The final weeks of 2024 have been quite impactful for standard essential patent (SEP) litigation at the EU’s Unified Patent Court (UPC). Earlier this month, the UPC’s Mannheim Local Division issued the court’s first decision addressing fair, reasonable, and nondiscriminatory (FRAND) licensing issues, a long-awaited judgment that confirmed the UPC has jurisdiction over FRAND counterclaims and addressed the proper application of EU caselaw governing SEP negotiations. Now, the UPC faces another FRAND-related issue for the first time, here as the result of a new development in the US. On December 4, accused infringer NETGEAR filed a motion for an anti-suit injunction (ASI) in a US court seeking to bar patent owner Huawei from enforcing a potential injunction in related UPC litigation. This motion, apparently the first ASI request aimed at the UPC, raises still-unanswered questions over whether the UPC’s jurisdictional limits will prevent it from issuing an anti-anti-suit injunction (AASI) in response, and if so what form that relief could take.

The underlying dispute relates to Wi-Fi 6 technology, here as covered by patents held by Huawei and declared essential to the relevant standard-setting organization—the Institute of Electrical and Electronics Engineers (IEEE)—in exchange for a commitment to license the patents on FRAND terms. NETGEAR pleads that Huawei first contacted it regarding a potential license in March 2020 but alleges that Huawei only expressed a willingness to negotiate in April 2022, a month after it had filed a pair of actions in Germany’s Regional Court of Düsseldorf against NETGEAR. Huawei then brought another two complaints against NETGEAR in the Jinan Intermediate People’s Court of China. In July 2023, as negotiations continued, Huawei next filed its first UPC case against NETGEAR, followed by a second in November 2023 that (per NETGEAR) Huawei characterized as a “extension” of the first complaint by adding an additional patent.

On January 30, 2024, NETGEAR pushed back with a lawsuit against Huawei in the Central District of California. The complaint alleges that Huawei had committed to IEEE that it would license its patents on FRAND terms “while not intending to honor its representation”, as a result of which it has “unlawfully” sought to “extract supracompetitive rates” from, and pursued injunctive relief against, NETGEAR. The complaint includes a variety of claims stemming from the allegedly fraudulent nature of Huawei’s FRAND commitments and its subsequent conduct. In particular, NETGEAR asserts claims of monopolization and unfair monopolization; breach of contract; a Racketeer Influenced and Corrupt Organizations (RICO) claim and common law fraud claim based on alleged mail and wire fraud committed when making the allegedly fraudulent FRAND commitments and in sending licensing communications; and claims of negligent misrepresentation and promissory estoppel. The plaintiff also alleges a related violation of California’s Unfair Competition Law (UCL).

In June 2024, Huawei filed a motion to dismiss, arguing that through its complaint, NETGEAR “has turned a routine patent-licensing dispute between two sophisticated parties into an unbounded, ten-count, 113-page complaint rife with tenuous legal and factual claims”. To that end, Huawei identified a host of reasons why NETGEAR’s federal antitrust, RICO, common law fraud, negligent misrepresentation, and promissory estoppel claims should be dismissed on the merits, also alleging that its California UCL claim should fail to the extent it depends on the federal claims.

That same day, Huawei also moved to strike portions of NETGEAR’s complaint related to its RICO claims that repeated allegations made by nonparties ADVA Optical Networking, Verizon, and L3Harris in unrelated litigation against Huawei in which NETGEAR was not a party, as well as allegations from a superseding indictment in the US government’s still-ongoing criminal case against Huawei over alleged IP misappropriation. Huawei argued that because “[t]he allegations are simply lifted from other pleadings in matters where NETGEAR was not a party”, and because NETGEAR had not “independently verif[ied]” them, the allegations are “immaterial” under Federal Rule of Civil Procedure 12(f) and must be dismissed.

Meanwhile, in an unrelated dispute between Ericsson and Lenovo, the Federal Circuit issued a decision that lowered a key threshold requirement for bringing ASIs targeting foreign litigation. In Ericsson v. Lenovo, the court held on October 24 that the requirement that a domestic case must be “dispositive” of a foreign action is satisfied when an ASI would merely resolve a foreign injunction and not the entire foreign proceeding. Moreover, the Federal Circuit found that under the applicable FRAND commitment—here concerning 5G cellular patents and made to the European Telecommunications Standards Institute (ETSI), an SSO based in France—a patent owner must at least comply with its FRAND obligation to negotiate in good faith in order to seek an injunction:

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.

Soon after, on November 15, NETGEAR filed a motion to bifurcate that invoked Ericsson, arguing that the decision establishes “that an SEP holder’s compliance with its FRAND commitments is a prerequisite for seeking injunctive relief” (emphasis in original). “Extrapolating” that holding to this case, NETGEAR argued that the applicable “standard of conduct” here “requires that Huawei, at a minimum, complies with its contractual obligations incumbent with the promises made to IEEE to obtain standard essential patents”. As a result, NETGEAR asked the court to hold a “preliminary mini-trial on a single discrete and dispositive question that results in the equitable enforcement of Huawei’s contract with IEEE”, through the determination of a FRAND license that would “lead to a global resolution of the disputes between the parties”.

On December 4, as a decision loomed in two of Huawei’s UPC actions (reportedly on December 18), NETGEAR then filed a request for an ASI, styled as a motion for an anti-enforcement injunction, seeking to enjoin Huawei from “seeking or enforcing injunctions obtained through proceedings in foreign courts which would enjoin the manufacturing or sale of [NETGEAR] Wi-Fi capable products based on SEPs that are subject to the worldwide licensing claims already at issue in this case”, including the SEPs asserted in the German, UPC, and Chinese actions.

NETGEAR argues in part that its motion satisfies multiple Unterweser factors, which lay out various considerations—at least one of which must be implicated—for an ASI to be granted. The company asserts that “pursuing injunctive relief against a willing manufacturer is anticompetitive, inconsistent with contractual RAND obligations, and risks harming downstream consumers”, as a result of which it argues that Unterweser factors 1 and 4 (contemplating whether public policy is frustrated and other equitable considerations, respectively) are satisfied. NETGEAR further contends that because the FRAND commitments are undisputedly contractual in nature, and because Huawei’s pursuit of foreign litigation (“bullying tactics”) would possibly force NETGEAR to accept supra-FRAND terms before the court can decide those contractual issues, Huawei’s conduct threatens the court’s jurisdiction as contemplated by Unterweser factor 3. Finally, based on the economic impact on NETGEAR that would be caused by the foreign injunctions sought by Huawei, which NETGEAR claims serve “no purpose other than to harass [NETGEAR] and cause unnecessary expense”, NETGEAR alleges that the requested foreign injunctions are “vexatious and oppressive” as contemplated by Unterweser factor 2. (Note that NETGEAR’s motion appears to switch the numbering typically used for those last two factors, treating the one concerning threats to jurisdiction as factor 2 and the “vexatious and oppressive” one as factor 3.)

In the alternative, should such an injunction not be “available”, NETGEAR’s motion also asks the court to set the terms of an interim license through the date when the court sets the terms of a final FRAND license—reportedly the first time a US court has been asked to do so in a SEP case. Rather than the allegedly “supracompetitive” rates sought by Huawei, NETGEAR proposes that the court adopt a lump sum interim license payment that it proposed during meet and confer, certain details of which are redacted from the public version of its motion. The proposed lump sum allegedly “accounts for a significant Qualcomm exhaustion issue”, apparently a reference to arguments raised in the complaint that based on NETGEAR’s purchase of modem chipsets from Qualcomm, Huawei’s rights in certain patents were exhausted as to NETGEAR. Additionally, NETGEAR apparently proposes certain adjustments based on Huawei’s participation in a Wi-Fi 6 patent pool in which its patents make up “approximately half” of those offered for license through that pool. (While the name of the aggregator is redacted from the public version of the motion, the specified details point to Sisvel International S.A.’s Wi-Fi 6 pool, of which Huawei is a founding member and reportedly contributes a majority of its patents.)

It is not yet clear how the UPC will respond to NETGEAR’s motion, since as noted above the court’s limited jurisdiction could complicate matters: While a national court could just issue an AASI that would bar a movant from further pursing its ASI in a foreign court, the UPC Agreement (the treaty that established the UPC) only contemplates injunctions against the infringement of EU SEPs. While this could prevent the UPC from issuing an AASI impacting foreign litigation, the UPC could still have room to maneuver here. In particular, IP Fray has stated that the UPC may still decide to issue an AASI (see here), observing that German courts have opted to issue AASIs where they would not have had jurisdiction over ASIs where necessary to defend against “foreign interference with patents that were enforceable in Germany” (see here)—or that in the alternative, the UPC could sanction NETGEAR for trying to undermine the UPC proceedings.

RPX’s coverage of the UPC’s first FRAND decision can be found here. More on SEP matters at the UPC, as well as in the UK and US, is also available in RPX’s third-quarter review. RPX members additionally have exclusive access to a webinar produced in parallel with that report that takes a closer look at the UPC, including a primer on the court and the Unitary Patent, the UPC’s caseload and NPE filings, and a look at what is attracting patent plaintiffs and litigation funders to the court, plus a deep dive on outcomes and remaining uncertainties on some key issues.