10.13.1 Standard-essential patents and FRAND licensing enforcement
As a way of aiding the development, adoption, and advancement of a growing range of network technologies, standard-setting organizations (SSOs) bring together engineers from multiple enterprises and universities to develop industry-wide technical standards. Participants in the standard-setting processes commit to making their patented technologies available to others on FRAND terms. Such projects are commonly pursued in the digital technology industries, where they have facilitated joint innovation and product development. For antitrust and other business reasons, these consortia rarely establish licensing rates. In addition, they do not always specify which patents are covered. The emergence of standard-essential patents (SEPs) and related contractual commitments to license such patents on FRAND terms over the past decade has spawned a complex set of patent-related cases with distinctive case management aspects.
10.13.1.1 FRAND rate-setting litigation
Standards implementers who have not been able to work out a licensing agreement with SEP owners can file declaratory judgment breach of contract actions asserting that the SEP owners have breached their FRAND obligations by not offering the implementers FRAND licensing rates.376 The implementers have standing to bring such actions as third-party beneficiaries of the SEP consortium. The SEP owner will typically counterclaim for patent infringement. The counterclaim brings the litigation within the appellate purview of the Federal Circuit, although it is obliged to apply regional circuit contract law. If no patent counterclaim is asserted, the contract-based cause of action is reviewable in the regional circuit court covering the district court handling the litigation.
10.13.1.2 Anti-suit injunction litigation
Global battles over SEPs and FRAND rate-setting have international forum shopping. Companies have sought to establish global FRAND rates by seeking so-called anti-suit injunctions barring a defendant from commencing or requiring that they cease to pursue parallel litigation regarding the FRAND dispute.
Thus far, U.S. courts have resisted efforts to impose such restraints on U.S. litigation. Several months after Microsoft filed a declaratory relief action against Motorola seeking to set a worldwide FRAND rate for two SEPs, Motorola filed an action in Germany alleging that Microsoft infringed German patents covered by the same contractual FRAND commitments at issue in the U.S. case. After the German court issued an injunction prohibiting Microsoft from infringing Motorola’s German patents, the U.S. district court prohibited Motorola from enforcing that injunction.377 The district court reasoned that the FRAND commitment required Motorola to license its SEPs on a “worldwide basis.” Since the U.S. court was charged with determining the parties’ worldwide rights, it was also responsible for deciding whether injunctive relief was allowed under the FRAND agreement. The court concluded that enforcing the German injunction would frustrate the district court’s ability to adjudicate the issues properly before it.
In another controversy, a U.S. court repelled an effort by a foreign court to enjoin U.S. patent enforcement and rate-setting.378 After negotiations between Samsung and Ericsson over the renewal of their global patent cross-licensing agreement broke down in 2020, Samsung filed a suit in China asking the court to determine the global licensing terms in accordance with the applicable FRAND agreement. Samsung neglected to provide notice to Ericsson of the Chinese action. Upon learning of the filing, Ericsson filed a parallel action in the Eastern District of Texas on December 11, 2020. Three days later, Samsung requested the Chinese court to issue an anti-suit injunction, which the Chinese court granted on December 25, 2020. On December 28, 2020, Ericsson sought a TRO in the Eastern District of Texas prohibiting Samsung from enforcing the anti-suit injunction issued by the Chinese court. Concluding that the anti-suit injunction would be vexatious or oppressive, the Eastern District of Texas granted Ericsson’s request for an anti-anti-suit (or anti-interference) injunction to prevent Samsung from attempting to enforce the Chinese anti-suit injunction and thereby interfering with the Eastern District of Texas’s exercise of its own jurisdiction.379