Following Huawei obtaining two anti-anti-suit injunctions (AASI) against Netgear on December 11, 2024 at the Unified Patent Court’s Munich Local Division and the Munich I Regional Court, China’s Supreme People’s Court also awarded an AASI in favor of Huawei against Netgear in a decision dated December 22, 2024.  This is believed to be the first AASI issued by a Chinese court.

China’s Supreme People’s Court granted Huawei’s request for an AASI against Netgear’s pursuit of an Anti-Suit/Enforcement Injunction in the U.S. reasoning:

First, Huawei’s application for injunction has factual and legal basis. Huawei Huawei is the patent owner of the two patents involved in the case. The two patents are Chinese invention patents granted by the China National Intellectual Property Administration in accordance with the Patent Law of the People’s Republic of China. They are currently in a valid state and their intellectual property rights are relatively stable. Huawei filed patent infringement lawsuits in the Chinese courts against Netgear for alleged infringement of the two Chinese patents involved in the case. The Chinese court, namely the Jinan Intermediate People’s Court, accepted the lawsuits in the two cases, which complies with Article 29 of the Civil Procedure Law on the jurisdiction of infringement cases and is also in line with the internationally recognized territorial principle of intellectual property protection.

In the first instance judgment of the two cases, the Jinan Intermediate People’s Court has determined that the alleged infringing products offered for sale, sold, and imported by Netgear fall within the scope of protection of the two patents involved in the case, and that Huawei fulfilled its fair, reasonable, and non-discriminatory (FRAND) licensing obligations in the licensing negotiations with Netgear, while Netgear had obvious faults such as delaying negotiations, making unreasonable counter-offers, and not actively responding to Huawei’s negotiation offers during the licensing negotiations, and ordered Netgear to stop its infringement. Netgear, based on its interest relationship with Netgear Beijing, applied to the U.S. court for a so-called anti-suit injunction order against the judicial relief procedures, including the patent infringement lawsuits filed by Huawei in the Jinan Intermediate People’s Court, in an attempt to prevent Huawei from filing normal lawsuits in Chinese courts, which obviously lacks legitimate reasons.

Second, if behavioral preservation measures are not taken, the legitimate rights and interests of Huawei will suffer irreparable damage or the two cases will be difficult to proceed or the judgments will be difficult to enforce. For standard essential patents, based on the principle of good faith and the fair, reasonable and non-discriminatory (FRAND) licensing obligations it promised in the standard setting process, the patent owner generally cannot request the alleged infringer to stop implementing its standard essential patents when the alleged infringer has no obvious fault as stipulated in Article 24, paragraph 2 of the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Laws in the Trial of Patent Infringement Disputes (II)” revised in 2020.. However, if the alleged infringer has obvious faults such as delaying negotiations and not actively responding to the patent owner’s negotiation offer in the negotiation of standard essential patents, the patent owner still has the right to request the alleged infringer to stop implementing its standard essential patents.

As mentioned above, based on the facts ascertained in the first-instance judgments of these two cases, it can be preliminarily determined that Netgear had obvious faults in the negotiation of the SEP license involved and was not a good-faith, honest patent implementer, while Huawei did not intentionally violate the fair, reasonable, and non-discriminatory (FRAND) licensing obligations. In this case, the legitimate rights and interests of Huawei as a good-faith licensor should be fully protected by law. If Netgear applies to the U.S. court for the so-called injunction (enforcement) order for the two cases, Huawei will at least face the pressure of considering terminating the litigation in the Chinese court, including giving up the future application for the enforcement of the Chinese court’s judgment, and its legitimate rights and interests will obviously suffer irreparable damage.

Third, if the behavior preservation measures are not taken, the damage caused to the Chinese company will obviously exceed the damage caused to Netgear by taking the behavior preservation measures. As mentioned above, if the behavior preservation measures are not taken, the Chinese company will suffer obvious damages, which include not only the damages to its substantive rights such as the long-term infringement of its patent by Netgear and the inability to obtain normal income in a timely manner, but also the improper obstruction of the Chinese company’s due process rights to promote the trial of these two cases and apply for judgment and enforcement in Chinese courts in accordance with Chinese law. Allowing the Chinese company to apply for and take behavior preservation measures is only to impose a procedural non-action obligation on the respondent and its affiliated companies within a certain period of time, and will not cause any additional losses to Netgear.

Fourth, the adoption of behavioral preservation measures in these two cases will not harm the public interest, and this court has not found any other factors that require special consideration.

The full text of the decision (with redacted party names) is available here (Chinese only) courtesy of Michael Ma at PRIP.

© 2024 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved. by: Aaron Wininger of Schwegman, Lundberg & Woessner, P.A. For more on Anti-Anti-Suit Injunctions, visit the NLR Intellectual Property section.