3 Takeaways from Samsung's Big Antisuit Injunction Win Against Huawei...
One of the hottest smartphone patent battles still raging is the one between China's Huawei and South Korea's Samsung. A true patent world war, with cases filed in Huawei's hometown of Szenzhen and good old Northern District of California, alleging various violations of 3G and 4G standard-essential patents owned by both companies, breach of contract claims relating to a failure to follow the FRAND licensing regime, and requests for injunctions aplenty. First blood went to Huawei, with a victory in the Szenzhen trial court (appeal pending) resulting in the issuance of an injunction, which, if enforced, could result in a shutdown of Samsung's formidable China-based smartphone manufacturing capacity -- bad news for any prospective buyers of the Galaxy S9 for example. Seeking immediate help from the ostensibly friendlier US-based court, Samsung moved for an antisuit injunction to stop Huawei from enforcing the injunction Huawei earned in China. Now that Samsung's motion was granted, it is a good time to consider 3 immediate takeaways from this important decision.
1) Why are you fighting? -- Any reasoned opinion like the one released by Judge Orrick that includes a plea for settlement speaks volumes. Here, Judge Orrick notes that the parties have been unable to agree on a cross-license for their sizable patent portfolios since 2011, leading the Court "to wonder aloud how it can be in the interest of these important multi-national corporations to slog through unending litigation around the globe rather than figure out a process to resolve their differences if agreement is impossible." (Decision at 3). When a judge from a court renowned for its ability to handle complex patent disputes between multi-national giants tells you maybe there is a better way to resolve the issues, it behooves the parties to listen.
2) Huawei's Big Win? - At the same time as Judge Orrick bemoans the intractability of the dispute here, there is a hidden big win implicit in his comments -- particularly his categorization of Huawei as an "important multi-national corporation" on equal footing with Samsung. While Huawei is undoubtedly a major multi-national, the bare truth is that Huawei is not well-known in the US for its smartphone offerings, or recognized as a leading innovator of smartphone technologies, to the public chagrin of Huawei's CEO, for one. At the same time, Huawei has successfully built a sizable patent portfolio, including standard-essential US patents, which have earned it a place at the negotiation table with an industry leader like Samsung. In short, it is worth remembering that patents create opportunity, even in the face of other commercial challenges.
3) Forum Shopping? - The opinion spends a considerable amount of energy discussing the timing of the various actions filed by the parties, and implicitly recognizes that Huawei: 1) filed in its hometown court, and 2) has had executives make public statements regarding using injunctions to drive licensing. (Decision at 18) Perhaps more importantly, however, is Judge Orrick's recognition that in order to adjudicate the issues, especially whether Huawei breached its FRAND obligations, he would have to engage in a never-ending inquiry that would ultimately fail to even provide a "way for this action to dispose of the parties' foreign patent actions." (Decision at 15.) At the same time, he ultimately decided that Samsung was entitled to obtain the antisuit injunction, even as he reserved the right to craft whatever remedy he would think appropriate -- even to potentially find that the Szenzhen court's injunction was an appropriate remedy -- based on the evidence adduced at the upcoming December trial before him. In short, Samsung would get its day in court, without the threat of the Chinese injunctions being imposed, especially since Samsung agreed that Huawei could seek damages for any patent infringement in China while the US action was pending, and there were no comity concerns with blocking the Chinese injunctions.
Plenty more for investors to watch here, including whether the battle escalates to incorporate more patents and additional jurisdictional battlefields.