The Intersection of FRAND Obligations and Anti-Suit Injunctions

TELEFONAKTIEBOLAGET LM ERICSSON v. LENOVO (UNITED STATES), INC.

Before Lourie, Prost, and Reyna.  Appeal from the Eastern District of North Carolina.

Summary: The threshold requirement for anti-suit injunctions, that the domestic suit must be dispositive of the foreign action, is satisfied when the domestic suit considers whether the party seeking foreign injunctions has engaged in fair, reasonable, and non-discriminatory (“FRAND”) licensing negotiations prior to seeking the injunctions.

Both Lenovo and Ericsson are members of the European Telecommunications Standards Institute (“ETSI”), which developed the standard for determining which 5G-related patents were considered Standard Essential Patents (“SEPs”). Members of ESTI agreed to a policy that requires they “‘grant irrevocable licen[s]es’ to their SEPs on ‘fair, reasonable[,] and non-discriminatory [FRAND] terms and conditions.’” Both Lenovo and Ericsson agreed that “the FRAND commitment includes an obligation to negotiate in good faith over licenses to SEPs.”

After the parties failed to reach agreement on a global cross-license for 5G SEPs, Ericsson sued Lenovo in the Eastern District of North Carolina for patent infringement and breach of its FRAND commitment to negotiate in good faith. Ericsson also sought a declaration that it had complied with its FRAND commitment to negotiate in good faith. Later, Ericsson sued Lenovo in Columbia and Brazil seeking a preliminary injunction based on its SEPs in those countries. Both injunctions were granted within a few weeks. In response, Lenovo filed a motion in the district court for an anti-suit injunction prohibiting Ericsson from enforcing its Brazilian and Columbian injunctions.

The district court denied the motion and held that a threshold requirement for anti-suit injunctions—that the domestic suit be “dispositive of the foreign action to be enjoined”—was not satisfied. The district court reasoned that, “to be dispositive, the domestic suit would have to result in a global cross-license between the parties.” Because there was no guarantee that such a license would result from the litigation, the district court held that the domestic suit was not dispositive of the foreign action and denied the anti-suit injunction.

The Federal Circuit vacated the district court’s decision. The Federal Circuit stated that, if the district court ruled that Ericsson had not complied with its FRAND commitment, then Ericsson would be precluded from seeking foreign injunctions related to those patents. Thus, the Federal Circuit held that the question before the district court – whether Ericsson had in-fact negotiated in good faith – could be dispositive of the foreign actions. Because this threshold requirement was satisfied, the Federal Circuit remanded for consideration of the remaining anti-suit injunction factors.

Editor: Sean Murray