Europe’s Unified Patent Court (UPC) has had a busy winter. In the final months of 2024, two of the UPC’s German local divisions issued the court’s first two final decisions addressing fair, reasonable, and nondiscriminatory (FRAND) licensing issues. A newly released ruling now shows that the court has also fired back against a jurisdictional challenge related to the second of those decisions, in which the Munich Local Division (Munich LD) imposed an injunction against implementer NETGEAR for standard essential patent (SEP) owner Huawei on December 18. Earlier that month, as that decision loomed, NETGEAR asked a US court to bar Huawei from enforcing that injunction (essentially, filing a motion for an anti-suit injunction, or ASI). The Munich LD has since disclosed that on December 11, it issued an ex parte anti-anti-suit injunction (AASI) barring NETGEAR from further pursuing that motion—revealing in the process that it had already decided another AASI motion in an unrelated case. These latest developments appear to have prompted the parties to resolve their dispute: On January 3, they jointly filed a motion to stay pending the finalization of a settlement agreement.
As previously recounted by RPX, the underlying licensing dispute began in March 2020 and hit the courts in March 2022, when Huawei filed a pair of actions in Germany’s Regional Court of Düsseldorf against NETGEAR, followed by another two complaints against the company in the Jinan Intermediate People’s Court of China. In July 2023, Huawei next filed its first UPC case against NETGEAR—the one decided in December—followed by a second in November 2023.
In January 2024, NETGEAR responded to those cases with a complaint in the Central District of California, arguing that the patent owner’s commitment to the relevant standard-setting organization, the Institute of Electrical and Electronics Engineers (IEEE), that it would license its Wi-Fi patents on FRAND terms had been fraudulent. Through those allegedly fraudulent FRAND commitments, NETGEAR alleged that Huawei had “unlawfully” sought to “extract supracompetitive rates” from, and pursued injunctive relief against, NETGEAR. The complaint included a variety of claims stemming from the allegedly fraudulent nature of Huawei’s FRAND commitments and its subsequent conduct, ranging from antitrust violations to RICO and fraud claims; Huawei later filed a motion to dismiss that complaint, and another seeking to strike certain facts taken from unrelated cases.
With Injunctions Looming, NETGEAR Seeks to Block Enforcement
In June 2024, the Jinan Intermediate People’s Court then issued a decision against NETGEAR, imposing an injunction and finding in Huawei’s favor and against NETGEAR as to the parties’ respective compliance with their FRAND commitments during negotiations. In particular, per a summary from Huawei, the court faulted NETGEAR for engaging in undue delay, making an “unreasonable counteroffer”, and failing to “actively respond to Huawei’s negotiation invitation”, the court finding that NETGEAR had “committed obvious faults during the negotiations”. A declaration submitted by NETGEAR’s Chinese counsel in the US case indicated that Huawei did not seek a global FRAND rate determination in its Jinan action, just an injunction; that the decision is currently on appeal before the Supreme People’s Court; and that the injunctions are currently pending, though Huawei may apply for an interim injunction in the meantime.
In October, as the UPC moved closer to its own FRAND decision in the first of Huawei’s cases, a development in the US prompted NETGEAR’s jurisdictional attack: In Ericsson v. Lenovo, the Federal Circuit lowered a key threshold requirement for filing an ASI targeting foreign litigation, that the domestic case must be “dispositive” of a foreign action—holding that this requirement 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.
On December 4, as the deadline for the UPC’s just-issued decision approached, NETGEAR filed a request for an ASI, styled as a motion for an anti-enforcement injunction, that invoked Ericsson, seeking to enjoin Huawei from seeking or enforcing injunctions against NETGEAR Wi-Fi products based on the SEPs at issue, including those asserted in the German, Chinese, and UPC actions.
Five days later, Huawei filed an application for an anti-anti-suit injunction with the UPC’s Munich LD. That request, according to a summary in the court’s decision (reviewed here, and quoted throughout, based on a machine translation from the original German), argued that both European and German law applies, the latter because the European Patent Organization (EPO) is headquartered in Munich. As such, Huawei pointed to the prevailing view that in German higher courts, “the application for such an anti-enforcement injunction or anti-suit injunction is unlawful” as an “encroachment” on the rights of the patent holder. A request for an AASI is justified, Huawei argued, because two of the independent bases for such relief as established by applicable German caselaw have been met: that an implementer has threatened to file a motion for an ASI and has in fact actually filed one.
Moreover, Huawei cited the fact, per the UPC’s summary, “US courts have a particularly ‘generous’ legal opinion with regard to anti-suit injunctions”; and argued that NETGEAR’s ASI request presented an “immediate and tangible danger of an encroachment” on Huawei’s patent rights, that Huawei’s prompt request for an AASI combined with the US court’s pending ruling satisfied urgency requirements, and that its interest in an AASI outweighed any harm to NETGEAR. Additionally, since US courts may issue an ASI or even an anti-anti-anti-suit injunction on an ex parte basis (i.e., without the participation of the party to be enjoined) and within one day, Huawei asserted that was necessary for the UPC to decide its request for an AASI ex parte as well.
Munich LD Grants Ex Parte AASI
The Munich LD granted that motion on December 11, though the UPC did not announce or publish that decision until weeks later. The court began its analysis by revealing that this was not actually the first time it had addressed the admissibility of a request for an AASI—stating that the same court had “already decided” that issue (though without here specifying the outcome of that particular motion) two days before, on December 9, in another case. While the court did not identify the case in question, IP Fray has reported based on a review of Munich LD panel assignments, timing, and the small size of the UPC’s current SEP caseload that the “most likely” candidate is a case filed against Xiaomi by Advanced Standard Communication LLC, a Delaware entity disclosing a generic Garland, Texas address, over a European patent originating with ZTE (EP 3 016 464). (RPX has previously reported that in March and April 2023, Advanced Standard Communication acquired roughly 50 US patent assets from ZTE, a transaction for which a Munich-based IP professional signed on the assignee’s behalf as proxy-holder.)
The court’s ensuing analysis confirmed that in the view of the Munich LD, the UPC does have the authority to issue AASIs—holding that Article 31 of the UPC Agreement (the treaty that created the UPC) establishes the court’s “international jurisdiction”; that Article 32(1) establishes the court’s authority to issue interim injunctions; and that Article 32(1)(a) establishes UPC’s authority to issue relief for patent infringement as an encroachment on the rights of the patent holder. An action seeking to bar the patent holder from enforcing its patents also constitutes such an encroachment on patent rights, the court determined—further holding that UPC local divisions where the underlying infringement occurred are empowered to issue AASIs by Article 33(1). The Munich LD also clarified that this authority does not extend to European patents that have been opted out of the UPC’s jurisdiction under Article 83(3), pursuant to the transitional regime wherein the UPC and national courts otherwise share jurisdiction over European patents not opted out.
Furthermore, the Munich LD ruled that Huawei’s request for an AASI was “well-founded” under Article 47(1) of the EU Charter, which gives every person with rights or freedoms guaranteed under EU law—which includes IP rights, per Article 17(2) of that charter—the right to an effective remedy before a tribunal (i.e., a general right to justice and of access to justice). The court additionally found that this same right to property protection was also reflected in German law, though it declined to decide whether German law uniformly applies due to the EPO being based in Munich, as Huawei had argued—finding merely that it had no basis to conclude that any other EU court would take a different approach and acquiesce to the US court’s ASI.
The Munich LD then performed a balancing of interests of the parties and found them to weigh in Huawei’s favor, finding sufficient urgency with respect to the timing of related proceedings and with respect to “objective” urgency, in that an ASI from the US court would remove Huawei’s ability to enforce its patents elsewhere, including at the UPC, plus the threat of sanctions from the US court for any violation of an ASI. In contrast, the Munich LD found that any damage to NETGEAR would be “less serious”, as it would not be barred from “enforcing [its] rights under [Huawei’s] declaration to IEEE” (i.e., it could still pursue claims based on Huawei’s FRAND commitment).
The Munich LD next found that granting the AASI with no hearing for NETGEAR was justified, finding that the record showed that NETGEAR would otherwise seek a temporary restraining order in the US, thereby accelerating those proceedings even further.
Finally, the court held that Huawei would be required to provide a €3M security within 20 days, prior to which the AASI would be immediately enforceable.
UPC’s Final Decision Imposes FRAND Injunction Against NETGEAR; Parties Settle
Of course, this was not the last setback for NETGEAR: As mentioned above, the Munich LD issued its final decision on the merits on December 18, ruling that the accused NETGEAR routers infringe the patent-in-suit based on their implementation of certain aspects of the Wi-Fi 6 (802.11ax 2021) standard and imposing an injunction barring their sale in Germany, Belgium, Italy, Finland, France, and Sweden. However, the court agreed with NETGEAR that Huawei’s patent rights were exhausted as to certain NETGEAR routers incorporating modems from Qualcomm, as the result of a prior license between that company and Huawei. The Munich LD also rejected NETGEAR’s FRAND defense, including its arguments based on antitrust law—in the process, further clarifying the SEP licensing principles first established by the Mannheim Local Division (Mannheim LD) in late November. In addition, the Mannheim LD rejected the implementer’s FRAND defense based on contract law, declining to find that its FRAND commitment to IEEE barred Huawei from seeking injunctive relief.
Despite that decision and the court’s grant of an AASI against it, NETGEAR initially indicated that it would continue to push ahead and seek certain relief from the Central District of California: On December 23, the company dropped its request for an anti-enforcement injunction but maintained its alternative request, made in that same motion, for an interim license covering NETGEAR until the court were to set the terms of a final FRAND license.
However, the parties’ January 3 joint notice of settlement and motion to stay would seem to suggest otherwise, as it asks the court to halt further proceedings for that motion and several others. Among them is NETGEAR’s November 15 motion to bifurcate, in which it argued that the court should hold a mini-trial to determine a FRAND license; as well as Huawei’s aforementioned motions to dismiss and strike, which were filed in June. The parties have informed the court that they “will promptly file a stipulation of joint dismissal with prejudice of the claims in this action upon Netgear’s completion of terms required under a license agreement under which Netgear took a license to certain Huawei patents”.
A deep dive on the Munich LD’s FRAND decision in this case and motion practice in NETGEAR’s US suit can be found at “UPC Issues Second FRAND Decision as Jurisdictional Battle Brews” (December 2024).
For more on key UPC developments this past year, stay tuned for RPX’s upcoming review of the fourth quarter and 2024.
