Ericsson Wins Anti-Interference Injunction Against Samsung in Texas FRAND Case

Judge Rodney Gilstrap of the U.S. District Court for the Eastern District of Texas yesterday issued an order enjoining  Samsung Electronics from taking any action to interfere with Ericsson’s U.S. FRAND (“fair, reasonable, and non-discriminatory” terms) lawsuit against Samsung in his court.

Samsung had filed a lawsuit on December 7, 2020 in the Wuhan Intermediate People’s Court of China but did not provide notice to Ericsson of the action. “Unaware of the Chinese Action,” according to Judge Gilstrap’s order, Ericsson filed a complaint against Samsung on December 11, 2020 in the Texas court, alleging that Samsung breached its obligation to license its Standard Essential Patents (SEPs) on FRAND terms, and “notified Samsung of its Complaint in this Court that same day.” Samsung subsequently asked the Wuhan court to issue an “anti-suit injunction” (ASI) to prevent it from seeking relief relating to the SEPs at issue anywhere else in the world. The Wuhan Court issued the ASI on December 25 for the “duration of the Chinese Action and until a future judgment in that Action becomes effective.” The Wuhan Court gave Ericsson notice of the ASI after it had issued on December 25. Ericsson thus asked the Texas Court for an emergency temporary restraining order (TRO) on December 28, which the court granted.

In discussing his decision to grant the preliminary injunction, Gilstrap explained that he applied the Fifth Circuit’s Unterweser factors, which “weigh ‘the need to ‘prevent vexatious or oppressive litigation’ and to ‘protect the court’s jurisdiction’ against the need to defer to principles of international comity.’” Gilstrap continued:

In applying this test, the Fifth Circuit has rejected the approach taken by some other Circuits, which “elevates principles of international comity to the virtual exclusion of all other considerations.” Id.(citing Kaepa, 76 F.3d at 627). Rather, the Fifth Circuit has noted that the “notions of comity do not wholly dominate the analysis to the exclusion of these other concerns.”

While the Fifth Circuit has not provided guidance on the particular circumstances of this case, in which Ericsson is seeking an anti-anti-suit injunction, or anti-interference injunction, to prevent Samsung from attempting to enforce the ASI “it is nevertheless instructive and will be applied here,” wrote Gilstrap.

Furthermore, “the public interest strongly supports the court’s continued exercise of its jurisdiction,” said the Order.

Allowing Samsung to enjoin Ericsson from asking this Court to adjudicate legally cognizable claims under United States law would frustrate this Court’s compelling interest in ensuring that litigation within its legitimate jurisdiction proceed in this forum.

The order in which the suits were filed is not dispositive and the issues before the Texas and Wuhan courts are different, said Gilstrap. Furthermore, the ASI would unfairly deprive Ericsson of the right to bring claims it is entitled to bring under U.S. law and the lack of notice to Ericsson about the Wuhan suit resulted in Ericsson being “enjoined from exercising its right to enforce legitimate causes of action under United States law pertaining to its 4G and 5G SEPs in the United States.” Gilstrap said that Samsung, in contrast, will not suffer inequitable hardship if the two suits proceed in parallel, as they are fully equipped to handle such cases, and Samsung admitted the Texas case was not “vexatious or oppressive” to it.

Gilstrap also said the two suits are factually, but not legally similar.

Samsung asks the Wuhan Court to determine the global licensing terms, including the FRAND royalty rates applicable for Samsung’s communication products implementing all of Ericsson’s 4G and 5G SEPs. Ericsson, on the other hand, asks this Court to look at the parties’ pre-suit negotiation conduct and determine whether the parties breached or complied with their mutual FRAND obligations. The Wuhan Court is asked to provide a number. This Court is asked to evaluate conduct.

Gilstrap did find some of Ericsson’s request “too broad.” Because the Texas court has no interest in inserting itself into matters of Chinese law, but simply in preserving its jurisdiction, Gilstrap declined to “order Samsung to withdraw the ASI, bar Samsung from participating in the Chinese Action, or require Samsung to promptly send documents filed in the Chinese Action to Ericsson.”

Instead, as of January 11, 2021 and until a final judgment is issued by the Texas court, Gilstrap ordered Samsung to:

“1) Take no action in the Chinese Action that would interfere with this Court’s jurisdiction to determine whether Ericsson or Samsung have met or breached their FRAND obligations as they relate to both Ericsson and Samsung’s 4G and 5G SEPs, or that would interfere with any other cause of action before this Court;

(2) Take no action in the Chinese Action that would deprive Ericsson or all of its corporate parents, subsidiaries, and affiliates of their rights to assert the full scope of their U.S. patent rights before any Article III Court, customs office, or administrative agency in the United States; and

(3) Jointly and severally indemnify Ericsson from and against any and all fines or other penal assessments levied against and actually incurred by Ericsson pursuant to the enforcement of the ASI, either on the motion of Samsung, sua sponte by the Wuhan Court, or otherwise, as such pertains, and only as such pertains, to actions Ericsson has taken or takes in the future in the United States to lawfully litigate or adjudicate claims relating to the 4G and 5G SEPs identified or involved in this case.”

Judge Paul Michel and Judge Randall Rader each weighed in–Michel in an amicus brief and Rader in a “declaration”–on whether the court should issue the preliminary injunction, with the two former Federal Circuit chief judges on opposing sides of the issue.

Professor Adam Mossoff of the Antonin Scalia Law School, George Mason University, also weighed in, arguing that Samsung’s proceedings against Ericsson in Wuhan “illustrate a marked lack of due process and transparency, which correlates with issues in which China’s economic interests are at stake,” and that the “dispute raises a serious innovation policy concern about unfairly titled playing fields in the development and licensing of standardized technologies when implementers of standard essential patents (SEP), such as Samsung, file lawsuits, engage in ex parte proceedings, and receive anti-suit injunctions without any notice or participations by the innovator in a licensing dispute.”

Mossoff added that Samsung’s strategy capitalizes on Chinese courts’ lack of respect for due process and undermines U.S. Article III courts.

Note: this article was updated on Jan. 13 to specify that Judge Rader filed a declaration, not an amicus brief, in the case.