In Telefonaktiebolaget LM Ericsson v. Lenovo (United States), Inc., [2024-1515] (October 24, 2024), the Federal Circuit reversed and remanded the denial of an injunction against foreign infringement suits over standards essential patents, because resolving the licensing issue was dispositive of the infringement issue.
Lenovo and Ericsson had, for some time, attempted to agree on a global cross-license to SEPs of the other, which would include Ericsson’s 5G SEP. When an agreement could not be reached, they resorted to litigation in and out of the United States. Lenovo moved the district court to enter an antisuit injunction prohibiting Ericsson from, among other things, enforcing injunctions it obtained in Colombia and Brazil. The district court denied the injunction using the framework from the Ninth Circuit’s opinion in Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012), which first determines that the parties and issues are the same in both the domestic and foreign suits, and the domestic suit must be dispositive of the foreign action to be enjoined. Second, the domestic court considers whether at least one of the antisuit-injunction factors applies, including “whether the foreign litigation would (1) frustrate a policy of the forum issuing the [antisuit] injunction; (2) be vexatious or oppressive; (3) threaten the issuing court’s in rem or quasi in rem jurisdiction; or (4) where the proceedings prejudice other equitable consideration[s].” Finally, the domestic court considers the antisuit injunction’s impact on comity.
The district court concluded that the case before it was not dispositive of the foreign action, and it therefore denied the requested antisuit injunction without reaching the second and third parts of the analysis. On appeal from that decision, the key dispute is whether the US suit is dispositive of the Colombian and Brazilian actions that were sought to be enjoined. The Federal Circuit concluded that the US suit was dispositive of the Colombian and Brazilian actions.
Lenovo argued that Ericsson’s FRAND commitment precludes Ericsson from pursuing SEP-based injunctive relief unless it has first complied with the commitment’s obligation to negotiate in good faith over a license to those SEPs. Thus, the “dispositive” requirement is met, because whether Ericsson has complied with its good-faith-negotiating obligation is an issue that (1) is before the district court—both via Ericsson’s claims and Lenovo’s counterclaims Lenovo maintains that Ericsson’s FRAND commitment precludes Ericsson from pursuing SEP-based injunctive relief unless it has first complied with the commitment’s obligation to negotiate in good faith over a license to those SEPs. Thus, in Lenovo’s view, the “dispositive” requirement is met, because whether Ericsson has complied with its good-faith-negotiating obligation is an issue that (1) is before the district court—both via Ericsson’s claims and Lenovo’s counterclaims; and (2) will, if decided in Lenovo’s favor (i.e., that Ericsson has not so complied), dictate the impropriety of Ericsson’s pursuing SEP-based injunctive relief.
Ericsson argued that the district court correctly concluded that, to meet the “dispositive” requirement, the instant suit must necessarily result in a global cross-license between the parties.
The Federal Circuit said that Ericsson and the district court got it wrong: Ericsson’s and the district court’s interpretation of what it takes to meet the “dispositive” requirement rests on a misunderstanding of Microsoft. The Federal Circuit saw nothing in the Microsoft district opinion that treated as “critical” the fact that the suit before it would result in a license. The court articulated the issues to be determined as both “whether Motorola may seek injunctive relief against Microsoft with respect to its [SEPs]” and “in the event Microsoft is entitled to a [worldwide RAND] license, what the RAND terms are for such a license.” The Federal Circuit said that this was also true of the 9th Circuit’s opinion, noting that the discussion of the “dispositive” requirement focused on how Motorola’s RAND commitment affected its ability to seek SEP-based injunctive relief.
The Federal Circuit said that with this misunderstanding corrected, Microsoft leads to the rejection of Ericsson’s arguments regarding what it takes to meet the “dispositive” requirement. As to Ericsson’s argument that the domestic suit should resolve not just an injunction, but instead the entire foreign proceeding (e.g., by resulting in a license), that was not necessary in Microsoft.