RICHARD G. ANDREWS, District Judge.
Presently before the Court is Defendants' Motion for Expedited Consideration of a Preliminary Injunction (D.I. 390) and related briefing (D.I. 391, 412, 423). The Court heard oral argument on December 19, 2017. (D.I. 458 ("Tr.")).
Plaintiffs predecessor, Aware, Inc., helped to develop the DSL standards.
In June 2013, Plaintiff wrote to Defendants
In December 2013, Plaintiff filed this patent infringement suit, asserting its portfolio of DSL patents against Defendants. (D.I. 1). Defendants subsequently filed a counterclaim, alleging that Plaintiff breached its obligations to the ITU by failing to conclude a RAND license with Defendants for patents which Plaintiff believes are standard-essential, and instead suing Defendants, seeking a permanent injunction. (D.I. 19; D.I. 391 at 3-4).
In 2017, Plaintiff filed suit in the High Court of Justice in London, England, against ZyXEL UK and ZyXEL Communications A/S (incorporated in Denmark) for infringement of two European patents. (D.I. 394-1). One of these two patents, EU 1,792,430, "is the European counterpart to claims in the Family 5 patents asserted in this action." (D.I. 391 at 6). The other does not correspond to a patent asserted in this action. (D.I. 394-1 at ¶ 3). Plaintiff also seeks a declaration that the terms of an offer it made to the UK and Danish companies on May 26, 2016 are FRAND. (D.I. 391 at 6).
Before Plaintiff filed the UK action, the High Court of Justice issued its main judgment in Unwired Planet International Ltd. v. Huawei Technology Co. Ltd., 2017 EWHC 711 (Pat.) 5 Apr. 2017. (D.I. 391 at 5). The decision provided that there is only one royalty rate that qualifies as FRAND for any given set of standard-essential patents and products, and a patent holder does not breach FRAND obligations by offering a license at higher than FRAND rates unless the rate is "significantly" above the true FRAND rate.
Now, Defendants move for Expedited Consideration of a Preliminary Injunction. (D.I. 390). Defendants ask the Court to enjoin Plaintiff from pursuing the UK action. (D.I. 391 at 1).
Bro-Tech Corporation v. Thermax, Inc., 2007 WL 2597618, at *3 (E.D. Pa. Sept. 4, 2007).
In applying the foregoing principles to the case before the Court, Judge Rufe further explained,
Bro-Tech, 2007 WL 2597618, at *3. The same assessment applies here.
As a threshold matter, for a court to consider an antisuit injunction, there likely exists a requirement that the action in the enjoining court will be dispositive of the enjoined suit.
Regardless, Defendants dispute that the Bro-Tech assessment applies here. They argue (1) that the UK action would usurp this Court's jurisdiction, and (2) that the Court must enjoin Plaintiff from pursuing the UK action to protect the "important U.S. policy to effectuate the procompetitive policies of standard setting associations," which holds that seeking injunctive relief is inconsistent with RAND obligations. (D.I. 391 at 1, 8, 12; D.I. 423 at 6).
As to Defendants' first point, Defendants argue that Plaintiff "wants the UK court to decide these [FRAND] issues before this Court can do so," yet "is still eager to avail itself of this Court and its judicial resources to pursue its claims against [Defendants] for infringement of numerous U.S. patents." (D.I. 391 at 8). However, I am unconvinced that this Court's jurisdiction is threatened by the UK action. "While it is true that res judicata can be applied to bar relitigation of claims previously decided on the merits, res judicata is . . . not a doctrine which would defeat subject matter jurisdiction. . . ." Livera v. First Nat. State Bank of N.J., 879 F.2d 1186, 1190 (3d Cir. 1989); accord, Rycoline Prods., Inc. v. C & W Unlimited, 109 F.3d 883, 886 (3d Cir. 1997). Accordingly, even if Plaintiff attempted to assert a judgment on the FRAND issue in the UK action as a res judicata bar to any of Defendants' defenses or counterclaims, that would not strip this Court of its jurisdiction over the RAND matter.
Moreover, entry of a judgment on the FRAND issue by the High Court of Justice is uncertain. If Defendants do not infringe the asserted European patents, then the High Court of Justice may not reach the FRAND issue.
Defendants cite Laker Airways v. Sabena, Belgian Worldwide Airlines, 731 F.2d 909, 915, 939 (D.C. Cir. 1984), where the D.C. Circuit affirmed an injunction where the foreign defendants had instituted a UK proceeding "solely" to terminate the United States claims. (D.I. 391 at 7-8). The court found that "United States judicial functions ha[d] been usurped, destroying the autonomy of the courts." Id. at 939. However, the Laker case is distinguishable. (D.I. 412 at 16-17). That case involved defendants filing suit in England "solely" to obtain injunctions preventing US courts from exercising jurisdiction over cases involving US antitrust law violations. Laker, 731 F.2d at 918, 938. The Laker court explained that "parallel proceedings on the same in personam claim should ordinarily be allowed to proceed simultaneously, at least until a judgment is reached in one which can be pled as res judicata in the other." Id. at 927-28. Here, Plaintiff has not instituted the UK action "solely" to terminate the United States claims. Rather, in the UK action, Plaintiff asserts at least one European patent that has no U.S. equivalent in this litigation. Accordingly, the circumstances suggest that the UK action should proceed parallel to this action, and do not warrant an injunction.
As to Defendants' second point, there is no ''per se rule" that standard-essential patent owners are not entitled to injunctions. Apple Inc. v. Motorola Inc., 757 F.3d 1286, 1331-32 (Fed. Cir. 2014), overruled on other grounds by Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015). Therefore, Defendants' argument that some "federal courts [outside of the Third Circuit] have come to the . . . conclusion that seeking injunctive relief against standard implementers is inconsistent with RAND or FRAND obligations" does not indicate the presence of some clear public policy that necessitates enjoining the UK action.
Because the UK action will not usurp this Court's jurisdiction, or threaten an important public policy, I will deny Defendants' Motion for Expedited Consideration of a Preliminary Injunction (D.I. 390).
A separate order will be entered.
But that court found that "the policy that is undermined is [the] court's ability to determine the propriety of injunctive relief in the first instance," and noted that "[t]he Chinese injunctions would likely force [Samsung] to accept Huawei's licensing terms, before any court has an opportunity to adjudicate the parties' breach of contract claims." Huawei, 2018 WL 1784065, at *10. Here, the High Court of Justice would resolve the contract issues on the basis of contract law. (Tr. 24:14-17). Moreover, Defendants do not agree that this Court would be bound by a worldwide FRAND rate found by the High Court of Justice. (Tr. 12:6-17). Accordingly, Huawei is distinguishable for multiple reasons.