Yesterday, the Delhi High Court issued its order against Xiaomi issuing the anti-anti suit injunction. See : The Court ordered:
I am of the view that a clear case, for grant of ad interim injunction, in terms of prayer (i) in para 33 of the present application, is made out.
Para 33(i) of InterDigital's application is:
“33. (i) Grant an injunction against the Defendant Nos. 1-8 in the present proceedings, restraining them from pursuing or enforcing the anti-suit injunction order dated September 23, 2020 passed by the Wuhan Intermediate People’s Court until the final disposal of the present proceedings;
The judgement is a bit dense and runs into 73 pages. Indeed the judge is fully aware of the issue and in para 80 remarks:
I am uncomfortably aware that, as an order deciding a prayer for ad interim relief, this order is considerably prolix. There was, however, no other option, as the injunction, of the enforcement of an order, passed by a court of foreign jurisdiction, in a foreign country, even for a day, is a serious matter.
What I see here is that Xiaomi should have pursued a different strategy / argument other than the one it used.
The Court here views the lis as follows:
64. ...The present ad interim injunction, being granted by this Court, does not, therefore, interfere with the proceedings before the Wuhan Court, in any respect. The plaintiffs are not seeking any injunction against the prosecution, by the defendants, of the FRAND rate fixation complaint, preferred by them before the Wuhan Court, and this Court is not passing any order, to that effect, either. The defendants would, therefore, be perfectly at liberty to prosecute the said proceedings and, at least at this stage, no interdiction, thereof, is being granted by this Court.
How did the Court reach the above conclusion: The Court saw that Xiaomi argued for necessity of maintaining comity of courts (para 71) and sets aside the argument in favour of public policy. The Court then goes on and undertakes a (US - First Re-statement of the law) analysis and determines that public policy trumps the comity principle.
The answer to the above question is more definitively answered in para 76: There is, in my view, another, and somewhat more serious, objection, to the order, dated 23rd September, 2020, of the Wuhan Court, which directly involves the principle of comity of courts.
By conditioning the continuance of the prosecution, by the plaintiffs, of the proceedings before this Court, with a penalty of about ₹ 1 crore per day, the Wuhan Court has effectively rendered it impossible for the plaintiff to continue to prosecute these proceedings. The inexorable sequitur is that this Court is also divested of the opportunity of adjudicating on the dispute, brought before it by the plaintiffs, which it has, otherwise, the jurisdiction to hear and decide.
Accordingly, the Indian Court sees the Wuhan judgement as being a direct impediment in its way in deciding the dispute.
In my view, what could have balanced Xiaomi's case is the fact that even if one takes the view that InterDigital succeeds in its patent infringement case against Xiaomi (see my previous post), the end result is that royalty would have to be paid to InterDigital. This royalty is a FRAND royalty and this issue is before the Wuhan Court before InterDigital sued Xiaomi here in India. Hence even arguing InterDigital's best case is it wins the patent infringement suit here - at maximum it will get a FRAND royalty as it itself prays for (The suits ask that Delhi High Court fix a FRAND royalty once infringement is proven).
Second, the number of patents in India owned by InterDigital are far less than InterDigital's patents in China. One has to see the list of patents disclosed here in India but that is behind the perverse confidentiality club shield.
The DHC judgement goes on to cite that Xiaomi did not inform this court at least half a dozen times about the Wuhan matter: here the question is did InterDigital inform the court about its investigation in China in 2013?
The DHC also ignores the stark reality in SEP / FRAND disputes that defendants are strategically litigated against in specific jurisdictions.
The DHC also ignores the public interest aspect: this was ignored in the earlier Micromax, iBall, etc. matters as well. It is the public interest that actually suffers in the absence of a market participant. Here, one big reason why our homegrown players got sidetracked and did not join the 4G bandwagon was because of the Ericsson litigation. Xiaomi was a beneficiary as it was the only one who brought in the 4G phones at the time when our domestic players were stuck to 3G.
If I were to put it bluntly, a patent infringement trial in India is an ordeal by trial. Patent litigation is by far the domain of the right holder, and that too one with deep pockets.
In a patent infringement case, we have seen that if a small independent elects to defend, he may win at law and lose his business anyway. If he capitulates and settles he sacrifices his independence, his competitive position, and probably some major part of his patent position as well. This outcome may occur even where the smaller party has the stronger patent position, or where the larger party is armed with patents of doubtful validity. The results to the competitive system, and to the independent, are the same. It is therefore essential to recognize that when a patent suit is decided, something more than the respective rights of the litigants is involved.
A patent infringement suit is predominantly a problem in public interest–it is in the public interest that the patent system finds its justification–and a problem in the relation between economic law and technology. The rights of the litigants are embraced within the public interest at issue and dependent upon it for the exceptional character of the rights contested.
For obvious reasons, InterDigital does not want the FRAND determination matters to be decided in China, given the manner in which it's conduct was investigated there last time.
Note: Although I have linked to just one article that diagrammatically illustrates the interest analysis approach, there are a large number of articles that discuss it. For example, one might look at: Roosevelt, Kermit III, "Brainerd Currie’s Contribution to Choice of Law: Looking Back, Looking Forward" (2015) available here or more specifically to an analysis of conflict of law and anti-trust by, James R. Ratner, Using Currie's Interest Analysis to Resolve Conflicts Between State Regulation and the Sherman Act, 30 Wm. & Mary L. Rev. 705 (1989) available here.
In Interest Analysis ("IA") approach, the first step is to determine whether there is a true conflict or not. Of course, here there is a true conflict between the Wuhan Court judgement and the matter before the Delhi High Court.
Next it is very important to look for what a legislator / judgement had in mind when issuing the said law / judgement. So we look at the Wuhan Court judgement and it is clear (from the extract as provided in the DHC judgement that - Para 1, sub-para 5 of the Wuhan Court judgement:
5. The Respondents InterDigital, Inc. and InterDigital Holdings, Inc. as well as the affiliates thereof shall not, during the trial of the present case, file lawsuits before any courts in either China or any other countries and regions requesting to adjudicate the royalty rate of the royalty disputes in terms of the 3G and 4G SEPs involved in the present case against the Applicant’s Xiaomi Communications Co., Ltd., Xiaomi Homecare commercial Co., Ltd., and Beijing Xiaomi Mobile Software Co., Ltd. as well as its affiliates;
This is obviously for the same 3G / 4G SEPs that InterDigital is agitating before the DHC.
Here the DHC should have looked at whether it was vindicating / enforcing an unconstitutional interest - or whether there was an express attempt to discriminate against a particular litigant - there is no fact that says InterDigital is being discriminated against. In fact, the very thing is that a court (in China) is looking into the matter is sufficient to show due process is being followed.
3. Then there needs to be a determination of whether this is a loss-allocating or conduct-regulating law / judgement. An example would suffice here: Conduct-regulating rules occur outside of the courtroom (DHC) before the lawsuit such as speed limiting rules and a place of tort has a more important interest in regulating the affair / judgement. Here the law of the place of the tort usually applies unless displacing it will advance the relevant substantive law purposes without impairing the smooth working of the multi-state system or producing great uncertainty for litigants. A Loss-allocation rule is after the event, while in a courtroom, regulates burden of injuries and parties’ common domicile has paramount interest in allocating losses.
In the present case, the Wuhan Court judgement is a conduct regulating judgement rather than a loss-allocating judgement and hence the Wuhan Court judgement should be given deference.
The DHC was confused (in my view) from the citations of IPCom v. Lenovo - (2019) EWHC 3030 (Pat): This is because these cases show territorial overreach rather than applicable principles of international patent litigation. In IPCom, Judge Hacon in para 24 notes: "…the less that an anti-anti-suit injunction granted in England would interfere with the foreign proceedings to which it is directed, the more likely it is that the court will exercise its discretion to grant such an injunction".
This DHC uses similar language and goes ahead and issues the order.