India: Enforcement Of Anti Suit Injunction: Indian Court Lays Down The Parameters For Grant Of Anti-enforcement Injunction Against An Order By A Foreign Court

In a recent case, titled Interdigital Technology Corporation & Ors. v. Xiaomi Corporation and Ors.¹, the Hon'ble Delhi High Court, ("Indian Court") stayed the enforcement of an anti-suit injunction order of the Wuhan Intermediate People's Court ("Wuhan Court"). This article briefly examines this unprecedented ruling and findings of the Indian Court in the abovementioned matter.

Brief Facts

Interdigital Technology Corporation ("Interdigital") states that it has certain Standard Essential Patents ("SEPs") which are being used without a licence by Xiaomi Corporation ("Xiaomi") for manufacture of 3G and 4G compliant cellular handsets. On 9^th June 2020, Xiaomi approached Wuhan Court for setting the SEPs royalty rate. Xiaomi sought a global fair, reasonable and non-discriminatory ("FRAND") royalty rate to be fixed which would enable it to obtain the licence and use the technology covered by the Interdigital patent portfolio. Subsequently, on 29^th July 2020, Interdigital filed a suit before the Indian Court seeking an injunction against Xiaomi in the event that it was not willing to obtain licence for use of certain SEPs at FRAND royalty rates.

On the day that the Indian Court issued notice in Interdigital's suit, Xiaomi approached the Wuhan Court with an application seeking an anti-suit injunction against Interdigital ("Anti-suit Application"). On 23^rd September 2020, the Wuhan Court directed Interdigital to (i) withdraw/suspend its legal action before the Indian Court (ii) not to pursue any lawsuits before any court in China or any other country in relation to settling the royalty rate of SEPs and (iii) pay a fine of RMB 1 million yuan (approximately INR 1.1 crore) per day in case of violation ("Wuhan Order").

In response, Interdigital approached the Indian Court with an application seeking to restrain Xiaomi from enforcing the Wuhan Order and to withdraw the Anti-suit Application i.e., anti-enforcement application. After granting an ad-interim injunction restraining Xiaomi from enforcing the Wuhan Order, the Indian Court heard arguments in detail.

Interdigital's arguments

Interdigital argued that suit before the Indian Court was a claim of infringement based on its rights under the Patents Act, 1970. Xiaomi had wrongly contended before the Wuhan Court that both cases dealt with settling the global FRAND rate for grant of licence. The overlap between the two cases (if any) was only incidental and did not justify issuance of an anti-suit injunction. Interdigital was unable to clarify this as the Anti-suit Application was concealed and the Wuhan Order was effectively passed ex-parte. The Wuhan Order was contrary to comity of courts and defiant of public policy as it usurped an Indian Court's jurisdiction to decide on the infringement claim of Indian patents. The consequence of the Wuhan Order would be that Interdigital would continue to suffer infringement without being able to seek any legal remedy.

Xiaomi's arguments

Xiaomi refuted these arguments by primarily stating that both cases were identical because FRAND rate consideration was integral to both. Interdigital was issued notice of the proceedings before Wuhan Court and deliberately chose to be absent. Instead, by filing the suit before the Indian Court, Interdigital was proceeding with the premise that any foreign judgement would be void if it incidentally affected some rights arising out of Indian law. Multiplicity of proceedings could lead to chaos as it would possibly result in two global FRAND rates being fixed. Lastly, Xiaomi argued that anti-enforcement injunctions were extremely a rare species of judicial interdiction and not easily granted.

Decision and reasoning:

The Indian Court held that a foreign court cannot injunct parties from seeking legal remedies under Indian law. The issues before the Wuhan Court and Indian Court were distinct. The Indian Court was only concerned with infringement of certain SEPs while the Wuhan Court was dealing with setting FRAND royalty rate for all SEPs held by Interdigital. The Indian Court relied on Magotteaux Industries Pvt Ltd. v. AIA Engineering Ltd² to emphasize that patent rights are territorial in nature and any perceived infringement should be redressed within the jurisdiction of the sovereign that granted it. The Wuhan Court would not have any jurisdiction to adjudicate on issues related to infringement and even Xiaomi did not dispute the territorial jurisdiction of the Indian Court. Accordingly, enforcement of the Wuhan Order would completely prohibit Interdigital from prosecuting patent infringement. In any case, mere overlap of issues or possibility of conflicting orders is not sufficient grounds for grant of anti-suit injunction.

Finally, the Indian Court applied the troika test of prima facie case, balance of convenience and irreparable loss to find that enforcement of the Wuhan Order would render Interdigital remediless against patent infringement. In a first of its kind, the Indian Court allowed the anti-enforcement application. Additionally, it passed directions to protect Interdigital from the fine imposed under the Wuhan Order if enforced by requiring Xiaomi to deposit an equivalent sum.

Comments:

After reviewing the foreign jurisprudence³, the Indian Court enunciated the following principles on anti-suit and anti-enforcement injunctions that

• anti-suit injunctions should be granted rarely because it interferes with another sovereign forum's functioning,
• only the Court which has natural jurisdiction over the dispute can grant anti-suit injunction
• non-grant of injunction would result in palpable and gross injustice,
• interference with right to pursue legal remedies before the competent forum amounts to "oppression",
• it is the right of the patent holder to initiate a patent infringement suit, and
• If the proceedings before a foreign court are oppressive, the Court should not be inhibited from granting anti-suit injunction merely because may offend a foreign court.

The Indian Court clarified that an anti-suit injunction restrains a party from proceedings with the main suit pending before a foreign court and an anti-enforcement injunction restrains a party from enforcing a foreign order or decree in a local court. However, there is no reason to treat anti-enforcement injunctions as rarer than anti-suit injunctions.

The judgement asserts exclusive territorial jurisdiction and sovereignty in relation to protection against perceived infringements of Indian patents. In our view, this approach leaves two prominent questions unanswered i.e. (i) if these principles will apply in case of rights arising out of a contract and (ii) in case of an international patent obtained through the Patent Cooperation Treaty, 1970, which would be the appropriate jurisdiction to approach.

Despite acknowledging that it is not sitting in appeal of the Wuhan Order, the Indian Court reassess and disagrees with justifications provided for the grant of anti-suit injunction. It glosses over the fact that Interdigital should have ideally appealed or sought review of the Wuhan Order from a superior court in Wuhan. It does not sufficiently consider whether setting of a global FRAND rate would factor in the Indian market and SEPs at issue before the Indian Court. In fact, if adequate compensation for prior use of Interdigital's entire patent portfolio is granted by the Wuhan Court, it would render the suit before the Indian Court infructuous. Admittedly, Interdigital has sought an injunction in the event Xiaomi is unwilling to use SEPs at FRAND royalty rates. It will be interesting to see how the jurisprudence evolves in such cases. Especially considering that here the Indian Court overlooked whether this was the right stage to intervene considering that a global FRAND rate has not been fixed by Wuhan Court yet and there has been no indication that Xiaomi is unwilling to pay.

* The authors would like to acknowledge the assistance rendered by Harshvardhan Korada, a student of Amity Law School, Delhi.

Footnotes

1. Judgement dated 3^rd May 2021 in I.A. 8772/2020 in CS(COMM) 295/2020, Interdigital Technology Corporation & Ors. v. Xiaomi Corporation and Ors.

2. Magotteaux Industries Pvt Ltd. v. AIA Engineering Ltd, 2008(155) DLT 73 (DB).

3. IPCom GmbH & Co KG v. Lenovo Technology (United Kingdom) Ltd (2019) EWHC 3030 (Pat); Lenovo (United States) Inc. v. IPCom GmbH & Co KG RG 19/21426 – No Portalis 35L7-V-B7D-CBAZK; Huawei Technologies Co. Ltd. v. Conversant Wireless Technologies S.A.R.L [2019] EWCA Civ. 38; Unwired Planet International Ltd v. Huawei Technologies (UK) Co Ltd [2020] UKSC 37 and SAS Institute Inc. v. World Programming Ltd (2020) EWCA Civ 599

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