Federal Circuit’s new approach to anti-suit injunctions in SEP disputes

In order to counteract an earlier unfavorable decision, the losing party in one jurisdiction may seek relief from another jurisdiction, for example, by initiating a motion to enjoin (i.e. prohibit) the other party from enforcing the injunctive relief, a so-called “anti-suit injunction”.

Anti-suit injunctions in the SEP context have been granted in the past decade by multiple jurisdictions like the UK, China, Germany, France, India and the United States.

In the United States, the Court of Appeals for the Ninth Circuit, in Microsoft Corporation v. Motorola Inc., 2012, granted Microsoft’s motion for enjoining Motorola from enforcing an injunction order that might be issued by a German court, setting out the general legal framework for analyzing the issue of a foreign anti-suit injunction in a SEP context.

The case Ericsson v. Lenovo (United States), Inc., 2024 recently decided by the US Court of Appeals for the Federal Circuit, illustrates how a US court deals with this complicated issue in the post-Microsoft era.

Background

In October 2023, Ericsson, after failing to reach a global cross-license agreement with Lenovo over some SEPs, filed a suit in a US district court, alleging, among others, Lenovo’s infringement of Ericsson’s 5G SEPs, breach of FRAND commitment, etc.

Lenovo immediately retaliated in the UK courts. Ericsson then sought anti-suit injunctions to prevent Lenovo from pursuing legal actions in Colombia and Brazil, and was successful in securing a preliminary injunction in both countries, prohibiting Lenovo from selling its products there and therefore infringing Ericsson’s patents.

In December, 2023, Lenovo requested the US district court to issue an anti-suit injunction to prevent Ericsson from enforcing the preliminary injunctions it had obtained in Colombia and Brazil.

The US district court initially denied Lenovo’s motion, finding that Lenovo’s injunction request failed to meet the “threshold” requirement under the Microsoft framework. In particular, the district court concluded that the US suit was not "dispositive" (i.e. a final determination) of the foreign action, partly because the US suit, from the court’s perspective, would not necessarily result in a global cross-license between the parties. Lenovo appealed the district court’s decision to the US Court of Appeals for the Federal Circuit.

Federal Circuit's Decision

The major issue before the Federal Circuit was whether the US action was "dispositive" of the Colombian and Brazilian actions to be enjoined, in particular, whether the “dispositive” requirement was met when the US suit could potentially resolve the foreign injunctions only, without necessarily resulting in a global license between the parties.

The Federal Circuit said yes. The Federal Circuit interpreted that the Microsoft case did not require the domestic suit to result in a global license in order to be considered "dispositive" of the foreign action. Instead, the court determined that what was central to the “dispositive” requirement under Microsoft was whether the domestic suit would potentially resolve the foreign injunction issue only.

The Federal Circuit determined that the US suit was dispositive of the Colombian and Brazilian actions because Lenovo’s claim that Ericsson’s FRAND commitment precluded Ericsson from pursuing any SEP-based injunctive relief unless it had first complied with its FRAND commitments, would, if decided in favor of Lenovo, determine the propriety of Ericsson’s enforcement of the injunctions obtained in Colombia and Brazil.

Accordingly, the Federal Circuit concluded that the district court erred in finding the US suit was not dispositive of the foreign actions and Lenovo’s anti-suit injunction request did not pass the threshold requirement under the Microsoft framework.  It therefore vacated the district court’s denial of Lenovo’s motion and remanded the case for further proceedings.

Additionally, out of concern for judicial economy, the Federal Circuit addressed the contractual interpretation of FRAND commitment for the first time in the appeal and concluded in favor of Lenovo that one party that has made a ETSI FRAND commitment must have complied with its FRAND commitment’s obligation to negotiate in good faith over a license to its SEPs before it pursues injunctive relief on those SEPs. 

Ericsson’s major counterargument was that international comity (i.e. mutual respect between countries for their laws and legal decisions) would be affected by the US court’s grant of any anti-suit injunction.

The comity issue was a major aspect in the Microsoft case. In this case, the Federal Circuit, did not consider it particularly relevant to the “dispositive” requirement, so only briefly addressed Ericsson’s arguments on this.

First, Ericsson argued that the contract interpretation issue should be decided by the foreign tribunals issuing the injunction, rather than a US court. It seemed to the Federal Circuit that Ericsson had intended to prove that the anti-suit injunction was inappropriate under any circumstance. In rebutting Ericsson’s argument, the Federal Circuit's view was that on the one hand, Ericsson did not meet its burden of proof, and reiterated what the Ninth Circuit had said in the Microsoft case.  On the other hand, the fact that different jurisdictions answered the same legal issue differently did not create "the intolerable comity problem" itself, and the anti-suit injunction could instead help curb forum shopping and international parallel proceedings in some way.

Second, Ericsson argued that the US suit would not be dispositive of the Colombian and Brazilian injunctions because they arose from independent foreign patent rights issued by foreign sovereigns and those foreign patent rights were enforceable only within the borders of those foreign sovereigns. As in the Microsoft case, the Federal Circuit said the issue was not about patent claims, but involved contractual issues, and by issuing an anti-suit injunction, a US court was not enforcing any foreign patent law, but, the private law of the contract between the parties.

In the Microsoft case, the Ninth Circuit did a fully-fledged analysis on the comity aspect, taking in to consideration the case’s strong connection with the US jurisdiction, the private law nature of the dispute, and the narrowly-tailored scope of the anti-suit injunction, etc.

Finally, since it was an interlocutory appeal, the Federal Circuit’s decision was not a final resolution of all of the parties’ claims before the district court, including the patent infringement issue, the FRAND commitment compliance issue, and global cross-license claims. Even in respect of the anti-suit injunction issue only, as the Federal Circuit made it clear at the end of the decision, its decision should not be read as implying that Lenovo would ultimately be entitled to a foreign anti-suit injunction, which should be left to the district court for decision in the first instance.

Comment

When the case is remanded back for further proceedings, in addition to the critical issue of whether Ericsson had complied with its FRAND commitment in the first place, the district court might also need to analyze the remaining parts of the Microsoft framework, including determining whether at least one of the “Unterweser factors”¹ (established in the case of M/S Bremen v Zapata Off-Shore Co which addressed whether to issue an antisuit injunction to prevent parties from pursuing litigation in foreign courts) applies, and assessing whether the injunction’s impact on comity is tolerable.

Footnote

[1] a disjunctive list of considerations that may justify a foreign anti-suit injunction, first articulated by the Fifth Circuit in In re Unterweser Reederei GMBH (428 F.2d 888, 896 (5th Cir. 1970)) and adopted by the Ninth Circuit Court as instructive in Seattle Totems (652 F.2d at 855):  Would the foreign litigation (1) frustrate a policy of the forum issuing the injunction; (2) be vexatious or oppressive; (3) threaten the issuing court’s in rem or quasi in rem jurisdictions; or (4) prejudice other equitable considerations.