Antisuit injunctions in SEP disputes and the recent EU's WTO/TRIPS case against China

Abstract

The existence of standard essential patents (SEPs)—and the associated litigation—has potentially disruptive consequences for the manufacture, marketing and distribution of complex products that incorporate many patented standards, for example, information and communication technology (ICT) products such as smartphones that incorporate a camera, video, web browser, wireless communications, text messaging, and so on, as well as an increasing number of ‘connected’ Internet of Things products such as wearable devices and ‘smart home’ devices. Indeed, SEP owners may use the patent enforcement system to prevent implementers of these technologies from bringing to market competing products that use the same standards. As is known, this raises concerns about competition in the market and the need to maintain interoperability to ensure the development of the ICT industry. One of the legal tools which can be used by implementers to (try to) neutralise SEP holders' anticompetitive behaviours is the ‘antisuit injunction’ (ASI). ASIs are not uncommon in common law jurisdictions while they are foreign to civil law countries within the European Union (EU). ASIs are particularly useful to SEP implementers when patent holders disrespect their commitment to license their patents on a FRAND basis. For example, a judge who is in the process of assessing whether the SEP owner complies with FRAND terms may at the same time grant an ASI to stop the patentee taking patent infringement actions in other jurisdictions until the FRAND litigation has been concluded. In February 2022, the EU filed a complaint at the World Trade Organization (WTO), arguing that China's use of ASIs prevents EU-based companies from properly protecting their SEPs. Indeed, ASIs have recently been granted in several Chinese disputes, including in Huawei v Conversant and Xiaomi v. InterDigital. More specifically, China's Supreme People's Court held that Chinese courts can use ASIs to prevent SEP owners from filing disputes in any foreign courts to enforce their patents; and that anyone who does not comply with the injunction should be fined €130,000 per day. In the WTO case the EU notes that such a case law jeopardises innovation and growth in Europe, ‘effectively depriving European technology companies of the possibility to exercise and enforce the rights that give them a technological edge’. From a legal perspective, according to the EU, China's conduct is in violation of various Trade-Related Aspects of Intellectual Property Rights (TRIPS) provisions, including Article 28 which grants exclusive rights to patent owners. The paper focuses on this EU–China WTO/TRIPS dispute and more generally, on the relevance of ASIs within SEP cases.