Context: Yesterday it became known that the Unified Patent Court’s (UPC) Munich Local Division (LD) and the Landgericht München I (Munich I Regional Court) had granted Huawei anti-antisuit injunctions (AASIs) against WiFi router maker Netgear’s pursuit of a U.S. antisuit injunction (ASI) (December 23, 2024 ip fray article).
What’s new: Later that day, Netgear’s U.S. counsel filed with the United States District Court for the Central District of California a notice of partial withdrawal of its motion. Netgear is no longer asking for a U.S. antisuit injunction, but explicitly states that it keeps pushing for an interim license. Furthermore, both parties’ counsel agreed on a request to postpone the related motion hearing from January 24 to January 31 so as to push certain briefing deadlines out of the Holiday Season.
Direct impact: It is a good sign for the UPC’s authority that Netgear does not refuse to comply with its order, which it could have considered if it was convinced that the UPC had acted ultra vires (beyond its authority). Apparently the two ex parte anti-antisuit injunctions that came down on December 11, 2024 relate only to the pursuit of antisuit (or “anti-enforcement”) injunctions as opposed to barring Netgear from asking the U.S. court to set an interim license, which would (unless the UPC and German courts decline to recognize it) have the same enforcement-undermining effect, however. Presumably Netgear expected the German national court to enter a routine AASI and brought its request for an ASI only so it could later tell the district court that the ASI route was blocked (as it now is), potentially planning to accuse Huawei of undermining the U.S. court’s jurisdiction though it was Netgear who started with foreign interference.
Wider ramifications: In other news yesterday, it became discoverable that consumer electronics giant Samsung has taken a similar initiative against China’s ZTE in the UK as Lenovo against the same patentee (represented by the same lawyers as well) (for the Lenovo story, see this October 27, 2024 ip fray article). There are definitely more and more FRAND actions brought by parties who expect to end up the net licensee in a certain dispute and hope that UK or U.S. courts will assume worldwide jurisdiction, thereby defusing the situation in jurisdictions in which SEP holders are (or may soon be) enforcing.
Here is the exact wording of Netgear’s withdrawal:
Plaintiff Netgear, Inc. (“Netgear”) hereby partially withdraws its Motion for Anti-Enforcement Injunction or, Alternatively, Entry of Interim License (Dkt. 126, 127) (complete filing package at Dkt. 124-128). More specifically, Netgear withdraws its request for an anti-enforcement injunction (argument at Dkt. 127 at 7:23-16:18). Netgear does not withdraw its request that the Court set an interim license (argument at Dkt. 127 at 16:19-22:18).
Netgear’s withdrawal serves the interest of judicial economy and results from Huawei Technologies Co., Ltd. filing an anti-enforcement injunction in Germany and the Unified Patent Court.
The second paragraph confirms the basic fact ip fray reported yesterday that both the UPC and a German court entered AASIs. But the terminology is misleading in the sense of a false equivalence: Netgear refers to both its own U.S. ASI request and Huawei’s AASIs as “anti-enforcement injunction[s].” If that is so, why does Netgear not maintain its request for a U.S. ASI and simply ask the court to stay enforcement so as not to run afoul of the UPC and German AASIs? The answer is that those AASIs are merely defensive measures against Netgear’s U.S. ASI motion. In fact, German courts justify AASIs, not only but also, with the concept of self-defense.
Netgear obviously argues that an ASI is also just defensive: a defense against foreign patent enforcement. But in this case, there was no U.S. proceeding that Huawei was attempting to undermine through foreign patent enforcement (unlike Motorola Mobility in Microsoft v. Motorola). Netgear ran to the U.S. court and brought a (geo)politically-charged complaint against Huawei in Los Angeles (February 4, 2024 ip fray article).
In the UK, there is precedent for an interim license: Xiaomi obtained one against Panasonic (October 3, 2024 ip fray article). There is also UK precedent for the denial of an interim license to a SEP portfolio: subsequently to Xiaomi-Panasonic, Lenovo failed against Ericsson (November 19, 2024 ip fray article).
In the U.S., Netgear wants the court to make new law. To legislate from the bench, basically. Obviously U.S. law has its roots in UK law, but the two jurisdictions have developed independently over the course of more than two centuries. Netgear now wants a U.S. court to imitate a UK court (though its fact pattern is far from the one in Xiaomi-Panasonic). That raises the question of why Netgear did not go to the UK in the first place, like others before it. The obvious answer is that all Netgear could expect in the UK would be an ecomomic analysis of the royalty rates, while in the U.S. Netgear hopes to capitalize on geopolitics. It is impossible to say with certainty what the outcome of a UK FRAND litigation would be, but it appears unlikely that Netgear could convince a UK court that the rates accepted by major competitors and other significant implementers, typically without and sometimes after limited litigation, were supra-FRAND. Netgear needs some non-numerical “arguments” to get its desired result.
Separately, but not entirely unrelated, Netgear’s and Huawei’s counsel agreed on a purely procedural question. Under the briefing schedule as it stood, Netgear had a deadline for its reply brief in support of its motion to bifurcate (i.e., a separate FRAND trial, which Huawei opposes in light of Netgear’s conduct (December 21, 2024 ip fray article), on December 27, 2024, and Huawei faced a deadline for its opposition brief to the U.S. ASI motion (which is now exclusively an interim-license motion) on January 3, 2025. The parties stipulated to a request that the district court postponed the combined motion hearing from January 24 to January 31, 2025 and, accordingly, the filing deadlines from December 27 to January 3 (still close to the Holiday Season, but not right in its middle) and from January 3 to January 10.
Even if the district court decided relatively quickly after the January 31, 2025 hearing (theoretically Judge André Birotte Jr. could even rule from the bench, but that would be very unusual on a novel question like Netgear’s request for an interim license), Huawei’s European enforcement would kick in. By then, even the likely Munich injunction (scheduled for January 9, 2025 (December 19, 2024 ip fray article)) would become enforceable as it takes only about a week at that time of the year to make a deposit. Netgear’s resellers will have a certain quantity of products in their warehouses, but at some point Netgear will have to make new deliveries.
As discussed in the December 19 article we just linked to, the UPC’s carve-out for patent exhaustion may be practically irrelevant due to a strict territorial limitation (Qualcomm would have to supply its chipsets to Netgear in Europe, and it would have to do so in the coming days as the relevant license agreement will expire then).
The fact that Netgear’s counsel (which faced the far more inconvenient one of the two filing deadlines) stipulated to a postponement of the motion hearing suggests, however, that Netgear believes it still has some time before it will have to settle so as to avoid a major disruption of its European router business.
Chinese AASI published
Update: The Supreme People’s Court (SPC) of China has entered the country’s first AASI against Netgear (December 24, 2024 post by PRIP Research (Chinese)).
When will Qualcomm and Huawei renew their license agreement?
While we are on the subject of timing, there is also an interesting question that is indirectly related to the Huawei-Netgear dispute. It became known, due to a clerical error (publication of underredacted document) by court staff, that Huawei’s license agreement with Qualcomm will expire in one week from today. The conclusion of that license agreement, and the expectation of a $1.8 billion payment, became known more than four years ago (August 3, 2020 article by Electronic Design). No renewal has been announced yet.
Qualcomm is already embroiled in a patent dispute with another Chinese company, Transsion (July 25, 2024 ip fray article).
In about three years from now, Qualcomm’s current license agreement with Apple will expire. In 2019, Apple settled a dispute, and a few years exercised a unilateral renewal option, because it needed Qualcomm’s 5G baseband chipsets. Apple has been trying for many years to make itself independent of Qualcomm as a supplier (first by hoping to be able to purchase them from Intel, then by taking over Intel’s mobile chipset division take control).
Now there are signs of Apple actually approaching the point at which it may use its own baseband processors instead of Qualcomm’s (September 6, 2024 Apple Insider article). In that case Apple would predictably refuse to pay the same patent royalties as now. That could give rise to a patent dispute, and then it may play a role that Qualcomm “hardened” some of its non-standard-essential patents as a result of the last dispute with Apple. As recently as in 2022, Apple still brought a Supreme Court petition in an effort to shoot down a Qualcomm patent (PDF), though it went nowhere.
For many years, Qualcomm concluded and renewed license agreements without complications. But the market has changed in some ways, partly due to the geopolitical dynamics that Netgear is trying to capitalize on against Huawei, and that means Qualcomm may not find it all that easy to command royalty rates far above what the likes of Ericsson and Qualcomm, and also Huawei (though its case is special becasue it is a major implementer), receive.