26 May 2021
The Delhi High Court in the Interdigital Technology Corporation & Ors. v. Xiaomi Corporation & Ors. case granted an anti-enforcement injunction against an anti-suit injunction obtained in a foreign jurisdiction. Xiaomi on June 9, 2020, filed an SEP royalty rate-setting suit in the Wuhan Intermediate People’s Court (“Wuhan Court”) to determine global FRAND rates to obtain SEP licences across the world. Thereafter, on September 23, 2020, Xiaomi obtained an anti-suit injunction (“ASI”) from the Wuhan Court, restraining Interdigital from proceeding with their July 2020 suit before the Delhi High Court that sought the following reliefs: a) To injunct Xiaomi from infringing its 3G and 4G Standard Essential Patents (SEPs) and b) Declaration of FRAND (fair, reasonable and non-discriminatory) pricing terms for the six Indian patents in question, provided that Xiaomi should elect to execute a licence in lieu of the aforesaid injunction. Interdigital in this suit sought relief from the Court to not only indemnify it from the costs handed down by the Wuhan Court’s order, but also that it not be enforced.As observed by the Delhi High Court herein, many of the issues that arose in the case were res integra insofar as the development of the law in India was concerned, the Court therefore found itself in virgin territory. It has navigated its path by mainly relying upon foreign jurisprudence, evolved primarily in the Courts of the United Kingdom in similar cases of patent infringement, pending determination of FRAND pricing rates. In some of the cases relied upon, the defendant has been a Chinese telecom company, similar to the present case. While the main bone of contention in this suit relates to whether the Court had the power to grant such an anti-enforcement injunction, penumbral issues in the case touch upon the Doctrine of Forum Conveniens and International Comity of Courts. It is important to state at this juncture that the Court held that principles and tests governing anti-suit injunction are relevant to anti-enforcement injunctions.
Main Principles Buttressing Key Holding
At the outset, the Court scanned Indian judgments to trace the law controlling ASIs. The Court’s power to injunct the impugned order was apparent from the judgments of Modi Entertainment Network v. W.S.G. Cricket Pte Ltd[1], Dinesh Singh Thakur v. Sonal Thakur[2] and Devi Resources Limited v. Ambo Exports Limited[3]. A common underlying rationale followed by these judgments is that, an ASI should be granted only in rare cases, and not for the mere asking. The Court should be mindful of the fact that even an injunction against an individual person, as opposed to a State, interferes with sovereign functioning of another forum.
Having established a clear window for grant of ASI, the Court relied on foreign judgments such as SAS Institute Inc. v. World Programming Ltd.[4], IPCom GmbH & Co KG v. Lenovo Technology (United Kingdom) Ltd[5], Huawei Technologies Co Ltd v. Conversant Wireless Technologies S.A.R.L[6], Unwired Planet International Ltd. v. Huawei Technologies (UK) Co Ltd [7] to establish firstly, what conditions constitute such rare cases, and secondly, when the principle of international comity of courts can be jettisoned to secure the ends of justice.
Conditions Constituting Grant of ASI
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The Court granting the ASI required to be the Court within whose jurisdiction the subject matter lies, so that it possesses sufficient interest. Given that the subject matter in the present suit is six Indian patents, it is only the Indian Courts that are forum conveniens to rule on the issue of infringement;
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Possibility of grave and palpable injustice; in the present case, if the Indian court didn’t refuse enforcement of the Wuhan Court’s ASI, Xiaomi will continue to infringe Interdigital’s SEPs, leaving Interdigital remediless, as there is no other forum it could approach for redress;
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Where the order under challenge was obtained fraudulently and secretly, as well as where the affected party had no means of knowing of the passing of such a judgment against him, until it was served on him.
Comity: ‘A Two Way Street’
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Considerations of comity are subject to the condition that the foreign law, proceeding or order was not offensive to domestic public policy or customary international law;
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Where the foreign proceeding, law or order was oppressive to the applicant seeking injunction against it, comity was of relatively little importance, as a factor telling against grant of injunction;
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And, even if grant of an injunction, given the aforesaid circumstances, was likely to offend a foreign Court, that consideration could not operate as a factor inhibiting such a grant.
While the Delhi High Court in this case has broken new ground domestically and laid out elaborate principles governing the grant of anti-enforcement injunction, in doing so, it has naturally followed the western patent litigation trend as has been laid out in the cases mentioned above. Interestingly, the Delhi High Court decision forms a part of a global litigation between the two aforesaid litigants, Interdigital and Xiaomi. Most recently in February, 2021, a Munich Court (Germany) also confirmed a preliminary injunction against subsidiaries of Xiaomi, restricting them from enforcing anti-suit injunctions obtained from the same Wuhan People’s Court against Interdigital. While ASI’s and AEI’s in patent litigation seem to be in vogue, a new modus vivendi will have to be reached in order for there to be a sustainable solution to determine FRAND rates between Chinese and Western technology companies.
For further information, please contact:
Gauri Rasgotra, Partner, Cyril Amarchand Mangaldas
gauri.rasgotra@cyrilshroff.com
[1] (2003) 4 SCC 341
[2] (2018) 17 SCC 12
[3] 2019 SCC OnLine Cal 7774
[4] (2020) EWCA Civ 599
[5] [2019] EWHC 3030 (Pat)
[6] [2019] EWCA Civ. 38
