Sometimes, patent litigation can start to look less like an exercise of government-granted rights to an invention and more like a nuclear arms race, with both companies stacked to the brims with artillery. That certainly seems to be what is happening in a patent dispute between Ericsson and Samsung, as the companies go toe-to-toe over standard essential patents (SEPs) related to wireless phone technology. Both Samsung and Ericsson have made it clear that they have patents that the other is infringing, and it does not look like a cross-license is in sight. In my second installment of ITC Week, I am discussing a new twist to what may end up being one of the most high-octane litigations of 2021. On the heels of an anti-suit injunction from a Wuhan court (and now an anti-anti-suit injunction in response from the Eastern District of Texas), Samsung has raised the stakes in its dispute against Ericsson by filing an ITC complaint.
At the heart of the dispute is license renewal gone afoul. In November 2012, Ericsson sued Samsung, and the companies ultimately settled in 2014. Based on the timing of the dispute, it would appear that the companies reached a 7-year agreement that needed to be, or soon needs to be, "re-upped." On December 11, Ericsson issued a press release noting that Samsung had violated FRAND commitments. In response, it had filed a lawsuit in the U.S. District Court for the Eastern District of Texas (E.D. Texas). The complaint explains that the previously-discussed settlement in January of 2014 was a cross-license covering both parties' patents related to 2G, 3G, and/or 4G standards. This is important to keep in mind as we move forward. A cross-license is a type of patent license wherein parties agree not to sue each other over patents that the other is infringing. In February of 2019, as the license was poised to expire, Ericsson took steps to initiate negotiations to renew the license. In the complaint, Ericsson stated that instead of negotiating the renewal in good faith, Samsung tried to get them to agree to a royalty rate that was "substantially less than the value of Ericsson's Essential Patents, and less than FRAND." As will be discussed in a future article, "FRAND" means "fair, reasonable, and non-discriminatory" royalty, and it is a notion that has been hotly contested on a global scale since it was introduced as a means to diffuse tension over SEPs.
"Christmas Surprise" from Wuhan
After Ericsson filed its original complaint on December 11, Samsung filed a lawsuit in the Wuhan Intermediate People's Court of China seeking to enjoin the E.D. Texas action, and the Wuhan court granted the complaint early Christmas morning. I put the phrase "Christmas Surprise" in quotes because I am not intimately familiar with the facts of the case, but Ericsson has claimed that the lawsuit was filed in "secret" and that as a result, it did not receive adequate time to respond. After the Wuhan court ruling, Ericsson filed an Emergency Application for Temporary Restraining Order to prevent Samsung from enforcing or continuing the action in China. On January 11, 2021, Judge Gilstrap granted Ericsson's motion for a preliminary injunction, issuing what is effectively an "anti-anti-suit injunction" (a topic for another time).
Samsung's ITC Complaint
In the midst of the jockeying for jurisdiction in Ericsson's case, Samsung filed a complaint with the International Trade Commission (ITC) on Thursday, January 7, demanding that it block U.S. imports of Ericsson's 5G base stations. As noted in my previous article about the ITC, these cases are rapid, with an average time to a final determination of 15 months, meaning that Samsung could apply a lot of pressure on Ericsson if the ITC decides to take up the investigation. The complaint notes that Ericsson's contracts with 5G providers, including AT&T, Verizon, and Sprint, evidence that Ericsson is set on infringing Samsung's patents.
But Samsung's complaint is not the only ITC action in this case. On January 4, Ericsson filed an ITC complaint against Samsung to initiate an investigation into Samsung's devices that allow for wireless connectivity. It is important to note that the ITC cases do not involve patents for industry standards and are instead related to adjacent handset technologies. Therefore, the result of the ITC cases would not necessarily have the effect of resolving the FRAND determination that has been ping-ponging between Wuhan and Texas. However, it seems clear that both parties are attempting to apply pressure to the other side by putting the other on "the ITC clock."
In the context of ITC Week, this case illustrates the pressure that the ITC timeline can place on litigants. With the parties deadlocked in an exotic venue dispute about whether the FRAND complaint should be decided in Texas or Wuhan, pulling the trigger on the ITC cases has put pressure on both parties to figure out a way to settle the dispute outside of the courthouse.