The Federal Circuit issued its opinion late last month in Telefonaktiebolaget LM Ericsson v. Lenovo (United States) Inc., a patent case that attracted an amicus brief. In this case, the Federal Circuit reviewed a district court’s denial of an antisuit injunction sought by Lenovo against Ericsson. Lenovo sought to prevent Ericsson from enforcing injunctions it was awarded in Colombian and Brazilian cases preventing Lenovo from infringing Ericsson’s patents. In an opinion authored by Judge Prost and joined by Judges Lourie and Reyna, the Federal Circuit vacated the district court’s denial and remanded the case for further proceedings. This is our opinion summary
Judge Prost began by outlining the procedural and factual background of the case:
This dispute concerns the 5G wireless-communication standard developed by the European Telecommunications Standards Institute (‘ETSI’)––and, particularly, patents declared to be essential to complying with that standards (standard-essential patents or ‘SEPs’). ETSI develops technical standards that ensure interoperability among different companies’ products. Because SEPs, by definition, must be practiced in order to comply with a given standard, SEP holders ‘wield significant power over [standard] implementers during licensing negotiations. . . .’ To address SEP-related concerns, ETSI has an
Intellectual Property Rights (‘IPR’) policy under which SEP holders declare that they are ‘prepared to grant irrevocable licen[s]es’ to their SEPs on ‘fair, reasonable[,]and non-discriminatory (‘FRAND’) terms and conditions. . . .’ Lenovo and Ericsson are both ETSI members, and both have made a FRAND commitment. . . . Lenovo and Ericsson have . . . attempted to agree on a global cross license to SEPs of the other . . . . [A]n agreement remaining out of reach, they took legal action—both here and abroad. On October 11, 2023 . . . filed the instant suit against Lenovo. . . . Ericsson’s complaint alleges that Lenovo infringed four of Ericsson’s U.S. 5G SEPs and breached its FRAND commitment . . . . The complaint also seeks a declaration that Ericsson has complied with its FRAND commitment regarding its offer to Lenovo. And, if Ericsson’s offer is found to be inconsistent with its FRAND commitment, the complaint asks the district court to determine a FRAND rate for a global cross-license between the parties. Two days later . . . Lenovo sued Ericsson in the United Kingdom, asking the court to determine FRAND terms for a global-license between the parties. . . . Ericsson . . . initiated proceedings against Lenovo in Colombia and Brazil . . . . Ericsson alleged that Lenovo infringed its Colombian and Brazilian 5G SEPs, and it sought a preliminary injunction in each country . . . . It secured injunctions in both countries . . . . [A]fter the Colombian and Brazilian injunctions against Lenovo were entered—Lenovo asserted counterclaims in the district-court suit. . . . [Its] counterclaims . . . roughly mirror the claims in Ericsson’s complaint . . . . On December 29, 2023, Lenovo moved the district court to enter an antisuit injunction prohibiting Ericsson from, among other things, enforcing its Colombian and Brazilian injunctions. The district court, in denying Lenovo’s motion, began by setting forth the three-part analytical framework—drawn largely from the Ninth Circuit’s opinion in Microsoft Corp. v. Motorola, Inc., . . . that it would apply to Lenovo’s foreign antisuit-injunction request. . . . The district court concluded that the instant suit 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. In part because of how it understood Microsoft, the court reasoned that, to be dispositive, the domestic suit would have to result in a global cross-license between the parties. . . . In the court’s view . . . the instant suit would not necessarily lead to this result. . . . As to Lenovo’s counterclaim seeking a declaration of a FRAND rate for a global cross-license . . . it conclud[ed] that the instant suit would not necessarily lead to a global cross-license between the parties. Lenovo . . . appealed.
Judge Prost began her analysis for the Federal Circuit by explaining that the panel would review the district court’s decision denying an antisuit injunction under the “the regional circuit’s law,” in this case, the Fourth Circuit’s law, which requires reviewing “such decisions for abuse of discretion.”
Next, Judge Prost explained the “the general framework” created by the Ninth Circuit and used to analyze foreign-antisuit-injunction. The framework, she explained, includes three parts: “first, a threshold requirement that parties and issues be the same as between the domestic and foreign suits, and that the domestic suit be ‘dispositive of the [foreign] action to be enjoined’; second, consideration of whether one of the antisuit-injunction factors applies . . . and third, consideration of ‘whether the [antisuit] injunction’s impact on comity is tolerable.'”
Here, Judge Prost explained, the Federal Circuit would “only resolve the first, threshold requirement in that framework.” She explained that the “key dispute here is whether the instant suit is dispositive of the Colombian and Brazilian actions to be enjoined.”
Judge Prost then recounted the factual circumstances of the precedent giving rise to the three-part framework. She explained she would do so because it was “central” to court’s conclusion that “the ‘dispositive’ requirement” was met here. In that case, the ETSI FRAND commitment was similar: after “Motorola offered to license its SEPs to Microsoft on certain terms, Microsoft sued Motorola in district court, alleging that Motorola breached its commitment by proposing unreasonable terms.” Then, “after Microsoft’s initial complaint against Motorola,” she explained, “Motorola initiated a separate proceeding in Germany” alleging “that Microsoft infringed two of Motorola’s European SEPs.” In those proceedings, “it sought an injunction prohibiting infringement of those patents. But, in “advance of the German court’s anticipated decision, Microsoft moved the district court” in the United States “for an antisuit injunction.” Judge Prost explained how the Ninth Circuit agreed with “the district’s court determination that the contract issues before [it] ‘could resolve the German patent claims.'” Specifically, she highlighted, the Ninth Circuit approved “[t]he district court’s conclusions that Motorola’s RAND [commitment] governs in some way what actions Motorola may take to enforce its [SEPs].” As a result, Judge Prost explained, the dispositive requirement was met. In short, the Ninth Circuit “determin[ed] that Microsoft’s contract-based claims, including its claim that the RAND commitment precludes injunctive relief, would, if decided in favor of Microsoft, determine the propriety of the enforcement by Motorola of the injunctive relief obtained in Germany.”
Turning back to this appeal, Judge Prost rejected both Ericsson’s and the lower court’s characterization of the “dispositive” requirement, which was based on a “critical” finding “that the suit before it would result in a license.” Rather, she noted, the previous case “ma[de] clear that it was the injunction-availability issue––not the ‘will result in a license’ one––that mattered to” the dispositive requirement. She explained that the Ninth Circuit focused “on how Motorola’s RAND commitment affected its ability to seek SEP-based injunctive relief.” In short, she indicated, the “dispositive” requirement “can be met even though a foreign antisuit injunction would resolve only a foreign injunction (and not the entire proceeding).”
Applying this understanding, Judge Prost found that the dispositive requirement was met in this case. She explained that it was met “because (1) the ETSI FRAND commitment precludes Ericsson from pursuing SEP-based injunctive relief unless it has first completed with the commitment’s obligation to negotiate in good faith over a license to those SEPs; and (2) whether Ericsson had complied with that obligation is an issue before the district court.” Therefore, she noted, “if the [lower court] determines that Ericsson has not complied with that obligation, that determination will dictate the impropriety of Ericsson’s pursuing its SEP-based injunctive relief.”
As a result of Judge Prost’s analysis, the Federal Circuit vacated the district court’s denial of Lenovo’s motion for an antisuit-injunction and remanded the case to the district court for further proceedings.