2024 Federal Circuit IP Appeals – Anti-suit Injunctions and the Global SEP Dance: Telefonaktiebolaget LM Ericsson v. Lenovo (United States), Inc., 120 F.4th 864 (Fed. Cir. 2024) (Lourie, Prost, Reyna)

Hundreds of patents are declared to be essential to comply with the 5G wireless-communication standard developed by the European Telecommunications Standards Institute (ETSI). These standard-essential patents (SEPs) ensure interoperability among different companies’ products. Because SEPs must be practiced in order to comply with a given standard, SEP holders wield significant power in the industry. For that reason, ETSI requires SEP holders to commit to granting patent licenses on fair, reasonable, and non-discriminatory (FRAND) terms and conditions.

Lenovo and Ericsson are both ETSI members who made a FRAND commitment. Notwithstanding, they were unable to reach a global cross-license of their patents. Erickson sued Lenovo in district court for infringing four 5G SEPs and for breaching its FRAND commitment. The complaint also sought a declaration that Ericsson complied with its FRAND commitment regarding its cross-licensing offers to Lenovo and requested the 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 that court to determine FRAND terms for a global license between the parties. Ericsson responded by bringing two more lawsuits in Colombia and Brazil, accusing Lenovo of infringing its Colombian and Brazilian patents. Ericsson prevailed in securing injunctions against Lenovo in both countries. Lenovo then added counterclaims to the U.S. lawsuit mirroring Ericsson’s complaint and moved the district court to enter an antisuit injunction prohibiting Ericsson from enforcing its Colombian and Brazilian injunctions.

The district court denied Lenovo’s motion. The court found that the issues before it were not dispositive of the foreign action, and that alone doomed the antisuit request. Specifically, the district court reasoned that, to be dispositive, the domestic suit would have to result in a global cross-license between the parties. Even though both parties cross-requested that relief, the district court found that resolution of the suit would not necessarily lead to it. Lenovo appealed.

The Federal Circuit confirmed that the framework for analyzing foreign anti-suit injunctions was the three-part test created by the Ninth Circuit in Microsoft Corp. v. Motorola, Inc., 696 F.3d 872 (9th Cir. 2012): (1) a threshold requirement that parties and issues be the same as between the domestic and foreign suits and that the domestic suit is dispositive of the foreign action to be enjoined; (2) whether one of the antisuit-injunction factors applies; and (3) whether the antisuit injunction’s impact on comity is tolerable. The Federal Circuit found that the “key dispute” was “whether the instant suit is dispositive of the Colombian and Brazilian actions to be enjoined”—the issue on which the district court decision turned. The Federal Circuit held that the “dispositive” requirement was met based on a “critical” finding “that the suit before it would result in a license” that would terminate the effect of any foreign injunctions. In other words, the ETSI FRAND commitment precluded Ericsson from pursuing SEP-based injunctive relief unless it has first met its obligation to negotiate a license in good faith. If the district court determined that Ericsson had not complied with that obligation, that determination will preclude Ericsson from pursuing SEP-based injunctive relief. If it had complied, then the district court could enforce the global cross-license Ericsson sought in its complaint. Either way, the decision would necessarily dispose of the foreign injunction. Accordingly, the Federal Circuit vacated the district court’s denial of Lenovo’s motion for an anti-suit-injunction.

This article appeared in the 2024 Federal Circuit IP Appeals: Summaries of Key 2024 Decisions report.