Anti-suit injunction - popular weapon in FRAND and SEP litigation

Around the world, the telecommunications industry is drawing attention to the Anti-Suit Injunction (ASI) – as a defence in SEP and FRAND disputes. In Germany, too, ASI disputes are increasingly being brought before the courts.

So let’s take a quick look at the so-called ASI; this is short for an English-language anti-suit injunction and means an anti-trial injunction, basically an anti-suit injunction. The starting point here are two national proceedings with national effect – but where overlaps in judgement are possible.

This is where it gets interesting, because then an attempt can be made to gain advantages by exploiting national IP rights. Equally important is the aspect that an ASI can be used to influence or prevent a delay in proceedings.

Anti-suit injunctions are injunctions issued by the courts in common law states (mainly in the UK and the US, but also in many other English-speaking or (former) Commonwealth) with the aim of stopping proceedings in other states.

Anti-Suit Injunction in FRAND and SEP Litigation

In practice, overlaps between two national proceedings occur mainly in litigation concerning FRAND and SEP licences, i.e. standard-essential patents (SEP) mainly in the field of telecommunications. A classic (and quite real) example of this would be an injunction action in Germany arising out of a SEP and FRAND-fixing action in the US, the anti-suit injunction would serve as a defence against an unwanted adoption of FRAND proceedings. In another example, the first proceeding would be for a determination of a FRAND licence in a court in China, and the second proceeding would be for an SE determination in Germany. In a way, the motto for this is “my injunction beats your injunction”.

Anti-suit injunction in EU case law

In view of the economic scope and the far-reaching effect of anti-suit injunctions beyond national patent rights, the application and legality of ASIs is repeatedly a subject of dispute before the EU courts.

The ECJ ruled as early as 2004 (C-159/02 -Turner v Grovit) that an ASI is incompatible with the Brussels Convention even if the second procedure serves to impede the first procedure. (The EuGVÜ was largely replaced by the EuGVVO on 1.3.2002, which in turn is the EU Regulation No. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, abbreviated as the Brussels Ia Regulation).

Most importantly, the ECJ then ruled in 2009 (judgment C-185/07 -Allianz v West Tankers) that an anti-suit injunction was contrary to EU Regulation 44/2001 of 2000. An ASI deprives national courts of the possibility to decide on the applicability of the Regulation and thus on their own jurisdiction. However, this case concerned anti-suit injunctions by a European court to prevent litigation in another European state.

Nevertheless, the ruling was already contrary to UK law at the time.

The legal basis for anti-suit injunctions in English law is § 37 (1) of the Supreme Court Act 1981. For anti-suit injunctions to protect arbitration agreements, § 44 (1) and (2) (e) of the Arbitration Act 1996 clarify that domestic courts may grant the same injunctions as in court proceedings. Anti-suit injunctions are directed at the actual or potential plaintiff in foreign proceedings. They prohibit the claimant from commencing or continuing proceedings in that court and impose severe penalties for non-compliance.

German judgements on anti-suit injunction

This, in turn, is not permissible under German law. In German procedural law, there is no power comparable to the common law to deny a party the right to bring proceedings. The threat of not being able to continue the patent infringement actions due to an anti-suit injunction contradicts the property law content of the patent according to § 9 f., 139 ff. of the German Patent Act. PatG, ruled the LG Munich accordingly in 2019 (District Court LG München, 21 O 9333/19). An anti-suit injunction (US law) violates German law, as it aims to deprive the defendant of its legal standing in Germany.

Also in 2019, the Higher Regional Court in Munich, OLG München (6 U 5042/19) ruled that a patent proprietor was in need of protection even if an ASI could not be declared enforceable in Germany, as he would have to expect the imposition of a penalty in the US in case of infringement. An temporary injunction issued in Germany also did not constitute interference with the sovereign rights of the USA, but served to defend against threatened interference in Germany. Moreover, the OLG München ruled that there was already a risk of interference when the application was filed in the USA. In the specific case, the OLG Munich considered not only the American group (of the FRAND licence seeker applying for an ASI) to be entitled to bring an action, but also the German parent company.

And in 2018, the Düsseldorf District Court ruled that a stay of the infringement proceedings pursuant to Art. 30 of the Regulation EuGVVO was not appropriate, as there was a risk of conflicting decisions with regard to the parallel proceedings, there would be a long-term delay in proceedings caused by the “chain suspension” and, moreover, the torpedo (LG Düsseldorf, 4c O 81/17).

ASI disputes have become frequent since 2019

ASI disputes have become more frequent in Germany since 2019. And as the latest development, China is also massively participating in the global SEP competition in the telecommunications sector, and often in Germany as well. For example, since 2019, in particular the courts in Munich and Düsseldorf have received a strikingly large number of applications for interim injunctions. Currently, the defendants often come from China.

Is this the beginning of a global competition for SEPs or is it already underway? In any case, an ASI seems to be the most popular weapon in global SEP and FRAND disputes at the moment.

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