Context: Yesterday, Lenovo’s standard-essential patent (SEP) injunction bids against Ericsson were thrown out by the Unified Patent Court (UPC) (August 6, 2024 ip fray article). More than two months ago, Lenovo failed to obtain a UK preliminary injunction against Ericsson (May 23, 2024 ip fray article).
What’s new: The United States Court of Appeals for the Federal Circuit today heard Lenovo’s (expedited) appeal of the denial of an antisuit injunction by a district court in North Carolina (May 5, 2024 ip fray article). Given the serious implications of what Lenovo is seeking (and on what grounds), it’s surprising that the appellate panel (Judges Lourie, Prost and Reyna) didn’t express stronger skepticism of Lenovo’s argument than it actually did.
Direct impact: Lenovo would like to get Ericsson to stop enforcing injunctions in Brazil and Colombia, and it is still more likely than not that the U.S. judiciary won’t interfere with foreign jurisdictions over injunctions based on foreign patents and relating to foreign markets. International comity (deferring to rather than interfering with each other) is going to be a key consideration.
Wider ramifications: So far, U.S. courts have reasonably exercised restraint in the global antisuit, anti-antisuit (all all the way up to anti-anti-anti-antisuit) game. With what Lenovo wants, however, the U.S. would be exposed to World Trade Organization (WTO) complaints over allegedly violating an IP law treaty named TRIPs. There would likely be retaliation from actually and potentially affected jurisdictions in the form of anti-antisuit injunctions. That is precisely why it is prudent for each jurisdiction to consider international comity before triggering an injunction arms race.
Lenovo made the argument it’s been making for a while now, and it’s based on Microsoft v. Motorola, a case in which the implementer, unlike Lenovo, unconditionally committed to the conclusion of a license agreement on court-determined terms.
Ericsson didn’t emphasize that difference per se, but repeatedly pointed the court to the fact that Lenovo won’t necessarily take a license: should Ericsson’s rate be deemed FRAND, Lenovo reserves the right to remain unlicensed (as it has been for about 15 years already). The potentially most impactful argument Ericsson made at today’s hearing was that the antisuit injunction sought by Lenovo could lead to a huge embarrassment: injunctions in Brazil and Colombia would be effectively lifted by a U.S. court decision only to find out after four or five years that Ericsson was entitled to an injunction, but during all those years, a U.S. antisuit injunction encroached on foreign courts’ jurisdiction.
That was different in Microsoft v. Motorola, where the alternatives were obvious: either Motorola (not yet a Lenovo subsidiary at the time) would have abused leverage (from two particularly outrageous Mannheim injunctions) to force Microsoft into a license agreement before the U.S. court set the rate, or it was going to be over anyway (and Motorola was going to get paid, the question just being how much). Put differently, the antisuit injunction in Microsoft v. Motorola merely required Motorola to wait, but there was zero risk of the U.S. having to apologize to Germany for having made a mistake.
Ericsson made another important point in a closely related context: under the laws of Brazil and Colombia, which are (as one of the judges also appeared to understand very clearly) injunction-centric when it comes to patent infringement, even a Lenovo win in the U.S. case might not ultimately be found to have stood in the way of ordering an injunction. Ericsson gave the best example: the LatAm courts could find that Lenovo, due to having declined to take a license for about 15 years, should be enjoined regardless of the extent to which Ericsson’s license fee demand was FRAND.
Those were strong arguments that should bear a lot of weight with the appeals court, and to the extent the possibility of a remand or direct entry of an injunction was discussed, it may just have been part of the court’s due diligence on a hypothetical basis. Still, ip fray believes this should have been a clearer case than it appeared to be at today’s hearing, where Lenovo didn’t get so much traction that reversal seems more likely than not, but more than one would have expected.
Lenovo already argued late last year that the LatAm situation, with ongoing enforcement, was unbearable. Here we are, in mid-summer, and they still haven’t settled but are now awaiting the Federal Circuit decision.
It bears remembering that what Lenovo is trying to protect through a U.S. antisuit injunction is not really the U.S. district court’s jurisdiction: instead, they want to use a U.S. antisuit injunction to put an end to patent enforcement in Brazil and Colombia in order to have the most impactful decision made in the UK. That, too, is different from Microsoft v. Motorola, where the only jurisdiction to resolve the dispute through a license agremeent was going to be the U.S. itself.
It is a bit disappointing that the appeals court today didn’t press Lenovo harder on international comity. An antisuit injunction targeting foreign proceedings is an extraordinary remedy. For such an influential appeals court as the Federal Circuit, it’s particularly key to weigh the potential fallout. The alternative is that the U.S. becomes the target of WTO complaints and that foreign courts come up with ways to protect their jurisdiction and/or will be more receptive to proposals that they should bar parties from enforcing U.S. court rulings. There wasn’t even half as much of a policy discussion at today’s hearing (the last one of four cases heard this morning) as the ramifications of the matter would have suggested.
A responsible decision by the Federal Circuit panel is still considerably more likely than what a UK judge recently labeled “jurisdictional imperialism.” But it’s not a given.