Standard essential patent (SEP) disputes often involve litigation in multiple different countries, which frequently leads to battles over jurisdiction as parties seek to have their claims decided in a preferred venue. One tool for doing so is a motion for an anti-suit injunction, which asks a court in one country to bar an opposing party from pursuing claims in a court in another country—or to bar the enforcement of decisions from the foreign court. Now, the Federal Circuit has weighed in on a key aspect of the caselaw governing such motions in the US. On October 24, the appellate court issued a precedential decision, in Ericsson v. Lenovo, that revisited the standard for a key threshold issue for anti-suit injunctions, loosening the requirement that a domestic case must be “dispositive” of a foreign action.

The underlying dispute stems from attempts by Ericsson and Lenovo to reach a cross-license that would include Ericsson patents declared essential to the 5G standard developed by the European Telecommunications Standards Institute (ETSI), a standard-setting organization (SSO) based in France. ETSI members (including both Ericsson and Lenovo) that have declared their patents essential to standards governed by the SSO do so under the ETSI IPR Policy, under which they agree to offer their patents for licensing on fair, reasonable, and nondiscriminatory (FRAND) “terms and conditions”, a “FRAND commitment” governed by French law.

Several dueling lawsuits resulted after the parties were unable to reach an agreement. On October 11, 2023, Ericsson made a “final licensing offer” and sued Lenovo in the Eastern District of North Carolina, alleging infringement of four Ericsson SEPs, seeking a declaration that Lenovo had not complied with its FRAND commitment by allegedly failing to negotiate in good faith, requesting a judgment that Ericsson had complied with its own FRAND commitment, and if not asking the court to set the terms of a global FRAND cross-license. Two days later, Lenovo filed a rate-setting case in the UK, where courts have asserted the jurisdiction to set the terms of global FRAND licenses even without the consent of both parties (unlike in the US). In November 2023, Ericsson then brought additional litigation against Lenovo in Brazil and Colombia, obtaining injunctions in Brazil later that month and in Colombia in December. Weeks later, Lenovo filed counterclaims in the US action alleging that Ericsson infringed four 5G SEPs, asserting that Ericsson breached its FRAND commitment, and also asking the court to set the terms of a global FRAND cross-license.

On December 29, Lenovo asked the Eastern District of North Carolina to issue an anti-suit injunction to block Ericsson from enforcing the injunctions in the Brazilian and Columbian suits. Lenovo argued that because the SEPs at issue in those cases are bound by the same FRAND commitments underpinning the contractual licensing issues at issue in the US proceedings, the foreign injunctions threatened the US court’s ability to resolve the dispute. Moreover, it argued that the issue of a global rate is squarely before the US court by virtue of the parties’ respective requests for a FRAND determination, and that a rate set by the court would moot the foreign actions.

However, District Judge Terrence W. Boyle denied that motion on February 13, 2024, holding that Lenovo’s motion failed to clear one of the “threshold” requirements for such an anti-suit injunction established by the Ninth Circuit’s 2015 decision in Microsoft v. Motorola, that the domestic suit would be “dispositive” of the Brazilian and Columbian suits. The issue, per Judge Boyle, is that the claims before the court would not necessarily result in a global license: While Lenovo’s counterclaim sought a FRAND determination without qualification, Ericsson’s own FRAND determination claim was “contingent”: The plaintiff first requested a declaration that its October 11, 2023 licensing offer had been FRAND, and only asked the court to set a FRAND rate if it were to find that offer non-FRAND. Since Lenovo had not committed to accepting Ericsson’s offer if found to be FRAND, and could not be forced to, Judge Boyle held that the action could not be dispositive. As a result, the district court did not reach the applicable anti-suit injunction factors, which address “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]” (quoting the district court’s recitation of the test from Microsoft), after which a court considers the impact of the anti-suit injunction on comity (an international law concept describing the “degree of deference that a domestic forum must pay to the act of a foreign government not otherwise binding on the forum”).

The Federal Circuit reached the opposite conclusion in its October 24 decision on appeal, rejecting the interpretation of the “dispositive” requirement relied upon by the district court and Ericsson. In doing so, it declined to accept two key, underlying arguments: The first was the implicit argument “that the domestic suit should resolve not just an injunction, but instead the entire foreign proceeding (e.g., by resulting in a license)”; and the second was the explicit argument that “that the domestic suit must necessarily—not just potentially—lead to the relevant resolution of the foreign action to be enjoined” (emphasis in original). The Federal Circuit held that this reading of the “dispositive” requirement was based on a “misunderstanding” of the Microsoft district court and appellate opinions: Neither treated as “critical” whether the suit would result in a license, while key language in both decisions, viewed in context, made it clear that the operative focus was on the patent owner’s ability to “seek SEP-related injunctive relief”, the court determined. Moreover, the Federal Circuit observed that under the anti-suit injunction issued in that case, patent owner “Motorola was permitted to move forward with the rest of the foreign proceeding while the antisuit injunction was in place—an incongruous result if what really mattered was that the domestic suit was going to settle the patent war once and for all” (emphasis in original).

Additionally, as for the position that “the relevant foreign-action resolution cannot depend merely on the potential that one party’s view of the facts or law prevails in the domestic suit” (emphasis in original), the Federal Circuit again found the Ninth Circuit opinion to be “clear on this point” by affirming the issuance of an anti-suit injunction that did not necessarily depend on one party’s view taking precedence: one based on the “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” (quoting Ninth Circuit opinion; emphasis added by Federal Circuit).

The Federal Circuit then outlined its contrary ruling as follows:

We conclude that the “dispositive” requirement can be met even though a foreign antisuit injunction would resolve only a foreign injunction (and not the entire foreign proceeding), and even though the relevant resolution depends on the potential that one party’s view of the facts or law prevails in the domestic suit.

(Emphasis in original.)

Applying the above standard, the Federal Circuit found that the “dispositive” requirement was met in this case—agreeing with Lenovo’s argument, as a matter of contract interpretation, that Ericsson’s FRAND commitment to ETSI would bar it from seeking injunctive relief unless it has first negotiated for a license in good faith:

Given the SEP-related concerns underlying the FRAND commitment, if the FRAND commitment means anything of substance, it must mean that an SEP holder that has made such a commitment cannot just spring injunctive actions against other standard implementers without having first complied with some standard of conduct. That standard of conduct, we conclude, must be—at a minimum—the very one imposed by the FRAND commitment’s good-faith-negotiating obligation.

(Emphasis in original.) The Federal Circuit characterized this interpretation as consistent with other courts addressing the FRAND commitment, both generally and in the context of the ETSI IPR Policy (including the UK Supreme Court’s 2020 decision in Unwired Planet v. Huawei and the Northern District of California’s 2013 opinion in Realtek Semiconductor v. LSI). The court further noted, in a footnote, that its conclusion was also consistent with the “general common-law principle, recognized in at least this country, that ‘one seeking equitable relief [e.g., an injunction] must do equity and come into court with clean hands’” (citations omitted).

Ericsson argued that it should be the Colombian and Brazilian courts that decide this issue of contract interpretation, not the district court or the Federal Circuit. Here, the Federal Circuit remarked that this argument appeared to support the position that anti-suit injunctions would be “inappropriate under any circumstances”: In Microsoft, the Ninth Circuit observed that if the threshold is whether two different jurisdictions would answer the “same legal question difficulty[,] . . . then there could virtually never be a foreign anti-suit injunction”. Regardless, the Federal Circuit held that this question is more appropriately resolved in the second or third parts of the anti-injunction framework laid out by that case, as this “simply has less to do with the ‘dispositive’ requirement”.

Having reversed the lower court’s application of the “dispositive” requirement, the Federal Circuit concluded by reversing and remanding for further proceedings, declining to either direct the entry of an anti-suit injunction outright (as sought by Lenovo) or perform the remaining analysis in this appeal (as requested by Ericsson).