California Court Halts Chinese-Issued Injunction Against Samsung

Author:Mr Michael F. Reeder II, John Wittenzellner and Rubén H. Muñoz
Profession:Akin Gump Strauss Hauer & Feld LLP

After nearly two years of patent litigation in dozens of cases in the United States and China, a Chinese trial court issued an injunction against Samsung, barring it from making or selling its 4G LTE smartphones in China—an order that the Northern District of California has now temporarily halted by anti-suit injunction.

Huawei sued Samsung in 2016 after years of unsuccessful negotiations to cross-license their respective standard essential patents (SEPs) covering 3G and 4G LTE cell phone technology. Huawei filed one case in the Northern District of California alleging that Samsung infringed 11 of its SEPs and that Samsung breached its commitment to cross-license on fair, reasonable and nondiscriminatory (FRAND) terms. The next day, Huawei filed nearly a dozen more actions in China alleging similar claims on the Chinese counterparts to the U.S. patents. Samsung filed similar countersuits in both jurisdictions as well. The Chinese actions advanced faster than the California case, and the Chinese court held a trial on two of Huawei's SEPs. Subsequently, in January 2018, the Chinese court issued an order finding that Samsung infringed Huawei's patents and that Samsung's behavior had not complied with FRAND principles, and it enjoined Samsung from making or selling its 4G LTE smartphones in China.

Requesting what is known as an "anti-suit injunction," Samsung sought to have the California court enjoin the Chinese injunction (which Samsung is also appealing in China). An anti-suit injunction refers to an extraordinary procedure where a domestic court issues an order to stop the outcome of proceedings in a second jurisdiction. The three-part test for determining whether to issue an anti-suit injunction is described in E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 990 (9th Cir. 2006)("Gallo"), which states that courts should consider: (1) whether the parties and the issues in both the domestic and foreign actions are the same (i.e., whether the first action is dispositive of the second); (2) whether the foreign litigation is vexatious or frustrates the policy, jurisdiction or equitable considerations of the domestic court; and (3) whether the injunction's impact on comity is tolerable. These injunctions can be used to prevent forum-shopping to "get around" an adverse ruling in the original jurisdiction. Samsung argued that the Chinese injunction would force it to close its Chinese factories and to enter into negotiations with Huawei at...

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