Telefonaktiebolaget LM Ericsson, Ericsson AB, Ericsson, Inc. v. Lenovo (United States), Inc. et. al., Appeal No. 2024-1515 (Fed. Cir. Oct. 24, 2024)

 In our Case of the Week, the Federal Circuit clarified that, for an issue in a domestic suit to be “dispositive” under the Microsoft framework in foreign antisuit injunction proceedings, it only needs to potentially resolve whether the injunction is appropriate, and does not need to necessarily resolve the entire dispute.

Ericsson and Lenovo are engaged in multi-jurisdictional disputes regarding standard essential patents (“SEPs”) owned by each party. They are both members of the European Telecommunications Standards Institute, whose intellectual property rights policy requires members to license their SEPs on fair, reasonable, and non-discriminatory (“FRAND”) terms. Ericsson and Lenovo have been negotiating for years over a global cross-license of their SEPs.

On October 11, 2023, Ericsson made a “final licensing offer” to Lenovo regarding the global cross-license, and filed the instant lawsuit in the Eastern District of North Carolina, which alleged that Lenovo had infringed Ericsson’s SEPs and failed to meet its FRAND commitments by, among other things, failing to negotiate the license terms in good faith. Ericsson also filed infringement proceedings in Colombia and Brazil regarding its Colombian and Brazilian SEPs. Ericsson sought, and was granted, injunctions in both South American nations.

After the injunctions were entered, Lenovo asserted counterclaims in the Eastern District of North Carolina, asserting that Ericsson had infringed Lenovo’s SEPs and failed to meet its own FRAND commitment to negotiate license terms in good faith. Lenovo moved the District Court to enter an antisuit injunction that would prohibit Ericsson from, among other things, enforcing the Colombian and Brazilian injunctions.

The District Court looked to the three-part framework laid out in Microsoft v. Motorola to determine whether it should grant Lenovo’s requested foreign antisuit injunctions. The initial threshold requirement of the Microsoft framework asks whether the parties and issues are the same in the foreign and domestic suits, and whether resolving the domestic suit would be “dispositive” of the foreign suit. Ericsson argued, and the District Court agreed, that for a domestic suit to be dispositive under Microsoft required it: (1) to resolve the entire foreign suit, and not just the injunction question; and (2) to necessarily resolve the foreign dispute, and not just to potentially resolve it, depending on which party prevailed in the domestic matter.

Following this reasoning, according to Ericsson and the District Court, the domestic suit could only be “dispositive” of the foreign suit if the domestic suit resulted in a global cross-license.  Whereas the question in front of the District Court—whether Ericsson had complied with its FRAND obligation to negotiate in good faith such that it was allowed to seek the foreign injunctions—could only resolve the questions of whether the foreign injunctions were appropriate, and then only if Lenovo succeeded on the question, a global cross-license would necessarily resolve the entire foreign suit, regardless of which party got its preferred terms in the cross-license.  Because the District Court found that the question in front of it could not meet the threshold “dispositive” requirement under Microsoft, the District Court rejected Lenovo’s request for antisuit injunctions against the Columbian and Brazilian injunctions.

The Federal Circuit disagreed. It found nothing in Microsoft that requires a domestic suit to necessarily or entirely resolve a foreign suit for the domestic one to be “dispositive.” The Federal Circuit held that the District Court had legally erred by requiring the domestic suit to necessarily resolve the entire foreign suit, and clarified that the “dispositive” requirement could be met even if the domestic suit only potentially resolved whether a foreign injunction is appropriate—not the entire foreign suit.

In this case, the Federal Circuit held that the District Court dispute—over whether Ericsson had complied with its obligation to negotiate license terms in good faith—would be dispositive. Ericsson’s FRAND requirements prohibited the company from bringing a claim for injunctive relief unless Ericsson had first negotiated license terms in good faith. Over protests from Ericsson—that it should be allowed to bring suits for injunctive relief at any time—the Federal Circuit found that “if the FRAND commitment means anything of substance, it must mean that an SEP holder that has made [a FRAND] commitment cannot just spring injunctive actions against other standard implementers without having first complied with some standard of conduct.”

Therefore, the Federal Circuit held that if Ericsson was found not to have negotiated in good faith, then Ericsson should be barred from seeking the Colombian and Brazilian injunctions. In other words, the District Court’s determination of whether Ericsson had met its obligation to negotiate in good faith could be dispositive of the foreign injunctions. Having found that Lenovo had met the first requirement for a foreign antisuit injunction under Microsoft, the Federal Circuit vacated and remanded back to the District Court, with the instruction to resolve the remaining questions under Microsoft, including whether Ericsson had complied with its obligation to negotiate in good faith.

The full opinion can be found here.

By Tyler Hall

ALSO THIS WEEK

NexStep, Inc. v. Comcast Cable Comms., LLC, Appeal Nos. 2022-1815, -2005, -2113 (Fed. Cir. Oct. 24, 2024)

In this case, a split panel of the Federal Circuit affirmed final judgment of non-infringement as to NexStep’s U.S. Patent Nos. 8,885,802 and 8,280,009, which NexStep alleged had been infringed by voice-activated remotes and support services, respectively, offered by appellant Comcast. Among other things, the decision emphasized the importance of clear expert testimony in showing infringement under the doctrine of equivalents (DOE).

Here, the panel majority found that NexStep’s proffered equivalents testimony on the ’009 patent was too vague and unstructured to support the jury’s finding of DOE infringement; for example, it appeared directed more to similarities between the accused and claimed processes as a whole than to the required showing of equivalence on an element-by-element basis. The panel reaffirmed that “from handbells to complex electronics, particularized testimony and linking argument is always required” to properly constrain application of the doctrine, and to prevent juries from eroding the important public notice function of a patent’s actual claim language. As to the ’802 patent, the Federal Circuit affirmed the district court’s construction of “VoIP” in the claims as specifically requiring two-way audio communications. It affirmed the district court’s grant of summary judgment of non-infringement on that basis.

Judge Reyna concurred as to the ’802 patent but dissented with regard to the ’009 patent. He criticized the majority for adopting what he characterized as a “new rule” that expert testimony was always required to show infringement under the doctrine of equivalents. The judge explained that taken as a whole, he believed NexStep’s expert had provided the jury with sufficient evidence on which to base a conclusion of DOE infringement.

The opinion can be found here.

By Jason A. Wrubleski