Submarines, donkeys and French hostages

For many years, the ‘Italian torpedo’ was the most discussed defensive patent tactic. An implementer would ask an Italian court to rule on the infringement of a patent from a faster country (often Germany). This prevented an infringement action in the faster court whilst the Italian court remained seized. The US West Coast also became popular for this action, with the courts considered more likely to favour the implementer over the standard-essential patent (SEP) holder, and more willing to grant an anti-suit injunction (ASI) to prevent infringement actions in other countries.

Anti-suit injunctions have long been used where two courts hear issues with potentially overlapping relief. A court cannot make an order against a foreign court, but it can order a SEP owner before it to withdraw an infringement action in another country, or not enforce relief obtained. However, the tactic showed its limitations when, despite initially granting an ASI, the Northern District of California in Continental v Avanci then agreed to transfer the case to the more patent-friendly courts of Texas. 

Wuhan in China is the latest jurisdiction where this has come into fashion. Xiaomi is proceeding there against Interdigital, and Samsung against Ericsson. Three things make Wuhan attractive – a belief that it will award low royalties, a readiness to accept jurisdiction, and a practice of granting ASIs. However, what gives it an edge over other courts is its willingness to proceed ex-parte, without notice. As a ‘submarine’ jurisdiction, it remains hidden until after it has struck. 

A SEP holder facing an ASI from one court can seek an anti-anti-suit injunction (AASI) in the country where its patent actions are ongoing. Like the ASI, this acts on the counterparty (rather than the other court). It may order the counterparty to withdraw or not enforce the ASI. Continental obtained an ASI against Nokia from the Californian court hearing the Avanci case above. Nokia obtained an AASI from Munich with some amusement: ‘aasi’, it turns out, is the Finnish word for ‘donkey’. Likewise, Ericsson obtained similar relief in Texas against Samsung’s Wuhan ASI.

If a submarine can be defeated by a donkey, what else can an implementer do to defend himself? It seems he can take a French hostage: in this case, the standards-setting organisation ETSI.

Electronics company TCL was the first to try this after Philips had sued it for patent infringement in the UK, prompting TCL to look for a way out. It filed an action in Paris seeking a FRAND determination. To make sure that the Paris court had jurisdiction, it took a hostage: it added ETSI as a defendant. Philips challenged the jurisdiction of the French court but Judge Nathalie Sabotier declined to dismiss the case. Sadly for students of litigation tactics, Philips and TCL settled before one could see how this tactic would play out. 

That chance may however appear soon as Xiaomi is trying the same approach. Philips has asserted patents against Xiaomi in the UK, Germany, India, Spain and the Netherlands. Xiaomi has reacted by bringing an action against ETSI and Philips in Paris. France is not the fastest of jurisdictions, so if the spoiler tactic is to work we can expect Xiaomi to seek stays of the other cases pending the French action. The case will be interesting to watch.

Richard Vary

Partner, Bird & Bird

E: richard.vary@twobirds.com