Wuhan, China is currently a destination jurisdiction for anti-suit injunctions (ASI) and anti-anti-suit injunctions (AASI). Although the first AASI was issued in a Wuhan maritime case in July 2017, the IP judiciary started to more seriously consider ASI’s. The ramp-up occurred around the time of a conference that I attended in China in mid-January of 2020 on the subject of ASI’s. At that conference, Chinese judges noted that the Civil Procedure Law (Article IX, Sec. 100) regarding “action preservation” would encompass anti-suit injunctions and that ASI’s should be issued by the Chinese courts. Subsequent to that conference, an ASI was issued by a Wuhan court in the Xiaomi v. Interdigital case, which was followed by an AASI from the Delhi High Court in India (discussed in the excellent blog of Yang Yu and Jorge Contreras). This December, Samsung also filed a suit against Ericsson in Wuhan and obtained an ASI to counter Ericsson’s earlier-filed suit against Samsung in the Eastern District of Texas. Today, December 28, 2020, the Eastern District of Texas granted an AASI against Samsung in response to an ex parte motion of Ericsson filed on the same day (Ericsson Inc. v. Samsung Electronics Co., Ltd, Civil Action No. 2:20-cv-380-JRG) (the “Order”).
Ericsson is seeking to resolve a FRAND dispute with Samsung. Ericsson publicly filed its case in Texas on December 11, 2020. Ericsson first became aware of the Wuhan lawsuit on December 17, 2020. Ericsson claims that the Wuhan suit was secretly filed on December 7, 2020 and was hid from Ericsson for ten days. Samsung sought an ASI from Wuhan on December 14, 2020. Ericsson had “no advance notice of the Wuhan antisuit injunction until the moment it was issued” on Christmas morning, December 25, 2020. Ericsson’s request for an AASI, styled as an “Emergency Application for Temporary Restraining Order and Anti-Interference Injunction Related to Samsung’s Lawsuit Filed in the Wuhan Intermediate People’s Court of China” was filed on Dec. 28, 2020, the Order was issued shortly thereafter on that same day.
Please note that I have not yet seen copies of any of the Wuhan filings. I am accepting all its allegations for purposes of this blog as true.
The facts alleged do not present an unusual situation. They are similar to other cases in China where the lack of transparency had been leveraged for strategic advantage and a case was prosecuted at an odd time in an odd court. The Veeco case, for example, involved an injunction issued “without providing notice … and without hearing” in order to undermine a foreign proceeding. The case was also filed at less well-known for court for semiconductor related litigation that had gained a recent reputation for issuing preliminary injunctions, As in the Samsung case, the Chinese court also had little relationship with either of the parties. Relief was also granted by the Chinese court against a US party within days of a US holiday. A similar issue involving non-transparency arose with respect to the Inter Digital case. Issues involving the actual date of filing of a “secretly” hidden case have also arisen from time to time, particularly under former civil procedure rules which permitted courts to avoid disclosing a filing of a case until 10 days after the case had been formally “established” and thereby led to suspicions of backdating of case filings.
The ASI issued by the Wuhan court bars Ericsson from (1) seeking injunctive relief on 4G and 5G SEPs around the world; (2) seeking a FRAND adjudication anywhere other than Wuhan; and (3) seeking an AASI. To counter this ASI, Chief Judge Gilstrap’s AASI: restrains Samsung from seeking injunctions that would impair the jurisdiction of the US court or from filing lawsuits or administrative actions to enforce or defend its United States patent rights; indemnifies Ericsson; and requires Samsung to provide Ericsson with copies of all court papers in the Wuhan matter.
At one time Chinese courts generally ignored ASI’s. However, as I have previously noted, it is now “wrong to assume that Chinse courts take a strictly ‘hands-off’ attitude towards foreign proceedings.” ASI’s are increasing. There are, however, certain systemic problems and strategic considerations that should be considered by China in granting ASI’s.
Among the procedural challenges are the lack of transparency in China’s civil procedure and preliminary injunction practice, including problems concerning service of process, and special rules that apply to foreign service of process. The problem of lack of transparency in preliminary relief in China is one that I have discussed several times in this blog. There are also inherent strategic advantages in China’s expedited civil process that may mitigate against issuance of an ASI. A Chinese court can reach a decision well in advance of most foreign courts and leverage its automatic injunction to help compel settlements, thereby averting the need for an ASI in some instances.
Substantive adjudication is also impaired by notions of judicial sovereignty and overly aggressive jurisdictional reach. Judicial sovereignty has become an increasing concern of China’s leadership, but it is not the same as comity, which seeks to minimize the impact of one court’s decision on another court’s legitimate interests. Ericsson sought to address comity concerns in its motion by noting that the Wuhan suit’s claims were a subset of the US court action. Ericsson argued that it was “not asking this Court to stop Samsung from proceeding in the Wuhan suit. Rather, Ericsson is asking this Court to order Samsung not to further pursue or enforce injunctions from other courts that would interfere with the jurisdiction of this Court.” Foreign courts that directly or indirectly seek to restrain or adjudicate matters involving US patent validity or infringement are likely to raise serious concerns with US judges about comity. Chief Judge Gilstrap addressed this issue by reaffirming the primacy of his court in the AASI in ensuring that Ericsson has the ability “to enforce or defend its United States patent rights.”
This case may present another example where a perceived lack of due process in a court proceeding provides no advantage in the court of public opinion or before non-Chinese judges. In the Inter Digital case, the Delhi District court, similarly noted in its AASI decision that the Wuhan case “appear[s] to have been less than fair, not only to the plaintiff, but also to this Court.”
Categories: China IPR