Court Grants Preliminary Injunction in Ericsson, Samsung FRAND Suit

On Monday, Judge Rodney Gilstrap of the Eastern District of Texas filed a memorandum opinion granting the motion for a preliminary injunction in the patent infringement suit brought by Ericsson against Samsung. The judge found that

In December 2020, Ericsson filed a complaint against Samsung claiming that “Samsung breached its obligation to license its Standard Essential Patents (‘SEPs’) to Ericsson on fair, reasonable, and non-discriminatory (‘FRAND’) terms in accordance with the obligation Samsung made to the European Telecommunications Standard Institute (‘ETSI’), a standard development organization (‘SDO’).” Both parties develop and manufacture cellular technology and have large patent portfolios, including SEPs for 3G, 3G, 4G, and 5G cellular standards. The parties have negotiated over the past year to renew their cross-license but were unable to come to an agreement before the expiration.

The filing noted that in light of the lack of an agreement, on Dec. 7, 2020, Samsung “filed a civil complaint in the Wuhan Intermediate People’s Court of Hubei Province (the ‘Chinese Action’),” where it asked the court to: “(d)etermine the global licensing terms” and “order (Ericsson) to bear the litigation costs and the just and proper expenses incurred by (Samsung).” However, the court noted that Ericsson was not notified about the Chinese Action when it was filed and on Dec. 11, 2020, Ericsson filed its complaint against Samsung in the Eastern District of Texas. The court added that on Dec. 14, 2020, Samsung filed in the Wuhan Court seeking an anti-suit injunction (ASI) to prevent Ericsson from seeking relief. On Dec. 25, 2020, the Wuhan Court issued the ASI to enjoin Ericsson from various activities. As a result, the ASI is in effect during the Chinese Action, and Ericsson will face fines if it violates the ASI; Ericsson was notified of the ASI on Dec. 25. On Dec. 28. 2020, Ericsson requested an emergency ex parte temporary restraining order to prevent Samsung from interfering with this action or to prevent Ericsson from asserting its patent rights in the United States until an oral argument on the preliminary injunction was heard. After which, this court granted Ericsson’s motion for a temporary restraining order and a hearing for the preliminary injunction was held on Jan. 7, 2021.

According to the court, Samsung claimed that Ericsson, Inc. does not have standing to seek relief on behalf of Telefonaktiebolaget LM Ericsson because Telefonaktiebolaget LM Ericsson is the defendant in the Chinese Action, therefore it is the only entity that would face a fine under the ASI. As a result, Samsung claimed that there is no risk of irreparable harm to Ericsson, Inc. Ericsson noted that the Motion and ASI are sought for both Ericsson, Inc. and Telefonaktiebolaget LM Ericsson. Consequently, the court finds that Ericsson, Inc. and Telefonaktiebolaget LM Ericsson have standing to seek the requested relief.

The court noted that the public interest strongly supports the court continuing to exercise its jurisdiction. The court found that “both Courts can properly exercise jurisdiction over the respective causes of action brought before them.” Therefore, this court will not enforce the ASI.

The court also analyzed if the Chinese Action “would be vexatious or oppressive.” The court looked at it from the posture of both venues, which it found that in both instances “this factor supports the issuance of an anti-interference injunction.”

The court argued that under these factors an ASI is warranted in this case because some of Ericsson’s requested relief is too broad and injunctive relief should be narrow. Nevertheless, the court noted that “a tailored indemnification provision will adequately address this Court’s concern that Samsung may seek the imposition of substantial fines in the Chinese Action for the purpose of creating economic leverage against Ericsson to achieve practically what it may not be able to obtain legally.”

The court required Samsung to: “Take no action in the Chinese Action that would interfere with this Court’s jurisdiction to determine whether Ericsson or Samsung have met or breached their FRAND obligation…or that would interfere with any other cause of action before this Court”; “Take no action in the Chinese Action that would deprive Ericsson or all of its corporate partners, subsidiaries, and affiliates of their rights to assert the full scope of their U.S. patent rights…in the United States”; and “Jointly and severally indemnify Ericsson from and against all fines or other penal assessments levied against and actually incurred by Ericsson pursuant to the enforcement of the ASI.”

Ericsson is represented by McKool Smith, P.C. Samsung is represented by Gillam & Smith, LLP, as well as Kirkland & Ellis LLP and Axinn, Veltrop & Harkrider LLP.