U.S. Courts May Order Owners Of Standard Essential Patents Not To Enforce Foreign Injunctions Obtained To Prevent Implementers From Infringing Those Patents

Abstract

The Ninth Circuit has established a legal framework for courts to use when determining whether to enjoin litigants from enforcing injunctions ordered by courts in other countries.

Background

Samsung and Huawei both owned certain patents that they declared as essential to the standards for 4G and 3G cellular phones established by the European Telecommunications Standards Institute (ETSI). Consistent with ETSI's policies, both also agreed to license their declared standard essential patents (SEPs) under fair, reasonable, and non-discriminatory (FRAND) terms and conditions.

After discussions between the parties to cross-license their patents fell through, Huawei sued Samsung in federal court in California for infringement of eleven of its SEPs and alleged that Samsung breached its commitment to enter into an SEP cross-license under FRAND terms and conditions.

Samsung responded by filing counterclaims for infringement of its SEPs, as well as non-infringement, invalidity, and antitrust claims against Huawei on Huawei's SEPs.

Huawei subsequently filed eleven separate infringement actions in China, eight involving counterpart patents to the patents asserted in the U.S. case.

While the California case was pending, the Chinese court in Shenzhen found Samsung infringed two of Huawei's Chinese SEPs and enjoined Samsung's Chinese affiliates from manufacturing and selling its 4G LTE standardized smartphones in China.

Relying on the negotiations between the parties, including Huawei's offers to Samsung (which the Shenzhen court found were within a reasonable range based on the strength of the patents) and Samsung's delay in the negotiations and sole offer (which the Shenzhen court found did not comply with FRAND principles), the Shenzhen court found that Huawei had complied with its FRAND obligations while Samsung had not.

Samsung filed an appeal in China and a motion in the U.S. case to enjoin Huawei from enforcing the injunction from the Shenzhen court. The U.S. Court ultimately granted Samsung's motion.

The Huawei-Samsung Decision

Legal Framework

The U.S. Court in California noted that when it has jurisdiction over parties, it has the power to enjoin the parties from proceeding with an action in the courts of a foreign country when the circumstances are unjust, but the power should be used sparingly.

Following the Ninth Circuit's test for determining whether such an injunction is proper, the Court explained it had to determine (1) whether or...