By Priya Adlakha and Tanvi Bhatnagar
A Single Bench of Hon’ble Delhi High Court, in Interdigital Technology Corporation & Ors Vs. Xiaomi Corporation & Ors. , dealt with an application for injunction filed by Interdigital Technologies & Ors. (hereinafter collectively referred to as the Plaintiffs) against enforcement of an anti-suit injunction order dated September 23rd, 2020 obtained by Xiaomi Corporation & Ors. (hereinafter collectively referred to as the Defendants), passed by the Wuhan Intermediate People’s Court (Wuhan Court). In addition, the Plaintiffs also prayed for directions, to the Defendants, for immediate withdrawal of Case No. (2020) E 01 Zhi Min Chu No. 169.1 filed before the Wuhan Court and withdrawal of the anti-suit injunction application before the Wuhan Court and imposition of costs on the Defendants which is equivalent to the costs likely to be imposed on the Plaintiffs by Wuhan Court. Later, the Plaintiffs did not press for the direction of withdrawal of case before Wuhan Court, but pressed for other prayers.
The Hon’ble Delhi High Court, vide its order dated October 09, 2020, granted an ad interim injunction against the Defendants from enforcing the directions in the order dated September 23, 2020, passed by the Wuhan Court. However, the said application was finally decided on May 3, 2021.
Interdigital Technology Corporation & Ors Vs. Xiaomi Corporation & Ors.
The Plaintiffs filed a lawsuit [CS (COMM) 295/2020] against the Defendants wherein they alleged infringement by the Defendants of certain Standard Essential Patents (SEPs), held by the Plaintiff and registered in their name.
The Defendants manufacture cellular handsets i.e. mobile phones, compliant with 3G and 4G standards and for its operation the Defendants required a technology contained in the SEPs, which is held by the Plaintiffs. The Plaintiffs herein are aware that right to use the SEPs cannot be monopolized and they are required to give voluntary licences granting right to use the technology to the licensees. These licences are, however, required to be granted by the Plaintiffs, and availed by the licensees, at rates which are fair, reasonable and non-discriminatory (FRAND). Therefore, the Plaintiffs herein have sought injunction with respect to the eventuality that the Defendants are not willing to obtain licences at FRAND royalty rates, from the Plaintiffs, with respect to the said SEPs. The SEPs concerned are Indian patents IN 262910, IN 295912, IN 298719, IN 313036 and IN 320182 (which are referred to as IN 910, IN 912, IN 719, IN 036 and IN 182 by the Delhi High Court in its order).
LITIGATION BEFORE THE WUHAN COURT, CHINA:
Prior to filing of the lawsuit by the Plaintiffs, the Defendants, on June 09, 2020, had preferred a SEP royalty rate-setting suit before the Wuhan Court. The Defendants had prayed for fixing of a global FRAND royalty rate, on the basis of which they could obtain licence from the Plaintiffs, to operate and use the technology covered by the entire patent portfolio of the Plaintiffs.
After receiving the summons, the Defendants filed an anti-suit injunction application before the Wuhan Court for an appropriate relief / order against the Plaintiffs restraining them from prosecuting the present suit before this Court.
The Wuhan Court, vide order dated September 23, 2020 (hereinafter referred to as ‘the impugned order’), passed the following directions to InterDigital, Inc. and InterDigital Holdings, Inc. as well as the affiliates thereof:
“1. Upon service of this ruling, they shall immediately withdraw or suspend their application for any temporary injunction before the High Court of Delhi at New Delhi in India against the Applicants as well as its affiliates;
2. Upon service of this ruling, they shall immediately withdraw or suspend their application for any permanent injunction before the High Court of Delhi at New Delhi of India against the Applicants as well as its affiliates;
3. They shall not, during the trial of the present case, apply for any temporary or permanent injunction before any courts in either China or any other countries and regions against the Applicants as well as its affiliates;
4. They shall not, during the trial of the present case, apply for enforcing any temporary or permanent injunction that has been granted or is likely to be granted by any courts in either China or any other countries and regions against the Applicants as well as its affiliates;
5. They shall not, during the trial of the present case, file lawsuits before any courts in either China or any other countries and regions requesting to adjudicate the royalty rate of the royalty disputes in terms of the 3G and 4G SEPs involved in the present case against the Applicants as well as its affiliates.”
The Wuhan Court, in its aforesaid order, had also ordered to freeze the guarantee fund, RMB 10 million yuan, provided by Xiaomi Communications Co., Ltd., Xiaomi Homecare commercial Co., Ltd., and Beijing Xiaomi Mobile Software Co., Ltd. for the behavior preservation application. The Court had also rejected other claims in the behavior preservation application and directed that a fine of RMB 1 million yuan per day, calculated cumulatively from the date of the violation, shall be imposed on InterDigital, Inc. and InterDigital Holdings, Inc. if they violate this ruling.
The Plaintiff approached the Delhi High Court seeking an injunction on enforcement of the aforesaid directions of the Wuhan Court against them.
SUBMISSIONS MADE BY THE PLAINTIFFS:
A)Plaintiffs right to sue
The impugned order passed by Wuhan Court completely divested the Plaintiffs of their right to prosecute their suit. The impugned order of the Wuhan Court effectively restrained the Plaintiffs from prosecuting their action for protection of the patents granted by the Indian Government and was, to that extent, also an assault on the sovereign function of the State. The order effectively denied, to the Plaintiffs, the right conferred by the Indian Patents Act as well as Code of Civil Procedure (India). The Plaintiffs submitted that the Defendants have misrepresented that the Plaintiffs’ suit was for settling the FRAND rate for grant of licence for the global portfolio of the Plaintiffs’ patents. The suit filed by the Plaintiff was only directed against infringement of the Plaintiffs’ patents. It was submitted that mere filing of a FRAND rate setting case in Wuhan could not divest this Court of the powers conferred by the Indian Patents Act as well as Code of Civil Procedure (India).
B)Principle of comity of courts:
It was brought to notice that the impugned order was destructive of comity of courts, as it starkly disregarded the rights of the courts in India to decide the claim of infringement of Indian patents, the jurisdiction in respect of which is vested in Indian courts alone.
It was submitted that, where the order of a foreign court was in defiance of the public policy of the domestic court, no principle of comity of courts could inhibit the domestic court from protecting itself against the assault on its public policy.
It was also submitted that this Court has the power and authority to injunct the impugned order, which was apparent from various judgment of the Supreme Court and various High Courts in India. The Plaintiffs relied on several judgments in support of their averments and submissions. As per these precedents, where the grant of anti-suit injunction would directly interfere with pending proceedings in a foreign court, the Indian court must be circumspect in granting injunction. It was submitted that in passing an injunction against the impugned order, no adverse effects will be caused upon the complaint filed by the Defendant before the Wuhan Court.
C)Plaintiff’s eligibility to get injunction:
The Impugned order injuncted the Plaintiffs from prosecuting their claim for a restraint, against the Defendants from infringing its patents and consequently effectively rendered the suit futile for paying of costs of ₹ 1 crore for every day during which the Plaintiffs continued to prosecute the present proceedings. It was submitted that the impugned order was vexatious and oppressive in its operation and effect. In light of that a prima facie case was made out in the Plaintiffs’ favour, for grant of injunction as sought in this application. It was brought to the notice of the court that as a consequence of the impugned order, the Plaintiffs would have to suffer continued infringement of its patents as no licence had been taken by the Defendants and the Plaintiffs were injuncted/disallowed to oppose such infringement before the instant Court (which was the only court competent to adjudicate the dispute). It was submitted that both balance of convenience and irreparable loss shall be caused to the Plaintiff, in case the impugned order remains active and applicable against the Plaintiffs.
D)Overlapping proceedings between two courts:
There was an overlap of proceedings, considering the fact that the Plaintiffs had filed the Indian suit and the injunction application before the Delhi High Court and the Defendants had filed a separate complaint before the Wuhan Court. It was submitted that overlap, if any, was incidental and only partial which did not justify issuance of an anti-suit injunction as had been granted by the Wuhan Court.
It was brought to the notice of the Hon’ble Court that the scope of FRAND inquiry, by this Court in the present suit, was fundamentally different from the scope of FRAND inquiry which had been carried out by the Wuhan Court while examining the complaint filed by the Defendants. It was submitted that this Hon’ble Court would be concerned with the FRAND rate of royalty for grant of licence by the Plaintiffs to the Defendants for the right to exploit the suit patents as, in the alternative, such exploitation would be tantamount to infringement and consequently vulnerable to injunction by law. As a corollary, the very issue of fixation of FRAND rate would arise only if the Defendants desired to continue exploiting the Plaintiffs’ suit patents by obtaining a licence from the Plaintiffs. As such, it was submitted that no serious consequence would result even if the appropriate FRAND rates for grant of licence by the Plaintiffs to the Defendants in respect of the suit patents, were decided by this Court.
It was further submitted that the Plaintiffs were not seeking any interference to the complaint filed by the Defendants before the Wuhan Court. However, the Plaintiffs were entitled to seek restoration of the status quo ante before the filing of the anti-suit injunction application in Wuhan by the Defendants. Mere fact that Defendants had filed their complaint before the Wuhan Court prior to the present suit was irrelevant as scope of both proceedings were different.
The impugned order had been obtained by subterfuge and concealment, and the Defendants had also resorted to suppression of material facts from this Court. The Plaintiffs were unaware of filing of the anti-suit injunction application by the Defendants in the Wuhan Court and issuance of the impugned order. The Plaintiffs became aware of the said anti-suit injunction application and the impugned order from the Defendants’ reply and documents filed with respect to IA 6440/2020. The Defendants had conspicuously concealed from this Court the fact of pendency of the complaint at Wuhan and of the anti-suit injunction preferred by the Defendants therein. No notice of the filing of the anti-suit injunction application was ever served on the Plaintiffs prior to issuance of the impugned order which had been passed ex parte.
E)Costs to be imposed upon the Defendants:
The Plaintiff strongly pressed for their prayer relating to costs. The Plaintiff prayed that the costs imposed on the Defendants be equivalent to the costs/penalty payable by the Plaintiffs in accordance with the impugned order. It was submitted that the impugned order had come to be passed owing to sharp practices adopted by the Defendants and the Plaintiffs were required to be indemnified by the Defendants, in the event of the Plaintiff being mulcted by fine as envisaged by the impugned order.
SUBMISSIONS ON BEHALF OF THE DEFENDANTS:
A)Impugned Order not affecting Plaintiffs’ right:
The Defendants submitted that the impugned order passed by the Wuhan Court did not extinguish the Plaintiffs’ right either to prosecute its suit for infringement of its Indian patents, or even its application for interlocutory injunction preferred therein. It merely delayed the recovery of the royalty by the Plaintiffs as claimed by them in IA 6440/2020 (application for interim injunction filed in present suit).
B)Overlap of Proceeding
It was submitted that the proceedings before this Court in the present suit and in IA 6440/2020 (application for interim injunction), were not only overlapping but are also identical to the proceedings pending before the Wuhan Court. The claims of the parties before the two forums, as well as reliefs prayed therein, were identical. Both parties wanted the respective courts to consider the FRAND rates. The present proceedings before this Hon’ble Court were bound to interfere with the proceedings in the complaint before the Wuhan Court. It was submitted that the Plaintiffs were exhorting this Court to proceed on a “direct collision path” with the Wuhan Court. FRAND rate determination was an integral part for consideration of the prayer for grant of injunction, in the case of alleged SEP infringement.
It was further pointed out that, before deciding an application for grant of interlocutory injunction against SEP infringement, the Court was required to satisfy itself that the asserted patents were valid, essential and infringed, and that, though the Plaintiffs had complied with their FRAND obligations, the Defendants were unwilling to take a license from the Plaintiffs, even at the FRAND rate determined by the Court. Determination of the FRAND rate at which the license for exploitation of their SEPs, was to be granted by the Plaintiffs, was a necessary precursor to any finding of infringement by the Defendants, which would follow only if the Defendants were unwilling to take a licence from the Plaintiffs at the FRAND rate so determined by the Court. It was alleged by the Defendants that the Plaintiffs were misleading the court in contending that their claim before the Court was only for injuncting infringement of the suit patents. It was reiterated that FRAND rate determination was integral to the consideration of the prayer for interlocutory injunction made by the Plaintiffs in IA 6440/2020 and therefore the issue between the two courts were identical.
It was brought to the notice of the Hon’ble Court that if both courts were to be permitted to adjudicate their proceedings simultaneously it will likely lead to two global FRAND rates being fixed which would result in chaos and would give rise to various vexing issues in such circumstances. It was submitted that there were authorities to the effect that, in order to avoid an unseemly race to have the FRAND rate fixed, one of the proceedings should be kept in abeyance.
Defendants also emphasized that given the extent of overlap between the proceedings, the injunctive order dated September 23, 2020 of the Wuhan Court was entirely justified.
C)Principle of Comity of Courts
Defendants submitted that anti-enforcement injunction/anti-anti-suit injunctions were an extremely rare species of judicial interdiction, which were not easily passed by courts. As there was no dispute regarding the competence of the Wuhan Court to pass the impugned order, this Court ought not to interfere with the same, as any such interference would be destructive of the principle of comity of courts.
D)Justification of costs imposed:
The impugned order imposed penalty of ₹ 1 crore per day and the same was imposed to ensure enforcement of the directions issued by the Wuhan Court and could not, therefore, be treated as vexatious or oppressive in any manner.
PRINCIPLES GOVERNING ANTI-SUIT INJUNCTIONS:
1)Anti-suit injunction 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 in personam interferes with the functioning of a sovereign forum, not subject to the writ of the court granting the injunction.
2)An anti-suit injunction could only be granted by a Court possessing “sufficient interest” in the lis forming subject matter of the proceedings which it intends to injunct. In other words, qua the said lis, the Court was required to be the natural forum.
3)The possibility of palpable and gross injustice, were injunction not to be granted, remains a definitive test. In doing justice in accordance with law, the Court will try and preserve the subject matter of the lis so that the beneficiary of the final verdict can enjoy the fruits thereof.
4)Interference with the right to pursue one’s legal remedies, before the forum which was competent to adjudicate thereon, amounts to “oppression”, especially where there is no other forum which the litigant could approach.
5)In patent infringement matters, it was the right of the patent holder to choose the patents which it desired to enforce. The only practical relief available to an SEP holder was by way of anti-infringement action. The right to seek legal redressal, against infringement, was a fundamental right. A proceeding, or an order, which resulted in divesting the patent holder of the authority to exercise this fundamental right, was ex facie oppressive in nature.45 Protection of the jurisdiction of the Court is also a guiding factor.
6)Comity, as a concept, was grating to the ear, when it proceeded from a court of justice. Where the proceeding or order, of which injunction was sought, was oppressive to the applicant seeking injunction, comity was of relatively little importance, as a factor telling against grant of such injunction. Even if grant of injunction, in such circumstances, was likely to offend the foreign Court, that consideration could not operate as a factor inhibiting against such grant. Considerations of comity were, moreover, subject to the condition that the foreign law, or the foreign proceeding or order was not offensive to domestic public policy or customary international law. Comity, in any event, was a two-way street.
7)There was no reason to treat anti-execution injunction applications as “exceptional”, to the extent that, even if grounds for grant of injunction were made out, the Court would hesitate.
8)Some instances in which anti-enforcement injunction is would be justified are (a) where the judgment, of the execution of which injunction was sought, was obtained too quickly or too secretly to enable the applicant (seeking injunction) to take pre-emptive remedial measures, including by way of applying for anti-suit injunction while the proceeding was pending, (b) where the order, of the execution of which injunction was sought, was obtained fraudulently, (c) where the applicant seeking anti-enforcement injunction had no means of knowing of the passing of the judgment or order against, until it was served on him.
The Hon’ble Delhi High Court, on the basis of the above mentioned analysis, framed two questions which required consideration for adjudication of the present dispute:
1)Whether the Wuhan Court was justified in granting anti-suit injunction vide its order dated September 23, 2020; and, secondly
2)Whether this Court would be justified in injuncting the Defendants from enforcing that order against the Plaintiffs.
The Court was of the view that the Wuhan Court had not been justified either in holding that the Plaintiffs had sought to interfere with the complaint filed by the Defendants before the Wuhan Court, by filing the present suit, or that they had intended to exclude the jurisdiction of the Wuhan Court thereby. The cause of action in the present proceedings is infringement of six select and specific Indian patents. It was observed that a lot of questions with respect to the Plaintiffs’ patents shall need to be answered in affirmative for the question of royalty rates, at which the Plaintiffs would be obligated to license the SEPs, to remain in conformity with their FRAND obligations, would come up for consideration. The Court accepted the submission of the Plaintiff that the issue of FRAND royalty rates arises, in the present case, only as a part of the entire gamut of the controversy before this Court.
It is also significant that the present suit concerns itself only with six of the plaintiffs’ patents, granted in India, whereas the Wuhan complaint is apropos the entire portfolio of all SEPs held by the Plaintiffs. The scale and sweep of enquiry in the Wuhan complaint is also, therefore, decided differently from that in which this Court has been called upon to engage itself, in the present proceedings. The nature of the enquiry which would be required to be conducted by this Court, in the matter of fixation of a FRAND royalty rate, would also be with respect to the infringement of the specified six patents involved in this case. Unlike the Wuhan proceedings, this Court, at least foreseeably, is not required to enter into fixation of a global FRAND rate covering the entire portfolio of the Plaintiff’s SEPs.
The Court observed that perceived infringement of Indian patents can, indisputably, be challenged only in India. Patent rights being territorial in nature and patents themselves being granted only by the concerned sovereign state. There is, therefore, no question of the Plaintiffs having been able to seek injunction, against infringement of its patents involved in the present case, before any forum outside India. There can be no question of exclusion of the jurisdiction of the Wuhan Court by the Plaintiffs, in the present proceedings, for the simple reason that the Wuhan Court has no jurisdiction to adjudicate on the present suit or decide the issue in controversy raised therein, i.e. infringement, by the Defendants, of the Indian suit patents of the Plaintiffs.
It was also observed that mere overlap of issues is not regarded, either by the law in this country or in any other jurisdiction, as sufficient to grant anti-suit injunction. It is only where the overlap results in the foreign proceedings being rendered “oppressive or vexatious” that anti-suit injunction may be justified. If one were to examine the present case on this anvil, the position that emerges is that, while the Wuhan Court may not have been justified in granting anti-suit injunction, this Court would certainly be justified in injuncting the Defendants from enforcing the impugned order against the Plaintiffs. The impugned order expressly prohibits the Plaintiffs to exercise their right to seek legal redressal, in accordance with the laws of this country, against perceived infringement of patents.
It was also observed that the Wuhan Court has, with greatest respect, failed to take into account the fact that the relief sought by the Plaintiffs before this Court does not form any part of the subject matter of the proceedings before the Wuhan Court. At best, it may be said that, if the Defendants acknowledge that the Plaintiffs’ patents are SEPs and that, in the absence of any license from the Plaintiffs authorizing them to utilize the said patents, they would be in infringement thereof, this Court may have to examine the issue of fixation of a FRAND compliant royalty rate. It is only at that stage, and in those circumstances, that any kind of overlap, between the present proceedings and the proceedings pending before the Wuhan Court, could be said to arise. That overlap, if and when it may arise cannot constitute a legitimate basis for the Wuhan Court restraining the Plaintiffs from prosecuting their application for injunction against infringement of the suit patents, either at the interlocutory or at the final stage. It was pointed out that every overlap of issues cannot justify an anti-suit injunction.
The Hon’ble Court observed that a step so extreme as an anti-suit injunction cannot be justified on a mere apprehension of the possibility of conflicting orders, were proceedings in both jurisdictions to be allowed to proceed.
Light was thrown upon Section 104 of the Patents Act which specifically prohibits the institution of any suit, for infringement of a patent, in any court inferior to a District Court having jurisdiction to try the suit. Section 20 of the Civil Procedure Code (India) requires any suit to be instituted in a Court, within the local limits of whose jurisdiction the Defendants reside or carry on business, or where the cause of action arises, wholly or in part. Indeed, it is not disputed, even by the Defendants, that the present suit, seeking injunction against infringement of the Plaintiff’s Indian patents IN 910, IN 912, IN 719, IN 036 and IN 182, could not have been maintained before any court outside India. Nor do the Defendants dispute the territorial jurisdiction of this Court, to adjudicate and decide the present suit.
The Hon’ble High Court after considering the submissions made by both parties, relying upon judgments of Indian and Foreign Courts and making observations have concluded the following:
•The Hon’ble Court held that it is totally impermissible for a Court in one sovereign jurisdiction to injunct the party before it from pursuing its cause against infringement of its intellectual property before another sovereign jurisdiction, where such latter jurisdiction is the only forum competent to adjudicate the claim of infringement, save and except where continuation of the infringement proceedings are vexatious or oppressive to the proceedings pending before the former, injuncting court. The mere fact that one or other aspect of the controversy may overlap cannot be a ground to grant such injunction. Nor can the consideration of the two courts arriving at differing decisions on that part of the issue which may overlap be regarded as sufficient to grant such injunction, which would result in denying the Plaintiff seeking injunction against infringement the right to agitate such claim before the only forum competent to adjudicate thereon. Such injunction would be ex facie destructive of the principle of comity of courts. It cannot be tolerated even for a day.
•It was held that the right of the citizen, in this country, to legal redress of his legitimate rights, is hallowed, sacred, and fundamental. It is a sanctified and pre-ambular constitutional goal, and derives sustenance from the most sublime of our fundamental rights, including those consecrated by Articles 14 and 21. It is an inviolable and inalienable facet of access to justice. It triumphantly carries forward the torch lit, over two centuries ago, by Chief Justice Marshall in Marbury v. Madison which hailed the right to obtain civil redress as “the very essence of civil liberty”. Further held that what the order of the Wuhan Court does, unfortunately, is to deny, to the Plaintiffs, the right to even flavour this essence, without due justification.
•It was held that, our Constitution guarantees “justice, social economic and political” to every citizen. This guarantee cannot be sacrificed at the altar of comity.
The Delhi High court finally passed the following direction vide its order dated May 03, 2020:
•The ad interim injunction granted by Hon’ble Delhi Court on October 09, 2020 is made absolute, pending disposal of the present suit. The Defendants shall remain restrained, during the pendency of the present suit, from enforcing the impugned order passed by the Wuhan Court against the Plaintiffs.
•In the event of any orders passed by the Wuhan Court, or any other measures being taken, against the Plaintiffs, towards deposit of the fine of RMB 1 million per day, as directed by the impugned order, the Defendants shall, within one week of the passing off the said order (which period may be reduced or extended at that stage, if necessary), secure such amount of fine, imposed on the Plaintiffs, by depositing, with the Registrar General of this Court, an equivalent amount, by way of crossed cheque/demand draft, and the Plaintiff shall be entitled, on such deposit, to withdraw the said amount, or have the same transferred to the account of the Plaintiffs.