Federal Circuit vacates District Court’s denial of Antisuit Injunctions in FRAND Case
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“[T]he Federal Circuit noted that nothing in Microsoft required a patent license to result for the U.S. action to be dispositive of the foreign injunction.”
The U.S. Court of Appeals for the Federal Circuit (CAFC) in a precedential decision today vacated a district court’s denial of Lenovo’s request for the court to issue an “antisuit injunction” against Ericsson prohibiting it from enforcing injunctions granted by Brazilian and Colombian courts relating to Ericsson’s 5G standard essential patents (SEPs).
The CAFC ruled that the district court erred in determining whether the U.S. lawsuit was dispositive of the South American actions when it concluded that the U.S. action must result in a license between the parties to the standard essential patents (SEPs) at issue.
District Court Dismisses Antisuit Injunction Under Microsoft’s Dispositive Requirement
Lenovo sued Ericsson in Eastern North Carolina last October following failed negotiations on a global cross-license to many patent assets, including 5G telecommunications SEPs owned by Ericsson. The following month Ericsson sued Lenovo and obtained injunctions on its 5G patents in Colombia and Brazil. Lenovo filed counterclaims against Ericsson in Eastern North Carolina in December last year, asserting their own 5G SEPs. Lenovo also claimed that Ericsson failed to meet its fair, reasonable, and non-discriminatory obligations (FRAND) by failing negotiate a SEP license with good faith. The district court used the three-part framework of the Microsoft v. Motorola decision from the Ninth Circuit in 2012 to determine that Lenovo’s U.S. infringement suit was not dispositive for the South American actions. This meant that the first threshold requirement in the Microsoft test had been failed. The district court concluded that the case would not necessarily result in a license if it determined that Ericsson’s negotiations had fulfilled the company’s FRAND obligations.
Under Microsoft’s framework, which both parties agreed to in the district court proceedings, a court first looks to whether the parties and issues are the same in both the domestic and foreign cases, and whether the domestic suit is dispositive of the foreign action to be enjoined. After determining whether the foreign litigation would frustrate the policy of the forum that issued the antisuit injunction, be vexatious and oppressive, threaten the issuing courts in rem or semi in rem jurisdiction or prejudice other equity considerations, a court will then assess if the foreign litigation is likely to: frustrate the policy of the forum Finally, Microsoft requires a court to consider whether the antisuit injunction’s impact on comity is tolerable.
The Federal Circuit began its reasoning by recounting the facts of Microsoft, which, like the present appeal, involved SEPs subject to FRAND commitments. Microsoft claimed that Motorola had breached their SEP licensing obligations and sought to prevent Motorola from enforcing an injunctive order arising from a German SEP violation action. After the district court issued the antisuit injunction to Microsoft, the Ninth Circuit affirmed, finding that the court’s determination of the contractual issues stemming from Motorola’s licensing obligations would determine whether the German injunction fell within Motorola’s commitment to reasonable licensing terms.
SEP Holders Must Comply with Standard of Conduct Before Pursuing Injunctions
The Federal Circuit noted that nothing in Microsoft required a patent license to result for the U.S. action to be dispositive of the foreign injunction. The Federal Circuit, pointing out that Motorola could still pursue foreign litigation without injunctive remedies following Microsoft, rejected Ericsson’s argument that the entire foreign proceeding had to be resolved by a U.S. court decision before an antisuit injunction could issue. The appellate court ruled that the district court’s decision on Ericsson’s FRAND obligations determined whether it could pursue injunctive remedies under those obligations. Although the district court did not reach this contract-interpretation issue, the Federal Circuit found it appropriate to resolve the issue as it was briefed on appeal and resolving the issue serves judicial economy.
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f the FRAND commitment means anything of substance, it must mean that an SEP holder that has made such a commitment cannot just spring injunctive actions against other standard implementers without having first complied with some standard of conduct.”
While Ericsson contended that the Brazilian or Colombian courts should be deciding the issue of interpreting the FRAND obligations under the European Telecommunications Standards Institute’s (ETSI) 5G standard, the Federal Circuit held that this was more appropriate to consider under the second or third part of the Microsoft test. The Federal Circuit noted that although the South American patents are separate from those asserted in this U.S. case that this appeal was a contract issue and not an issue of rights. The Federal Circuit remanded the case to the district court to assess the rest of the Microsoft test, declining requests from both Lenovo and Ericsson to decide the antisuit injunction on appeal.[I]
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Steve Brachmann
Steve Brachmann graduated from the University at Buffalo School of Law in May 2022, earning his Juris Doctor. He served as the president of the Intellectual
