contract without expert testimony on French law suggests that the decision makers had no qualms over comity (i.e., how their colleagues in other jurisdictions, here particularly Brazil, Colombia and France, would view their approach).
Comity will, however, be a big issue on remand. But that is only the third step, and the district court may not even get there next time. The second step gives Lenovo several options, but at least one of the following criteria would have to be met:
“(1) [The foreign actions] frustrate a policy of the forum issuing the [antisuit]
injunction; (2) be vexatious or oppressive; (3) threaten the issuing court’s in rem or quasi in rem jurisdiction; or (4) where the proceedings prejudice other equitable consideration[s].”
Lenovo wanted to avoid this, and argued that the sky was falling, so they needed an antisuit injunction right here and now. It’s not necessarily going to happen, and even if it did, it wouldn’t happen too fast. There are situations where an appeals court vacates and remands, but with instructions that make it easier for the appellant to win. That is not the case in Ericsson v. Lenovo. The second and third steps of the antisuit injunction framework are not impacted by what was decided today, other than that the district court, in the Federal Circuit’s opinion, took an impermissible shortcut by throwing out the antisuit injunction motion just for what it considered a lack of dispositiveness (of the U.S. case with respect to the Brazilian and Colombian cases).