Amicus Brief by Adam Mossoff in Ericsson v. Samsung (Fed. Cir., April 9, 2021)

Chair, Forum for Intellectual Property and Senior Fellow

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Summary of Argument

This Court should affirm the district court’s order of an anti-interference injunction. Appellee Ericsson sets forth the specific legal framework governing anti-suit injunctions and international comity and how the district court properly followed the law in issuing its injunction. Amici provide two additional insights concerning the legal proceedings in the Wuhan court and in the licensing of standard-essential patents (SEPs) that further support the district court’s injunction. First, the Wuhan proceedings that Samsung brought against Ericsson illustrate a marked lack of due process and transparency. These failings in the rule of law correlate with economic issues in which the Chinese government has expressed strong national interests. While the Chinese legal system has generally improved over the past two decades, commentators and government officials recognize that independence, transparency, and due process are not yet the norm in all cases.

Those departures from these basic norms of the rule of law are evident in this case. Samsung did not serve Ericsson notice, nor even provide it informal notice, of the lawsuit Samsung filed in Wuhan until after Ericsson had filed its lawsuit in the district court. Samsung then obtained an ex parte anti-suit injunction from the Wuhan court. Again, Ericsson had neither notice of nor opportunity to participate in the process. This contrasts starkly with the notice to Samsung and the opportunity for its arguments to be heard fully by the district court in its expedited proceedings, despite the holiday season and the COVID-19 pandemic.

Chinese courts have also departed from rule-of-law norms in other cases in which the Chinese government has significant domestic economic interests. This includes other cases concerning the determination of fair, reasonable, and non-discriminatory (FRAND) rates in the licensing of SEPs on mobile telecommunications, like in this case. China and its courts have adopted policies supporting Chinese companies that develop hardware for the mobile revolution, such as smartphone handsets. One such policy that is relevant to this case: reducing the royalty rates paid by Chinese companies for using patented technologies in making smartphones, such as 4G and 5G, when these patents are owned by U.S. or European companies. In fact, the Wuhan court justified its worldwide anti-suit injunction against Ericsson by asserting that allowing the lawsuit properly filed in the district court to proceed would result in Samsung having to “submit to unreasonable royalty rates” that “increase . . . operating costs.” Appx566–67 (Defs.’ Opp’n to Pls.’ Appl. for Anti-interference Inj., Ex. 8, at 4–5). In other cases, Chinese courts have also issued anti-suit injunctions in FRAND disputes involving domestic Chinese industrial policy interests while similarly disregarding basic norms of due process. See, e.g., Appx251–324 (InterDigital Tech. Corp. & Ors. v. Xiaomi Corp. & Ors. (2020) 295 CS 2020 (India)).

Second, this case raises serious policy concerns for innovation, highlighting the negative consequences of unfairly tilted playing fields in the development and licensing of standardized technologies. The key facts are undisputed: Samsung, an implementer of SEPs, filed a lawsuit, engaged in ex parte proceedings, and received an anti-suit injunction on Christmas Day without any notice to or participation by the SEP owner, Ericsson. This disregard for due process combined with an institutional bias towards implementers sheds light on Samsung’s decision to file its lawsuit in Wuhan—an otherwise inconvenient forum with no connection to either the parties’ contractual FRAND dispute or the patent infringement allegations asserted by Ericsson against Samsung.

If the Wuhan court is permitted to enjoin the lawful proceedings in U.S. district court, Samsung’s litigation tactic in this case will provide a roadmap for other implementers of SEPs to displace neutral adjudication of FRAND disputes in favor of fora that pursue national political and economic policies at the expense of due process. In the context of SEP licensing, implementers are uniquely positioned to forum shop. Owners of SEPs cannot simply file a patent infringement lawsuit when an implementer infringes their patents. Rather, SEP owners customarily offer licenses on FRAND terms and other terms of use, wait for a response, and then engage in laborious negotiations. These negotiations sometimes take many, many years, as in this case. By contrast, implementers can (and do) file lawsuits first, and sometimes they do so immediately after receiving an initial offer. See Microsoft v. Motorola, 2013 WL 2111217, *2 (W.D. Wash. Apr. 25, 2013).

If the Wuhan court’s injunction is permitted to stand, implementers have a roadmap for creating a fundamentally unbalanced playing field in their favor. Any implementer seeking a lower royalty rate will simply sue SEP owners in Wuhan first, providing no notice of the lawsuit. They will then wait for the SEP owner to file suit at some point during the long, protracted negotiations, immediately obtain an anti-suit injunction without notice or ability to participate in the proceedings, and then force the SEP owner to litigate in a forum lacking basic respect for due process and with clear evidence of institutional bias in favor of the implementer.

Samsung’s tactic also threatens to deny the U.S. courts their longstanding role in properly adjudicating controversies arising within their jurisdiction over U.S. patent rights. It threatens the fundamental principle of the rule of law that has been the historically unique hallmark of the U.S. patent system. The consequences cannot be understated. The U.S. patent system has successfully driven the U.S. innovation economy for two centuries and has been the gold standard globally for many other jurisdictions, including, ironically, China, which has adopted many historical features of the U.S. patent system in its own legal reforms in recent years. To avoid these negative consequences, this Court should affirm the anti-interference injunction

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