Unwired Planet and the Role of Chinese Courts: A Perspective from Shenzhen

This is the second article on recent research on Chinese IP law and practice.  The focus of this blog is  a widely read article of Judge Zhu Jianjun, Shenzhen Intermediate Court, Intellectual Property Tribunal.  His article “Research on Judicial Judgment Issues of SEP Global Royalty Rates” was published in  Intellectual Property, Issue 10, 2020, pages 3-12, and has since been distributed on Wechat.  A slightly edited machine translation of the Wechat text is found here.

Judge Zhu is a prominent IP judge who has adjudicated a number of SEP-related disputes, including one of the earliest SEP cases involving Huawei and Interdigital, and more recently, Huawei v. Samsung.   He published an article on Huawei v. Interdigital with his fellow judges in 2013 (标准必要专利权人滥用市场支配地位构成垄断的认定评华为公司诉美国IDC公司垄断纠纷案 (Recognizing Abuse of Market Position by Holders of Standards Essential Patents – Huawei v. US IDC Company) , 3 电子知识产权 (Electronics Intellectual Property) (2013).  In addition to his case load, and publishing articles on SEPS and IP-related matters, Judge Zhu is scheduled to speak on January 22, on day two of the forthcoming Berkeley-Tsinghua program on transnational IP litigation.

The views expressed by Judge Zhu are not necessarily those of his court.  By the same token, Judge Zhu’s views are controversial among many in the West, and my repeating them here does not necessarily mean that I subscribe to them.

Judge Zhu is concerned about the circumstances where, in his view, a SEP right holder does not abide by the FRAND commitment, and a national court voluntarily sets a global licensing rate by issuing an injunction to the implementer as a coercive force.  In his view, this practice does not comply with FRAND principles. Judge Zhu expresses particular concern about Unwired Planet v. Huawei (“UWP” and the “UWP case”), where the Supreme Court of the United Kingdom determined that Huawei infringed the two British standard requirements of UWP’s patent rights and adjudicated the global licensing terms of UWP’s patent portfolio.

In his article, Judge Zhu encourages China to take a more aggressive posture towards extra-territorial jurisdiction of foreign courts. In his view, the courts of major countries in the world other than the United Kingdom will not ordinarily take the initiative to determine the global standard-essential patent license rate for both parties in the case.  In the UWP case, Huawei was required to pay damages to UWP for infringing two patents unless Huawei signed a FRAND clause binding both parties under threat of a UK-wide injunction.  The British courts, in Judge Zhu’s words, took the initiative to decide “the global rate of the standard essential patents for both parties in the case where … a ban on the sale of wireless communication products guaranteed enforcement.”  

Comparing the UK to the global landscape, Judge Zhu notes, based largely on Microsoft v. Motorola, that “the U.S. court will only judge the global FRAND rate of the standard essential patent portfolio involved in the dispute when the parties in the dispute agree, and will not actively set the global fee for both parties.”  In the Sisvel case in Germany, Judge Zhu notes that the decision “is based on whether the quotations given by the two parties in the negotiation process conform to the FRAND principle as an important condition for judging whether to issue an injunction.” With regard to global rate setting, Judge Zhu notes that German courts recognized that “acceptance of global patent portfolio licenses cannot be used as a criterion to measure whether a party fulfills FRAND obligations.  Standard-essential patent implementers are allowed to explain why they do not accept global licenses. Non-discriminatory licensing does not require that all licensees be given the same licensing conditions under any circumstances.”  The German approach appears important to Judge Zhu to justify lower, China-specific rates.  Based on Samsung v. Apple in Japan, Judge Zhu also notes that Japanese courts regard whether the parties comply with the FRAND principle during the negotiation process as a condition for issuing the injunction, and will not take the initiative to determine the global licensing rate of a SEP patent portfolio.

Judge Zhu concludes that “the practice of the British courts taking the initiative to judge global rates for both parties in the case is contrary to the mainstream practice of the international community.”  To me this approach sets up a conflict between antitrust jurisdiction and traditional IP jurisdiction.  In the Huawei v. InterDigital decision, for example, Judge Zhu took the view that the filing of a USITC action by InterDigital was an abuse of dominance under Chinese antitrust law. In separate decisions the court awarded antitrust damages and set a FRAND rate, with the foreign antitrust decision acting as another “coercive force.” The most recent Chinese court to blend antitrust jurisdictional concepts in a FRAND IP dispute appears to be the Wuhan Intermediate Court IP case of Samsung v. Ericsson.  

In determining whether to issue an injunction, Judge Zhu notes that “the Chinese court will judge whether the standard essential patent portfolio quoted by both parties in the negotiation process conforms to the FRAND principle, as an important condition for judging whether the parties should be given an injunction.”  For example, with respect to the Huawei v Samsung case, Judge Zhu notes that the Shenzhen Court determined that Samsung carried relative fault in the negotiations, and it was ordered to stop infringing Huawei’s patent rights.  The standards for determining fault are articulated in the Guangdong SEP guidance, and other judicial documents.

In Judge Zhu’s view, the UK Supreme Court in UWP was seeking to force Huawei to accept higher licensing fees.  Another view is that Chinese courts are charging unfairly low licensing fees.  Judge Zhu also notes this wide disparity in his article when he discusses the German UWP case: “[t]he German court determined that Unwired Planet complies with FRAND’s Chinese licensing rate quotation, which is 18.3 times higher than the Chinese fee rate confirmed by the Nanjing Intermediate People’s Court in the first instance that Unwired Planet complied with the FRAND principle.”  This huge gap in understanding between Western and Chinese courts of what constitutes a FRAND rate calls into question whether the Chinese courts are behaving in a results-oriented manner.  This is also substantiated by a lack of proportionality between China’s low rate setting decisions and its more aggressive decisions regarding abusive licensing practices. NDRC’s penalty of $975 million against Qualcomm was was 13,000  to 50,000 times higher than the average patent damage award at that time.  By contrast, the Chinese lower court decision in Huawei v InterDigital awarding InterDigital a rate of 0.019% was miniscule.

As the recent decisions in Wuhan suggest, Chinese judicial activism in this area has not focused on preserving a Chinese rate setting for China which might nominally be within the scope of Chinese “judicial sovereignty”, but instead, as Profs. Contreras and Yu have pointed out,  enabling Chinese courts to engage in global rate setting under the compulsion of a global anti-suit injunction.  This also facilitates implementation of Chinese government industrial policies to increase China’s global licensing balance of trade.  It is not surprising that Samsung recently saw a similar opportunity by bringing a case in Wuhan to obtain a global ASI as part of its toolbox of remedies, despite Samsung and Ericsson having a small market presence in China when compared to the United States.

Without the benefit of ASI’s, Chinese courts already enjoyed the advantages of a forum that automatically grants injunctions, grants them quickly, and grants them over the huge Chinese market for companies that sell or manufacture there.  Even if a company does not manufacture in China, the automaticity of Chinese injunctions provides significant advantages. Another advantage for plaintiffs, as the Samsung v. Ericsson case revealed, is that China is  non-transparent prior to the long period that extends from case acceptance to international service of process.  Moreover, forum non conveniens decisions, where the court relinquishes jurisdiction in favor of a more appropriate forum, are rare. 

An additional reason for lower values in China, according to Judge Zhu, may also be higher invalidation rates for foreign patents filed in China, which may be “due to language translation and other reasons” which places those patents in an “unstable state.”  Another translation issue occurs with respect to rate setting when Judge Zhu notes that “it is difficult to separate the standard-essential patent fee rate in Chinese jurisdictions because the description of the prior patent package fee rate agreement is generally very general or very vague.”   Judge Zhu also does not discuss another factor that tilts the scale in favor of low foreign portfolio values, namely over-reliance on Chinese patent quantities to judge patent values

For Judge Zhu, the UWP case involved a plaintiff who “had only 3 months of contact and negotiation with Huawei. It can be said that when the negotiation has just begun and there is no sign that the negotiation cannot proceed, UWP immediately filed a case with the British court… It is difficult to say that UWP’s behavior conforms to FRAND principles.”  There may be, of course, different foreign perceptions of what constitutes reasonable or fair behavior.   Foreigners making decisions regarding when and where to file court cases may need to consider such factors as: the short statute of limitations of Chinese court cases; the rapid time to trial and appeal of a Chinese case; a lower licensing rate if the case were filed in China; delays in service of process from Chinese courts; the flexibility of Chinese courts in setting their docket when a foreign party is involved; the aggressive use of ASI’s; difficulties of a Chinese court relinquishing jurisdiction; and other factors which may lead to a truncated period of negotiations prior to a foreign court case.  Considering these uncertainties, courts may also need to be cautious in assessing what does not constitute a FRAND pre-trial offer.

Judge Zhu suggests several strategies to address the challenges posed by the UWP case: Chinese companies should seek to invalidate patents in China, and Chinese companies should initiate a lawsuit against the Chinese court for the licensing rate of standard essential patents.  Judge Zhu also believes that when a Chinese company requests a ruling on the standard-essential patent right holder’s litigation for the standard-essential patent license rate in the Chinese jurisdiction, regardless of whether the time of litigation is first or later, the Chinese court is required to determine the standard in the Chinese jurisdiction. Therefore, extraterritorial courts should exclude the trial of standard essential patent licensing fees in Chinese jurisdictions.  Consistent with that view of exclusive jurisdiction over Chinese rate setting, China should establish an anti-suit injunction system for handling SEP disputes in China: “[t]he practice of foreign courts issuing anti-suit injunctions to civil litigants in China has caused great obstacles to the normal exercise of rights by litigants in civil litigations in China. At the same time, it has also caused a greater impact on the legal exercise of jurisdiction by Chinese courts.” 

In the few months that have passed since this important article was published, the global environment for SEPs has become more complex, largely due China’s decisions to issue its own global anti-suit injunctions. Some of these, such as the recent Samsung v. Ericsson case in Wuhan, addressed issues that were within the sovereign jurisdiction of other countries. The issuing of global ASI’s by China is now less inconsistent with the UK approaches. 

Another concept that may not have survived well may be Judge Zhu’s analysis of when extraterritorial courts voluntarily ruling on global rates “would violate a [Chinese] principle of the closest connection in the jurisdiction of intellectual property cases.“ Judge Zhu cites the example of the UWP case. In that matter, In that case, Huawei’s global sales business primarily involved products that are produced in China and the main market is also in China.  I do not know the jurisdictional basis in China of the Samsung v Ericsson case, In that case, however, the United States appears to offer a closer connection to both parties. 

If, on the other hand, if the UWP dispute were heard in China and one were to apply Article 34 of the Civil Procedure Law  of China to the UK case, jurisdiction would have been appropriate.  It only requires an “actual connection” for a court to take jurisdiction in a contract or property dispute.  This threshold is quite low. As Prof. Vivienne Bath has noted, only when “a judgment of a foreign court has been recognized in China must the court reject a suit on the same dispute.”  Furthermore,  United States and many other foreign courts’  judgments are rarely enforced due to the lack of a  bilateral agreement.

Judge Zhu’s article is an important introduction to Chinese perspectives on extraterritorial jurisdiction over SEP matters.  At a conference that Judge Zhu and I both attended in January 2020 at Renmin University, I raised concerns to the audience about China’s lack of familiarity with concepts of comity as an important factor in drafting ASI’s by Chinese courts.  Addressing extraterritoriality and interference in a country’s legal system with appropriate deference to the proceedings of other courts and respect for their legal system is a necessary next step for China’s judiciary in order to be perceived a fair venue for all parties to resolve their IP disputes. 

Judge Zhu as well as Prof. Vivienne Bath are scheduled to speak at the forthcoming Berkeley-Tsinghua program on Transnational IP litigation on January 22, 2021. The SEPS panel will also include Chief Judge Randall Rader (ret.), Judge Andrew Guilford (ret.) and former USPTO Director David Kappos, among other notable speakers.  Profs. Robert Merges and Hao Yuan will be moderating.

MofCOM’s New Blocking Rule: A Dangerous Weapon or a Necessary Remedy?

On January 9, 2021, MofCOM released the Measures to Block the Improper Extraterritorial Application of Foreign Laws and Measures, (Docket Number 1)(中华人民共和国商务部令 二〇二一年 第1号)(the “Rule”).  The Rule was promulgated with “approval from the State Council.”  The Rule may be used to support litigation in Chinese courts against foreign extraterritorial measures, including court cases and perhaps USITC Sec. 337 cases. It might also be used to retaliate against export controls    Being the first MofCOM rule in the new year, during a period of transition in the United States, with immediate application, circumventing usual legislative procedures for 30 days notice and comment and delayed implementation, with an English translation simultaneously released by MofCOM, I assume that it is  intended to be understood by Americans, and to send a political signal to the President-elect’s trade team.  It is also the first significant step taken to address trade sanctions and other measures imposed by the United States since Wang Wentao, a “defense technocrat”, became the new MofCOM Minister (Dec. 26, 2020).  Its legal basis, however, is less clear.

The Rule is a ministerial measure promulgated by a State Council agency, or  “banfa” (办法).  It is cloaked in language of representing the central government in its enactment, beginning with the unusual introduction that it was promulgated with State Council approval.   I anticipate that the State Council may yet publish an approval document on its website.  References to national authorities are found throughout the text.  For example, the operative legislation the Rule is implementing is the National Security Law (Art. 1).  Interagency mechanisms for implementing the law are also contemplated (Art. 4). 

MofCOM  did not tarry with the usual legislative procedure in preparing this Rule.  For example, a relevant SPC rule (2009) requires that rules need to be promulgated under delegated authority of the State Council to be a basis for judicial decision making.   (最高人民法院关于裁判文书引用法律、法规等规范性法律文件的规定 (Art. 5).  Although the State Council apparently “approved” the Rule, it is unclear if an explicit delegation of “authority” was obtained that should otherwise be necessary for the judicial procedures contemplated by the Rule to be effective .  The National Security Law similarly simply authorizes the State Council and its constituent agencies to issue regulations (fagui) and rules (guizhang) (Art. 37), and does not explicitly provide for circumvention of the Law on Legislation.  The State Council Regulation on Procedures for Enacting Rules 规章制定程序条例 requires 30 days advance notice of proposed rules and a 30 day delayed implementation period, neither of which appears to be the case here.  This State Council Regulation also requires that a joint rule making which requires other agencies’ involvement is invalid if it is not drafted together with these agencies (Secs. 3,4, 9, 15).   In light of the shortcuts taken, I assume that the Minister deemed it highly important to pass this Rule early in his tenure and quickly.

Although overseas court cases are not mentioned as a target, the Rule applies to “foreign laws and other measures being applied extraterritorially contrary to international law”. It specifically authorizes court cases to obtain compensation (“Where a judgment or ruling made on the basis of foreign laws within the scope of a prohibition order causes losses to Chinese citizens, legal persons, or other organizations, the citizens, legal persons, or other organizations may initiate litigation in the people’s courts in accordance with law, requesting compensation for losses from the parties benefiting from that judgment or ruling”).   One “hot” target could be the extra-territorial jurisdiction of foreign courts in the recent spate of standards essential patent cases – at least to the extent they have not already been addressed by anti-suit injunctions or other measures.  Doug Clark has written an excellent article on some of these developments,  I also blogged about more recent anti-suit injunctions.  Former Federal Circuit Paul Michel’s amicus brief also pointed out due process concerns in China in Ericsson v. Samsung here.

Another target of the Rule may be USITC Section 337 litigation.  Cases involving trade secrets where the US has imposed US law and exercised jurisdiction over misappropriation of trade secrets that occurred within the territory of China have aroused the ire of MofCOM in recent years.  In its amicus brief in support of the petition for Cert in the Sino Legend case, MofCOM argued “The ITC’s disregard for the sovereignty of China risks the very international discord underlying the presumption against extraterritorial application of U.S. law.” 

One consideration is that the Rule is by its own terms limited to harm caused to “third country” markets (Arts. 2 and 5). However, at a press conference of January 10, 2021, “third country” harm was only discussed once. The dominant theme was “extraterritoriality” 域外, which is mentioned 19 times.

Blocking measures against the extraterritorial exercise of export controls also have a long history.  Canada’s Foreign Extraterritorial Measures Act is one such example of such blocking legislation, which was applied to the US embargo against Cuba.  China has stated in the press conference of January 10, 2021 that it looked at blocking measures of other countries. A blocking measure by China would likely pose a different degree of risk to US exporters than a Canadian blocking measure. The United States and Canada closely cooperate on export control matters. If US export control laws for dual use technology, including those that prohibit re-export to third countries, are threatened to be blocked by China, it could further reduce confidence in China as an end destination for licensed exports. This could provoke another downward spiral in sales of controlled goods or technology to China.

This blog was updated January 10, 2021 to include reference to the news conference of even date, and to address the possibility that the Rule by its explicit terms is focused on third country impacts.

Due Process and ASI’s: Wuhan and Texas

Attached is the December 25 decision of the Wuhan Intermediate Court (Chinese language only) (the “Decision”) in the matter of Samsung v. Ericsson, about which I previously blogged.   The Fosspatents blog has also posted some of the other recent filings in the E.D. of Texas, including former Chief Judge Rader’s expert opinion, and the patent infringement case recently filed by Ericsson against Samsung.

I will focus here on the procedural elements of the Wuhan case (Samsung v. Ericsson). 

Anti-Suit Injunctions (“ASI”) are often discussed as if they were a “first to file” priority right where timing is critical.  In the Huawei v. Samsung ASI case in the Northern District of California and Shenzhen, the separation in filing times between the two case was likely a matter of hours, owing to time zone differences between the West Coast and California.   However, timing is not the only determinant of whether an ASI should grant.  It is certainly less critical if there are forum selection clauses in contracts between the parties.  In Microsoft v. Motorola, an earlier SEP ASI case, other factors such as whether one case would be dispositive of another, and the jurisdiction’s interest in limiting forum shopping, were determined to be supportive of the lower court’s decision to grant an ASI.  

In terms of the first court to grant an ASI, the Wuhan court comes out ahead, but only nominally.  The Decision granting Samsung’s Anti-Suit Injunction (ASI) was signed by five judges of the Wuhan Intermediate Court on Friday December 25, 2020, a US holiday.  Counting for the difference in time zones, this is only one business day ahead of Judge Gilstrap’s Anti-Anti Suit Injunction decision/ TRO of the morning of Monday December 28, 2020.    

To the extent that the Samsung ASI was intended to thwart the original exercise of jurisdiction of Judge Gilstrap, it also came a few days too late. Samsung requested the ASI on Monday December 14, 2020 (Decision pp. 1, 2).  Ericsson had brought suit in the Eastern District of Texas on Friday December 11, 2020. 

As the preceding indicates, the difference in time between different filings is often quite nominal.  The gaps in time were considerably shorter than the “several months into… the domestic litigation” behavior of Motorola in Microsoft v Motorola.  Comparisons might also be made to the slower docket in Xiaomi v Inter Digital case in Wuhan, which involved three of the five judges to the Samsung v. Ericsson dispute, and which was initiated on August 4, 2020 with an ASI decided on September 23, 2020. 

Samsung comes up especially unfavorably when taking into consideration the adequacy of notice to the adverse party.  Samsung sued on December 7, 2020 in Wuhan (qisu/起诉) (Decision, p. 5).  Ericsson had filed its case in Texas on December 11, 2020. Samsung filed it request for an ASI on December 14, 2020. There is no record in the Decision of service or notice having been delivered to Ericsson for the initiation of the case, or on the motion for an ASI, although 18 days had elapsed since the case was accepted on December 7, and 11 days had passed Samsung requested its ASI.  Samsung left Ericsson operating in legal darkness.

In Chinese civil procedure and practice, there are several periods of case opacity where the court de facto condones secrecy.  These periods can include: before a case is accepted; when service of process is being made; when a final decision is being reached and an adjudication committee of outside judges may be involved; and when a decision is made to publish a judgment and a case may be written or denied publication on political grounds.  The first period is the most germane here.

The basic process is that a party initiates a case by “suing” (qisu).  When a party “sues” it should file a complaint that meets the minimal criteria set forth in Article 119 of the  Civil Procedure Law (CPL).  These criteria include indicating: a party in interest, an actual defendant, an actual complaint with facts and reasons, and appropriate jurisdiction.   The court has seven “opaque days” to “accept and review” (shouli/受理) the complaint.  After acceptance and review,  the case will be “established” (li’an/立案).  Docketing, assignment of judges and service of process follows thereafter.   The relevant terms are drawn from the CPL, particularly Art. 123.  The Wuhan court generally adheres to this statutory nomenclature in its Decision. 

In Huawei vs Conversant, the Supreme People’s Court looked at case acceptance as one milestone event in determining the priority of filings (p. 9). However, I believe that the Chinese case acceptance procedure, despite recent reforms, lacks adequate transparency for significant international rights to be affected without further inquiry.  Case acceptance has long been the subject of criticism and concern from both domestic and foreign litigants.  See Liu Nanping and Michelle Liu, “Justice Without Judges: The Case Filing Division in the People’s Republic of China,” 17 U.C. Davis J. Int’l L. & Pol’y 283 (2011), and my blog.  Concerns about discretion and opacity in case acceptance decisions have also caused foreign litigants to make “noisy” filings in China before a holiday which involve an immediate press conference after the filing in order to limit the risk that a case suddenly appears that was filed in advance of another filing. 

At this time, further information is needed in order to substantiate the December 7 filing date.  Case acceptance is not automatic and can be denied or accelerated for a variety of reasons, including the political sensitivity of a case, such as in environmental matters.  The Decision states that Samsung sued on December 7 (p. 5), and that case was accepted and established  on the same day (pp. 2, 5).  It is possible that Samsung filed its case and the court reviewed and accepted and reviewed the same day.  However, by law, the Wuhan court had a week to review the case.  Moreover, accelerating review during December might have been difficult because this case acceptance was accomplished during a pandemic and the end of the year is also typically a busy time for China’s IP courts when they try to resolve all pending cases for that year.  Hubei Province, where Wuhan is located,  has also had an unusually high increase in IP-related litigation.  In 2019 alone the province’s IP docket of cases “accepted and reviewed”  increased by 100%  to a total of 20,825 cases.  While a December 7 filing, review and acceptance is not impossible, it is also likely that there were other reasons that all three of these tasks were accomplished on one day.   For example, Samsung may have sued during the week prior to December 7 and was required to make changes to its filing, or perhaps the court decided that it would permit Samsung to enjoy a filing date of December 7 due to problems that may had arisen later during the review process.   A case acceptance date clearly is more ambiguous in its significance than a US court filing made with the Clerk of the Court.

US courts increasingly have to concern themselves with problems posed by lack of transparency of this type.  The US Supreme Court has had to grapple recently with these issues.  In Animal Sci. Prods., Inc. v. Hebei Welcome Pharm. Co., 138 S. Ct. 1865, 1873-74 (2018), the Court noted that “the transparency of the foreign legal system” is one factor in China in determining the level of deference that should be given to the Chinese legal system. In a recent University of Pennsylvania Law Review  article, “Illiberal Law in American Courts” (May 2020), Mark Jia has noted that China’s legal regime has increasingly imposed difficult questions for US judges.  Ultimately, he advises “American judges … [s]ometimes …must decide whether the foreign legal system is fair.”

There are now numerous IP cases where foreign judges have decided that that Chinese courts failed to provide adequate notice or procedural transparency.  The Delhi High Court in Inter Digital v Xiaomi,  noted in its AASI decision that the parallel Wuhan case “appear[s] to have been less than fair, not only to the plaintiff, but also to this Court.” Judge Kaplan in Vringo v. ZTE, another SEP dispute, noted that:  “Vringo long remained entirely unaware of the Shenzhen litigation.  It was not until June 26, 2014 – more than four months after the lawsuit was initiated – that it received a copy.”  In a non-SEP case involving semiconductor manufacturing equipment, and a US company,  Veeco, a preliminary  injunction was issued “without providing notice …  and without hearing”  in order to undermine a long pre-existing foreign proceeding in the Eastern District of New York.   Knowles, another US corporation, which was sued in China in retaliation for filing a Section 337 patent action, was also barred from attending legal proceedings and stated that “a fair trial is impossible.”  In antitrust actions, including IP-related antitrust actions, the situation had become so severe that the US government had to obtain a promise from China that it would “allow Chinese practicing lawyers to attend and participate in meetings with any of the three [anti-trust agencies].”   Still worse, foreign lawyers have complained that company officials have been threatened with arrest if they did participate in meetings in China, and there have been rising concerns of detentions of foreigners as commercial hostages including during the pendency of civil litigations

Should concerns over a failure to comply with general notions of due process, including notice or access to counsel mandate that a court limit the impact of a foreign court’s ASI? As Mark Jia notes, this is within the discretion of the presiding judge.  While judicial procedures vary from nation to nation, delays in notification to adverse parties can raise concerns about violation of generally accepted standards of IP litigation, as reflected in the TRIPS Agreement.  That agreement requires “timely” written notice of “civil judicial procedures” to the parties as well as the right to an “independent counsel” (Art. 42 “Fair and Equitable Procedures”). 

There are other, troubling aspects of the December 25 decision. The court appears to base its jurisdiction on SEP cases being global and affecting Chinese and other national and territorial courts (pp. 2, 11).  It therefore has jurisdiction over “global licensing conditions, including licensing rates” (p. 7).  The court does not explain its departure from prior Chinese practice, such as the Guangdong SEP Guidelines, which would authorize a court to consider a worldwide rate setting if the parties agreed to it, nor does it consider whether it is the optimal form for these disputes.  Long-standing US precedent for ASI’s also establishes that “comity teaches that the sweep of the injunction should be no broader than necessary to avoid the harm on which the injunction is predicated.” (Laker Airways v. Sabena, 731 F.2d 909, 933 n. 81 (D.C. Cir. 1984)).  The court also adopts an anti-trust like approach to granting the ASI, by looking at harm to consumers and competition if an infringer were to be enjoined (p 10, para. 4). A thoughtful analysis of the choice of law and ASI issues could likely have helped de-escalate and de-conflict the issues. To rub salt further into the choice of law wound, the ASI extends to access to all courts, including those of the United States, and thereby includes US patent matters (Decision, p. 12, para. 2).  

To be fair, Chinese courts’ entry into the “global SEP litigation” arena in 2020 has been preceded by global rate setting decisions elsewhere in the world, including the recent Conversant and Unwired Planet cases in the United Kingdom.  Additionally, the Chinese courts have been instructed to take a more aggressive approach to international parallel litigation. The court at this stage should, however, also be committed to the increase of procedural fairness  as well as careful legal analysis in order to minimize friction among the parties and with other jurisdictions.

Updated on January 5 & 11, 2021 to correct minor typographical errors.