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MIP International Patent Forum: Anti-anti-suit injunctions ‘scary’ FRAND trend

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Counsel from Philips, Ericsson and other panellists discussed the evolution of SEP litigation at Managing IP’s virtual forum

The rising trend of anti-anti-suit injunctions was an unavoidable topic at this year’s Managing IP virtual International Patent Forum, which finished today.

Beginning in 2019 when Nokia won an anti-anti-suit injunction against Daimler in Germany, there has been a wave of counter injunctions from Wuhan in China all the way to California.

The goal of an anti-anti-suit injunction is to get a court to stop the infringement proceedings of a company in an anti-suit injunction in another country. In each instance, one jurisdiction is pitted against another as standard essential patent (SEP) owners and implementers go to war over fair, reasonable and non-discriminatory (FRAND) licensing terms.

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Global trends

Moderator Erik Puknys, partner at Finnegan in California, asked a panel of global experts today how they see the trend of anti-anti-suit injunctions playing out in the future, and how policy makers should respond.

Chitra Iyer, head of IP and standards at Philips in India, said she doesn’t know if it’s an interesting or a scary development.

“When we first heard about it a few months back, it was scary enough, but now we see this trend of forum shopping with implementers using it for their own advantage. The scary part is you have a portfolio of 61,000 patents, and you spend a lot on maintaining this and you have companies that don’t want to pay royalties.”

Iyer expressed concern that anti-anti-suit injunctions are not only having a negative impact on the industry but are undermining the laws in many countries. She said her biggest fear is that they are eroding trust and could potentially create trade problems between countries.

“I just hope it will have a proper resolution in an amicable way, and it doesn’t create global distrust,” she said.

Ricardo Nunes, partner at Brazilian law firm Daniel in Rio de Janeiro, told the audience that Brazil has become an important jurisdiction for FRAND litigation owing to reforms that have made the judicial system friendly to patent owners.

All the same, he said he could not see any Brazilian judge tolerating an anti-suit injunction.

“Most Brazilian judges would not be comfortable granting such a request. Their view of the Brazilian constitution would make them think this would not be the proper thing to do,” he said.

“If an anti-suit injunction is granted elsewhere, I don’t see a Brazilian court paying much attention to it.”

Cat and mouse

The panellists then discussed how to avoid expensive litigation. Puknys asked how companies could act in good faith and how they can tell when a firm is actually willing to take a licence rather than just resorting to ‘hold-out’ behaviour.

Claudia Tapia Garcia, head of IPR policy at Ericsson in Munich, said that sometimes her company approaches a business to ask it to pay a licence and she can tell it is acting in good faith but genuinely needs help in understanding the technology and royalty rates.

She said that by the time you end up in court, it is fairly easy to tell if a company is acting in good faith or dragging its heels and refusing to take a licence.

“We spend time talking to companies and explaining why we think we deserve the amount we are asking for the royalty rate. Other times you just see they are playing games and gaming the system,” she said.

“We had a former judge in the High Court in the UK tell us that he couldn’t give a definition for bad behaviour because there is no perfect definition. But when they are in court we know they are trolling.”

Bowman Heiden, visiting professor of IP at the University of California, Berkeley, said he is concerned that some companies are delaying taking a licence on purpose, adding that there needs to be a penalty put in place for this sort of behaviour.

“Injunction relief is not easy to obtain, so for many companies it is rational to wait to take a licence. Nobody wants to be the first to pay, and they’d rather wait for collective action,” he said.

A major concern for industries involved in FRAND disputes is that if companies continue to escalate their litigation battles, there is no telling where the anti-anti-suit injunction trend will end.

Iyer at Philips said: “Why don’t we just be reasonable right from the beginning and then it wouldn’t be a problem at all?”

The problem, of course, is that reason, like FRAND, is a relative term.

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