Chinese mobile phone manufacturer Xiaomi has suffered a setback in its global SEP dispute with InterDigital. The Regional Court Munich prohibited Xiaomi from enforcing an anti-suit injunction from a court in Wuhan from last year. InterDigital can now file patent infringement suits against Xiaomi in Germany.
26 February 2021 by Mathieu Klos
The Munich Regional Court yesterday confirmed a preliminary injunction against Xiaomi from 9 November, directed against four Chinese subsidiaries of Xiaomi. The companies are no longer allowed to enforce an anti-suit injunction from the Wuhan Intermediate People’s Court against InterDigital in Germany.
The Wuhan anti-suit injunction prohibits InterDigital from filing global lawsuits based on patents related to 3G and 4G mobile standards, until the Wuhan court has ruled on Xiaomi’s suit for a global FRAND licence. At the same time, the Chinese court barred InterDigital from taking action against the anti-suit injunction in other countries: an anti-anti-anti-suit injunction.
Unsurprisingly, the Munich patent judges ruled in November that both orders from China do not apply in Germany. Xiaomi filed an opposition against this preliminary injunction. But the Munich court has rejected this after a hearing (case ID: 7 O 14276/29).
Xiaomi may not pursue the ASI from Wuhan; it also cannot take any measures to prevent InterDigital from filing patent lawsuits in Germany. This order is a fourfold anti-suit injunction.
InterDigital could now file patent suits in Germany. So far, the US company has refrained from doing so. However, Xiaomi can appeal against the Regional Court Munich’s decision. Observers consider this likely, because the opponents tend to be very adamant in such anti-suit injunction battles.
On the other hand, if Xiaomi ignores the Munich ruling, it faces regulatory penalties in Germany. However, InterDigital had not sued the German Xiaomi company – rather, its Chinese subsidiaries. It is thus likely to be difficult for InterDigital to enforce the injunctions.
In its opposition, Xiaomi argued that InterDigital’s preliminary injunction was not urgent and that a parallel AASI proceeding in India means a dual lis pendens (in German: doppelte Rechtshängigkeit). However, the Munich judges did not allow these arguments.
The ASI battle developed after licensing negotiations between Xiaomi and InterDigital were unsuccessful. Xiaomi then sued for a global FRAND licence in Wuhan. Back in September 2020, the Wuhan court issued the ASI and AAASI (case ID: (2020) E 01 Zhi Min Chu 169). At the end of September, Interdigital countered with an AASI and AAASI from the Delhi High Court (case ID. 8772/2020 in CS(COMM) 295/2020). A month later, InterDigital filed the same applications in Munich.
The Munich judgment is now contrary to the Wuhan ruling. InterDigital, for its part, is threatened with penalties in China if it ignores the ASI from Wuhan.
But a quick settlement between the two parties to the dispute is still doubtful. For, in each case, the courts are likely to find it difficult to enforce their orders. It is more likely that InterDigital will ignore the orders in China and file SEP lawsuits in Germany. It is equally likely that Xiaomi will ignore the orders from Munich.
Recently, similar stalemates have occurred in other ASI battles, where neither party to the dispute gained an advantage in court and economic arguments ultimately tipped the balance in favour of settling the dispute.
Apparently, ASIs are the new ‘magic bullet’ in global SEP and FRAND battles. On Christmas Eve 2020, the Wuhan Intermediate Court of China issued an ASI on Samsung’s request against Ericsson (case ID: (2020) E 01 Zhi Min Chu 743).
The Chinese court then established its jurisdiction to set a global FRAND rate in the licensing dispute between Ericsson and Samsung. It prohibited the Swedish mobile phone company from enforcing an injunction against Samsung under its 4G and 5G patents. Furthermore, no other court may set Ericsson a FRAND licence.
However, Ericsson ignored the harsh sanction threats from Wuhan. Immediately after Christmas, it filed an AASI at the District Court of Texas. The court temporarily allowed Ericsson to proceed with its FRAND lawsuit. On 12 January, the Texas court extended the measure (case ID: 2:20-CV-00380-JRG).
The ASI against Ericsson is now the second of its kind ordered by the Wuhan court. Previously, the Wuhan court had ordered the ASI and AAASI against InterDigital.
Last summer, 5G giant Huawei applied to the Supreme Court of China for an ASI, in its SEP battle with NPE Conversant. As such, the Chinese court prohibited Conversant from enforcing the Düsseldorf judgments (case ID: 2019 Zui Gao Fa Zhi Min Zhong No.732, 733, 734 Part I).
Prior to this, the famous ASI battle in the German connected cars dispute between Nokia, and Daimler and its suppliers raged on. Daimler’s co-litigant Continental applied to a US court for an anti-suit injunction. However, the Regional and Higher Regional Courts of Munich declared an ASI incompatible with German law.
Both Arnold Ruess and Hogan Lovells appeared for the first time in the proceedings for clients InterDigital and Xiaomi. The Chinese mobile phone manufacturer is no stranger to European patent litigation. It faces SEP lawsuits in the UK, as well as in the Netherlands, Italy and Germany.
In Italy, Xiaomi works with Trevisan & Cuonzo; in the UK with Kirkland & Ellis and Powell Gilbert; and in the Netherlands, with Brinkhof and Simmons & Simmons respectively. Most recently, the German patent team of Simmons & Simmons also appeared alongside Xiaomi in lawsuits brought by Sisvel.
In Germany, the Chinese mobile phone manufacturer previously worked regularly with Vossius & Partner. Hogan Lovells has not yet appeared publicly on Xiaomi’s side. However, the patent team has good relations with ZTE, another Chinese mobile phone manufacturer. The team was involved in the Huawei vs. ZTE decision of the CJEU.
Arnold Ruess (Düsseldorf): Arno Riße (lead), Cordula Schumacher, Lisa Schneider
In-house (Wilmington): Steve Akerley, (VP, Head of Litigation)
Hogan Lovells (Düsseldorf): Andreas von Falck (lead), Diana Rodriguez
Regional Court Munich, 7th Civil Chamber
Matthias Zigann (presiding judge), Hubertus Schacht, Georg Werner