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Patent Litigators Add to Playbook With Anti-Suit Injunction

Oct. 8, 2020, 9:01 AM

Locked in a patent fight with Huawei Technologies Co., Samsung Electronics Co. had a problem.

After a Chinese court found Samsung liable for patent infringement and issued an order that threatened the company’s ability to make or sell 4G LTE smartphones in China, Samsung turned to a judge in San Francisco with an unusual request: It wanted an anti-suit injunction.

Today, anti-suit injunctions are increasingly being deployed by companies embroiled in global patent battles over standardized wireless technology. Their use is expected to continue with the transition to 5G and emerging Internet of Things.

“Once litigators discover a new litigation tool or tactic, it’s very difficult to take it away from them,” said Jorge Contreras, a law professor at the University of Utah. He said anti-suit injunctions will become part of the standard playbook in these types of cases.

The injunctions’ growing use has already prompted resistance, leading some courts to meet the orders with their own orders as they spar across international jurisdictions.

Stopping Suits

Anti-suit injunctions prohibit litigants from starting or in some cases continuing a parallel lawsuit in another court.
For Samsung, the worry was that it would have to close some factories in China, once a court there found it had infringed two Huawei patents.

Samsung asked Judge William H. Orrick of the U.S. District Court for the Northern District of California to block Huawei from enforcing the Chinese court order until the judge could sort out a related dispute in his court. The judge agreed in 2018, issuing the injunction.

Such orders create opportunities for strategic maneuvering from lawyers, including seeking preemptive orders to block the injunctions. There can also be a sense of urgency for companies to be the first to file a lawsuit and better position themselves in a legal fight.

“I can see more legal wrangling over those types of procedural remedies going forward,” John Carlin, a partner at Venable LLP in New York, said.

Nuisance Litigation

Anti-suit injunctions have a long history in U.S. and English law, but their use in patent cases has been concentrated more recently, finding momentum during the tech industry’s global smartphone wars.

Companies that violate the injunctions run the risk of being found in contempt and facing steep court fines.

Over the past decade, Microsoft Corp. has won an order in the U.S. blocking Motorola Inc. from enforcing a German ban on Xbox and Windows software. Ericsson Inc. was stopped from pursuing litigation against TCL Communication Technology Holdings Ltd. in the U.K., Brazil, Russia, Argentina, and Germany over wireless technology.

China emerged on the scene in recent weeks, when a Chinese court ordered patent licensing company Conversant Wireless Licensing not to enforce German orders blocking Huawei and ZTE Corp. from selling phones in Germany. It was believed to be the first anti-suit injunction in China.

Last month, InterDigital Inc. said a court in Wuhan blocked it from seeking an injunction against Xiaomi Corp. in India over patents related to 3G and 4G technology. Xiaomi is a Chinese company that makes phones and other electronics.

Concerns of duplicative litigation and inconsistent judgments between courts may be driving these orders. Judges can see a later-filed lawsuit in another country as a “nuisance” when it involves the same companies and issues that will be decided in the original case, said Thomas Cotter, a University of Minnesota law professor.

Anti-Anti-Suit Injunction

Courts in European countries with civil law systems, where anti-suit injunctions historically have been frowned upon, have pushed back.

A German appeals court in December upheld an order from a lower court in Munich requiring Continental AG to withdraw a motion it filed in California attempting to block Nokia Corp. from pursuing lawsuits in Germany against Continental customer Daimler AG.

The order—an anti-anti-suit injunction—was the first of its kind in Germany.

A court in Paris took a similar route last year, ordering Lenovo (United States) Inc. and Motorola to backtrack on a request that a U.S. court block IPCom GmbH & Co. from litigating a related case in France. Failure to comply with the order would result in a fine of 200,000 euros (roughly $234,000) per day. An appeals court affirmed the ruling in March.

Legal scholars view the orders as a response to the willingness of courts in places like the U.S. to issue orders viewed as interfering with parties’ fundamental legal rights. The lower court in Paris said anti-suit injunctions in many cases are “an interference in the jurisdiction of the courts.”

“Courts view themselves as pretty sovereign entities,” Contreras said. “Having a court 6,000 miles away tell the parties not to litigate a case that’s properly before you, that seems sort of like treading on your turf.”

With Europe’s largest economy, Germany is a frequent stop for companies tangled in global patent disputes. Henrik Holzapfel, a partner at McDermott Will & Emery LLP in Düsseldorf, suggested judges there might be open to an anti-suit injunction directed at a later-filed lawsuit abroad, using much of the same reasoning as the court in the Continental case.

“There is a realistic likelihood of repeating the Munich logic for a simple anti-suit injunction,” Holzapfel said.

‘Mind-Boggling’

Some wonder how far the back-and-forth between courts can extend, and whether cases could spiral into a series of injunction orders between courts in different countries.

“Everybody is waiting for the next shoe to drop: the anti-anti-anti-suit injunction,” Cotter said. “It’s like an infinite regress. It’s kind of mind-boggling.”

Cotter said the situation could reinvigorate a push for an international forum to settle global licensing disputes over standardized technologies. Another alternative could be for standard-setting organizations to require that parties in disputes submit to arbitration, taking it out of the hands of national courts.

“We may need for some more chaos to ensue for a few more years until it gets so bad that that turns out to be the only way to prevent it from continuing,” he said.

The availability of injunctions can influence strategy. Lawsuits in licensing disputes are often brought by the patent owner, but attorneys said companies that implement the technology could be motivated to strike first. This allows them to chose the forum, and could help avoid a mirror lawsuit in another country.

The court where the first lawsuit was brought may “be a little more protective and more willing to enter an anti-suit injunction against a subsequently filed foreign action that is going to potentially frustrate the purpose of the original action,” Carlin, the Venable attorney, said.

Meanwhile, lawyers continue to look for ways to make use of anti-suit injunctions. Holzapfel said it is something he has discussed with a client that is embroiled in litigation in the U.K. and elsewhere.

“It’s one of the bullets that you can fire,” he said.

To contact the reporter on this story: Matthew Bultman in New York at mbultman@correspondent.bloomberglaw.com

To contact the editors responsible for this story: Renee Schoof at rschoof@bloombergindustry.com; Keith Perine at kperine@bloomberglaw.com

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