Context: Right after ip fray‘s 10-part UPC Roundup, the Unified Patent Court’s Munich Local Division (LD) made a very important decision. It relates to the cases brought by Lenovo, through its Motorola Mobility subsidiary, against Ericsson that became known earlier this year (February 13, 2024 ip fray article).
What’s new: In two parallel Motorola Mobility v. Ericsson cases over standard-essential patents (SEPs), the Lenovo-owned company’s motions for leave to amend the complaints to the effect of pursuing injunctive relief have been denied as untimely.
Direct impact: Without leverage from an injunction, those Lenovo countersuits against Ericsson are devoid of strategic value. The decision was made by an entire three-judge panel, which deemed the case to be so “clear-cut” that leave to appeal was denied. Lenovo could still try to petition the UPC Court of Appeal (CoA), but it may now actually be more realistic and efficient to bring new cases, which also involves considerable delay and might come too late to move the needle in settlement negotiations.
Wider ramifications: Lenovo’s decision not to seek an injunction in its UPC cases from the start is easily attributable to the global battlefield, with Lenovo, at the time, seeking a U.S. antisuit injunction as well as help from the UK with respect to the enforcement of Brazilian and Colombian preliminary injunctions (PIs) by Ericsson. The U.S. antisuit build failed in district court (February 15, 2024 ip fray article), and the Federal Circuit will hear Lenovo’s appeal tomorrow (August 7, 2024). In German national court, it would have been easier to amend the complaints by seeking an injunction at a later stage, but the UPC does not allow a litigant’s gamesmanship to delay its proceedings.
Materially consistent orders by the UPC’s Munich LD just issued in case no. UPC_CFI_41/2024 (PDF) and UPC_CFI_42/2024 (PDF). The upshot is that Lenovo’s access to remedies in those cases is restricted to what it sought in the original complaints dated January 30, 2024. In terms of remedies, that will mean nothing else but damages (and the accounting needed to calculate them). The additional requests for an injunction, recall, removal and destruction of infringing goods were not admitted.
Instead of seeking injunctions in the original January 30, 2024 complaints, or at least in time before the complaints were served on Ericsson (February 17, 2024), Lenovo waited until May 6, 2024 to then ask the court for permission to amend its claims accordingly.
Why not January or mid-February? Because a U.S. antisuit motion over Ericsson’s then- and presumably still-ongoing enforcement of Brazilian and Colombian PIs was ongoing, and seeking SEP injunctions would have undermined Lenovo’s position that SEPs shouldn’t give rise to sales bans.
Why not March or April? Because the denial of the U.S. antisuit injunction had meanwhile been appealed, and Ericsson had until May 1, 2024 for its responsive brief on appeal. Lenovo didn’t want Ericsson to mention those UPC tactics in its Federal Circuit brief.
It was obviously no coincidence that Lenovo then brought its motion in the UPC a few days after Ericsson’s (lone) brief on appeal. Briefing in the Federal Circuit was completed on May 15 with Lenovo’s reply brief. The appellate hearing will take place in Washington, D.C., tomorrow (August 7, 2024). ip fray doubts that Lenovo’s U.S. appeal will succeed.
Officially, Lenovo told the UPC another story. They obviously wouldn’t have had a good-faith reason under UPC rules to delay the pursuit of injunctive relief only because they want a U.S. court to put an end to Ericsson’s enforcement of Latin American injunctions. So they came up with a contorted story concerning cross-licensing, blaming Ericsson for always just focusing on what Lenovo would have to pay for the use of Ericsson’s patents instead of seeking (for its mobile base stations) a license to Lenovo’s patents. They claim that they wanted to still give Ericsson the chance to get more interested in a license to Lenovo’s patents, and they hoped that filing those two UPC actions would help in that regard.
A far-fetched story that the Munich LD didn’t buy, even less so in light of the fact that Lenovo already filed an injunction bid in the UK in mid-December 2023. For now, UK SEP case law is still based on Huawei v. ZTE. Post-Brexit they can deviate if they want, but haven’t so far.
The order explains the legal issue. Rule 263 of the UPC’s Rules of Procedure (RoP) allows parties to ask the court for permission to make such amendments, but the rules say the court shall deny such motions if the moving party fails to satisfy two requirements:
(a) the amendment in question could not have been made with reasonable diligence at an earlier stage;
and
(b) the amendment will not unreasonably hinder the other party in the conduct of its action.
Here, there was no legitimate reason for the delay, and it is obvious that requiring Ericsson to raise a FRAND defense (and possibly FRAND counterclaim) at this advanced stage of proceeding impacts Ericsson’s defensive efforts greatly.
The order explains that both conditions must be met independently, and if neither is met, there is no wiggle room: denial of the motion for leave to amend is the only possible outcome.
This is a setback for Lenovo. In this global dispute in which Ericsson is already enforcing PIs, a couple of UPC damages cases are not going to make a difference. Lenovo might as well withdraw them because they are a waste of time, money and energy.
Separate complaints for injunctive relief could be filed now. It would just take a lot longer then to get a decision than if the existing complaints could have been amended.
A recent procedural order in the UK part of this wider dispute has become discoverable and just means that there will be a partial judgment on the question of whether an old Motorola Mobility license agreement covers certain products. Lenovo wanted that decision to be made at the earliest stage possible, and they will get that, but that doesn’t necessarily mean they will win that part (and if they did, they would still need a license for plenty of other reasons).
The Munich LD made a panel (not single-judge) decision: Presiding Judge Dr. Matthias Zigann, Judge-rapporteur Tobias Pichlmaier and Judge Pierluigi Perrotti (Milan).
Lenovo (Motorola Mobility) is represented by Hoyng Rokh Monegier’s Klaus Haft and Ericsson by Kather Augenstein’s Dr. Christof Augenstein,