Context: Ever since Lenovo obtained a favorable FRAND determination last year from the High Court of Justice in London in a case brought by InterDigital, the company (which also owns the Motorola Mobility smartphone brand) has taken various proactive initiatives to make the UK the center of gravity and preferably even the exclusive jurisdiction over its standard-essential patent (SEP) disputes.
What’s new: New information on Lenovo’s UK-or-nothing litigation tactics has surfaced recently as a result of
- Ericsson’s brief in a Federal Circuit antisuit appeal (which also revealed that Ericsson has indeed struck agreements with other smartphone makers than Lenovo based on its standard royalty rate of 1%, capped at $4 per unit (May 4, 2024 ip fray article) and
- InterDigital’s most recent quarterly report (which contains a section on pending litigation).
Direct impact: Lenovo’s strategy is not without risk:
- The company could be deemed an unwilling licensee such as in a Munich case that resulted in an injunction for InterDigital (May 3, 2024 ip fray article).
- Its credibility is at stake when asking a U.S. court to order an antisuit injunction while actually wanting Ericsson to withdraw a case pending in North Carolina.
- The InterDigital v. Lenovo FRAND determination is being appealed, with a hearing to take place next month (June 10, 2024, to be precise).
Wider ramifications: Lenovo’s extreme positions and aggressive tactics contrast with the more conventional approaches pursued by other net licensees of SEPs in their disputes with the same SEP licensors, such as OPPO (vis-à-vis InterDigital) and Apple (vis-à-vis Ericsson). The only other net licensee of SEPs to follow Lenovo’s “thought leadership” at the moment, to at least some extent, is Tesla (January 3, 2024 ip fray article).
Ericsson’s appellate brief defending the denial of an antisuit injunction (May 4, 2024 ip fray article) repeatedly (almost ad nauseam) stresses that Lenovo does not seek a U.S. antisuit injunction against Latin American injunctions in order to protect the jurisdiction of the United States District Court for the Eastern District of North Carolina. It’s actually about shifting the entire global dispute to the UK, a purpose for which Lenovo is even seeking a UK preliminary injunction (February 13, 2024 ip fray article).
What Ericsson stresses in this context is that Lenovo has actually tried to sideline the U.S. court as well:
“Lenovo contends it has offered security and interim payments ‘in exchange for Ericsson standing down on its injunctions.’ […] Lenovo omits much about that ‘offer’: Lenovo offered to make payments into escrow on the condition that Ericsson (1) agree to proceed in Lenovo’s preferred U.K. forum, (2) drop this U.S. action and all other litigation, (3) consent to the U.K. court establishing a FRAND rate without deciding whether Ericsson’s offer was FRAND, and (4) include in any license non-SEP ‘implementation’ patents not subject to FRAND obligations.” (emphases in original)
The parties’ previous non-disclosure agreement (NDA) expired in 2021, about two years before the InterDigital v. Lenovo FRAND determination in the UK. But even in the NDA context, Lenovo made the overreaching demand that Ericsson should not be allowed to enforce any of its patents against Lenovo “while allowing Lenovo to sue Ericsson in China at any time.” (emphasis in original)
So there is a pattern of Lenovo trying to impose all sorts of anti-patent-enforcement conditions in connection with such basic things as an NDA or interim payments.
Ericsson argues that “Lenovo cannot justify an injunction against foreign litigation on the theory that the U.S. lawsuit is dispositive, while simultaneously trying to escape the U.S. court and keep it from deciding anything at all.” It would indeed be surprising if the Federal Circuit allowed a litigant (here, Lenovo) to use U.S. courts as a tool to neutralize foreign patent assertions, only to deprive the U.S. courts of jurisdiction over U.S. patents as well.
What Ericsson’s responsive brief on appeal furthermore reveals is that Lenovo would rather obtain a U.S. antisuit injunction ASAP than solve its Latin American problems in those other countries. The filing gives examples of Lenovo not having exercised procedural rights to be heard, and of having played a delay game, seeking extension after extension instead of trying to get a Brazilian appellate decision at the earliest opportunity.
Even if one gives Lenovo the benefit of the doubt (for example, by taking the position that whether Lenovo engaged in hold-out needs to be determined by a court further down the road), there is enough in Ericsson’s brief that one can’t help but wonder whether Lenovo thinks the Federal Circuit is stupid. The fact that Lenovo doesn’t trluy want to litigate anywhere other than the UK is patently obvious.
InterDigital’s latest quarterly report (HTML version). combined with public UK court documents that ip fray has previously obtained, shows a similar patent in Lenovo’s other major ongoing SEP dispute.
The UK FRAND determination that came down last year covered the six-year period from the start of 2018 until the end of 2013. InterDigital focused on appealing that one, but Lenovo proactively requested a UK FRAND determination on September 24, 2023. In order to get there, Lenovo filed a declaratory judgment action over the UK parts of two EPO-granted InterDigital patents (alleging invalidity, non-essentiality and non-infringement) and seeking a declaration that “[as of January 1, 2024] Lenovo is licensed under terms to be determined by the UK High Court through 2028 or, in the alternative, a determination of the terms of a FRAND license.”
Approximately four weeks later, Lenovo doubled down on the latter part and asked the UK court to order InterDigital to ” indicate whether it is prepared to give an unconditional undertaking to enter into a global license on terms set by the UK Court, or failing that, a declaration that the Defendants are unwilling licensors.” Presumably, Lenovo would want to use an unwilling-licensor declaration against InterDigital not only to prevent future UK injunctions but also in other jurisdictions. At a December 2023 hearing, Lenovo agreed to stay that application. Meanwhile InterDigital was pursuing a jurisdictional challenge it brought in November 2023. The SEC filing says: “A hearing on the jurisdiction challenge took place on April 24-25, 2024, and on April 25, 2024 the jurisdiction challenge was denied.”
Lenovo is so UK-focused now that it even dropped a 2020 request for a Chinese FRAND determination (which had survived a jurisdictional challenge by InterDigital):
“On December 5, 2023, Lenovo filed a request to withdraw the proceedings, and on December 29, 2023, the Beijing IP Court granted Lenovo’s request.”
Two weeks later, Lenovo also withdrew a second Chinese FRAND action, which it had brought in late 2021 to seek a FRAND determination for the 2024-2029 period. The court denied InterDigital’s jurisdictional challenge in August 2023, and InterDigital appealed to the Supreme People’s Court, but no appellate decision was necessary because “[o]n December 19, 2023, Lenovo filed a request to withdraw the proceedings, and on January 15, 2024, the Beijing IP Court granted Lenovo’s request.”
The same InterDigital filing with the SEC shows that OPPO, unlike Lenovo, is still very interested in a Chinese FRAND determination, with respect to which “[a]n initial evidentiary hearing was held on October 13, 2023.” Between InterDigital and OPPO, the licensee is now also more interested in a UK FRAND determination than the licensor, but OPPO is not going out of its way like Lenovo to turn the dispute effectively into a UK-only matter: instead, OPPO still prioritizes China.