1. Stephen S. Korniczky
Anti-Suit Injunctions – Leveling the Playing Field When Seeking a FRAND License to Standard-Essential Patents

2. Technology Standards
Standards are technical requirements that encourage:
Cooperative innovation
Product compatibility
Price competition

3. Standard-Essential Patents
Standard-Essential Patents (“SEPs”)
Cover the standard: it is impossible to practice the standard without infringing
The standard creates a demand for licensing
Problems
Royalty stacking: cost to license all SEPs?
Hold-up: lack of choice may encourage SEP owners to demand higher royalties than their patents merit
Solutions
Obligation to declare patents covering standard
Obligation to license essential patents on fair, reasonable, and non-discriminatory (“FRAND”) terms

4. Meaning of “Standard Essential”
“Declared essential” does not mean “actually essential”
“Essential” does not mean valid or enforceable
Not all essential patents are of equal value
Some SEPs are pioneering
Some SEPs offer minor improvements
Some SEPs offer the only working solution
Some SEPs offer one of several working solutions

5. Meaning of “FRAND” What is “fair and reasonable”?
Fact intensive and case specific
Some courts use a modified version of the Georgia–Pacific factors to help determine what is fair and reasonable
What is “non-discriminatory”?
What royalty rates have been offered to competitors?
Are those competitors similarly situated?
How much transparency and access to information is required?
E.g., most SEP licenses are confidential
E.g., difficult to identify number and value of “actually essential” patents

6. TCL Files Declaratory Judgment Action in California
Hold-up: Licensees under Tremendous Pressure to Accept Licensor’s Terms
Ericsson offered TCL terms that TCL believed were non-FRAND
Ericsson sued or countersued TCL in 7 other jurisdictions
Ericsson lawsuit(s)
SEPs
Injunction Sought?
Filed
France (1) 3
Yes
2012
Brazil (4) 2
2012 & 2014
Russia (2) 1
UK (1)
2013
TCL Files Declaratory Judgment Action in California
ALL No
2014
Argentina (1)
Germany (2)
E.D. Texas I (1)
E.D. Texas II (1)
2015

7. Leveling the Playing Field: TCL Files Declaratory Judgment Action
Asked court to determine FRAND terms and conditions for a worldwide license
Alleged that Ericsson breached its contractual obligation with ETSI to license on FRAND terms
TCL is a third-party beneficiary and willing licensee

8. TCL Needs to Level the Playing Field
Eliminate Ericsson’s threatened and actual injunctions around the world
Focus on the merits of the FRAND-license dispute and determine the FRAND terms and conditions
Free up TCL’s monetary and human resources from fighting 14 different lawsuits

9. Leveling the Playing Field: Seeking an Anti-suit Injunction
Ordinary test for injunctive relief considers:
Likelihood of success on the merits
Irreparable harm
Balance of equities
Public interest
This is not the test for obtaining anti-suit injunctive relief

10. Leveling the Playing Field: 3-Part Test for Foreign Anti-suit Injunctions
Are the parties and issues the same in the foreign action, and is the domestic action dispositive of the foreign action to be enjoined?
Does the foreign litigation satisfy at least one of the following?
It frustrates a policy of the enjoining forum (e.g., causing distracting and wasteful litigation);
It is vexatious or oppressive;
It threatens the issuing court’s jurisdiction over property; OR
It invokes other equitable prejudices (e.g., undue expense and delay).

11. Leveling the Playing Field: 3-Part Test for Foreign Anti-suit Injunctions
Would the injunction have a tolerable impact on comity? Courts consider:
Effect on foreign relations;
Whether the suit raises public international issues;
Forum shopping concerns; and
Whether the proposed injunction is narrowly tailored.
See Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, (9th Cir. 2012).

12. Score! The Court Enjoins Ericsson
Ericsson obtained injunctions in other jurisdictions, and refused to stay its worldwide litigation
TCL agreed to abide by the court’s global determination of FRAND terms and conditions
Injunctions are not necessary once TCL agrees to abide by the court’s FRAND terms and conditions
Court’s order is directed to Ericsson—not foreign courts
Problem: court refuses to enjoin Ericsson’s Texas action asserting five implementation patents

13. Score! TCL’s Fallback Position Knocks Out Implementation Patents
After court refuses to enjoin Ericsson’s Texas action, TCL files 17 IPR petitions against Ericsson’s five implementation patents
Patent Office must issue a decision on IPR petitions within 6 months
Patent Office grants all 17 IPR petitions
E.D. Texas grants motion to stay two weeks before trial

14. Score! California Court Orders Additional Transparency
In discovery, Ericsson produced over 100 SEP licenses
Unpacking licenses demonstrates whether discrimination exists
TCL moves to compel critical information necessary to understand what are FRAND terms and conditions (i.e., are rates fair and reasonable)
Ericsson ordered to provide a list of its “actually essential patents”
Some are not “actually essential”
Some are merely optional to the standard
Some are invalid
Some are minor improvements

15. Trial is scheduled for October 11, 2016
Stay Tuned
Trial is scheduled for October 11, 2016

16. Questions?