Case Notes: Interdigital Technology Corporation & Ors. vs. Xiaomi Corporation & Ors. (I.A. No. 8772/2020 in CS (COMM) 295/2020) (Delhi High Court)

INTERDIGITAL TECHNOLOGY CORPORATION & ORS. VS. XIAOMI CORPORATION & ORS. (I.A. 8772/2020 in CS (COMM) 295/2020.)

In the matter stated hereinabove, the learned single judge of the Hon’ble High Court of Delhi (High Court) passed a one-of-a-kind judgment on 03rd May, 2021, granting an anti-enforcement injunction against an anti-suit injunction. The judgment passed by this court is unprecedented in India as well as, exists amongst only a handful of other deliberations, judgments made upon the same issue, wherein the Plaintiff (“Interdigital Technology Corporation”) successfully managed to obtain an anti-enforcement injunction against an already passed anti suit injunction operating on the Plaintiff restraining it to proceed with the claim of infringement of its patents before the Hon’ble High Court of Delhi by Wuhan Intermediate People’s Court (Wuhan’s Court).

The brief facts of the matter are as such, that, upon reaching a deadlock in negotiations with regard to setting up a royalty fee for Plaintiff’s Standard Essential Patents (“SEPs”) as per the Fair, Reasonable and Non-discriminatory (FRAND) terms. The Defendants (“Xiaomi Corporation”) filed a standard essential patent royalty rate setting suit against the Plaintiff before the Wuhan Court on 09th June, 2020.

The Plaintiff filed CS(COMM) 295/2020 before the High Court claiming infringement of its SEPs registered vide nos. IN 262910, IN 298719, IN 295912, IN 320182, IN 313036 and prayed for injuncting the defendant to use in any way its above-referred SEPs. However, the injunction as claimed under the infringement suit was not absolute as the Plaintiff claimed for injunction in the event, the defendants do not agree to obtain license(s) to use such SEPs from the Plaintiff as per the FRAND terms. Summons were issued in the present suit to the Defendants on 04th August 2020 and on the same day, an anti-suit injunction application before the Wuhan Court was filed against the Plaintiff by the Defendants, in order to restrain it from proceeding with the infringement suit before the High Court. ?

By order dated 23rd September, 2020, the Wuhan Court granted the application for anti-suit injunction filed by the Defendants and restrained the Plaintiff from proceeding with the present infringement suit and also suspended the right of the Plaintiff to seek redressal of its well-founded claims till the adjudication of the pending standard essential patent royalty rate setting suit before it. The High Court vide an order dated 09th October, 2020, injuncted the defendants ad-interim from enforcing the order of the Wuhan Court dated 23rd September, 2020, pending the final adjudication of the interlocutory application seeking anti-enforcement injunction against the anti-suit injunction passed by the Wuhan Court.

The present judgment has been passed after the final hearing of the interlocutory application and the High Court essentially formulated the entire legal dispute in two issues as provided hereunder.

a)??????Whether the Plaintiffs are entitled to seek a restraint against execution or enforcement, by the Defendants of the order dated 23rd September, 2020, passed by the Wuhan Court, and

b)?????Whether a case for injuncting the Defendants from prosecuting the anti-suit injunction application filed by them before the Wuhan Court, in which the order dated 23rd September 2020, came to be passed, could be said to have existed, had the Plaintiffs approached this court when the application was still pending.

Deciding upon the issues, the High Court observed that, the order dated 23rd September, 2020, passed by the Wuhan Court was obtained by the Defendants without even intimating the Plaintiffs about the same application. The said application or summons to defend the same before the Wuhan Court was never served to the Plaintiffs and the said impugned order of the Wuhan Court was passed ex parte. Noting the same and upon discussing various judicial pronouncements from the apex court and various foreign courts, the High Court also observed that, there is no distinction in exercising caution while granting an anti-anti-suit-injunction-injunction and an anti-enforcement injunction. While discussing the decision of Singapore Court of Appeal in, Sun Travels & Tours Pvt. Ltd vs. Hilton International Manage (Maldives) Pvt. Ltd.[1], the High Court respectfully did not submit to its view wherein, a distinction of exercising an extra caution while granting an anti-enforcement injunction than an anti-suit injunction was affirmed. The High Court placed its view on various other judgments passed by the Hon’ble Supreme Court of India as well as foreign judgments to concur the view that, all of these applications such as anti-suit injunction, anti-anti-suit-injunction-injunction and as well as anti-enforcement injunction belongs to the same species and in order to meet the interests of justice, any of these applications can be granted by the court depending upon the ensuing facts and circumstances of the present case.

In the last part of paragraph 84 of the judgment, the High Court states: -

“If rendering of justice, in a given case, requires an anti-enforcement injunction to be issued, the Court should not hold back its hands, on some perceived notion of lack of “exceptionality” in the case. This would result in perpetuation of injustice. Justice, it is well settled, is the highest to which the law can attain.”

In view of the above, it was held by the High Court in respect of the second issue, that, the Plaintiff, if had the knowledge of the proceedings of the anti-suit application before the Wuhan Court could have filed an application for anti-anti-suit-injunction-injunction while the anti-suit injunction was pending before the Wuhan Court.

The High Court while discussing the judgments of the Hon’ble Supreme Court of India in ONGC vs. Western Co. of North America.[2], Modi Entertainment Network vs. W.S.G Cricket Pte. Ltd.[3], Dinesh Singh Thakur vs. Sonal Thakur.[4], amongst other foreign judgments such as SAS Institute vs. World Programming Ltd.[5], Ecobank Transnational Inc. vs. Tanoh[6] etc, in paragraph 88 states: -

“Though, no doubt, Indian Courts, including the Supreme Court, have pronounced on the circumstances in which anti-suit injunctions may be granted, sufficient room for play in the joints still remains, in view of the use of the words “oppressive”, “vexatious” and “interests of justice”. No well delineated boundaries, within which the existence, or non-existence, of these parameters, could be gleaned, are to be found in any judicial authority. Indeed, the moment the ends of justice are predominant, there can never be any hard or fast rule, or guidelines cast in iron. I find myself, however, in agreement with the following general principles relating to anti-suit and anti-enforcement injunctions, emerging from “foreign” jurisprudence, to which my attention has been invited during the course of arguments:”

The High Court based upon discussing catena of foreign judgments, laid down various principles to be followed in granting of anti-suit injunction as well as anti-enforcement injunction as provided hereinbelow:

1.??????Anti-suit injunction shall be granted only in rare cases and not on just mere asking. The courts should be mindful of the fact that, even an injunction in personam interferes with the functions of 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.

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 in order to effectuate the benefits of its verdict.

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. Protection of the jurisdiction of the Court is also a guiding factor.

6.??????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. 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.

?

The High Court in paragraph 88 also recognised various instances wherein, a grant of anti-enforcement injunction would be just and valid and the same are provided hereunder: -

“(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.”

Further, the High Court in the paragraph 89 of the judgment summed up the entire controversy between the parties in two aspects, firstly, whether the Wuhan Court was justified in granting anti-suit injunction, vide its order dated 23rd September, 2020, and, secondly, whether the High Court would be justified in injuncting the respondent from enforcing that order against the plaintiffs. The issues are dealt with the High Court in great detail in the judgment and is briefly enumerated hereunder.

Overlapping of proceedings

The High Court after examining the contentions of the parties held that the proceedings before the Wuhan Court and itself are inherently different from each other as one is for setting a global royalty rate for the SEPs of Plaintiffs and the other is for the determination of the claim of infringement of such registered patents in India by the Defendants. It was noted that, the relief sought under the infringement suit does not even form part of the suit pending for adjudication before the Wuhan Court and even existence of a mere incidental possibility of both the proceedings resulting in conflict, is not a sufficient reason to entrench upon the lawful jurisdiction of another sovereign court. Moreover, the High Court also noted the fact that, the Plaintiffs have not prayed for any relief which would result in conflict of both the proceedings.

Exclusive Jurisdiction of the High Court

Considering the nature of the patents to be territorial in nature, it was observed by the High Court, that, the Plaintiffs could have only filed for an infringement of patent suit before the Delhi High Court and while restraining the Plaintiffs to exercise its fundamental right to seek legal remedies even before the sole court wherein, it could’ve exercised the Wuhan Court’s order dated 23rd September, 2020, is held to be “oppressive” in nature against the policy of the Indian sovereign. It was held that, the Wuhan Court has in fact, overlooked this aspect and decided upon the subject matter falling exclusively in the domain of the Indian Courts more specifically the High Court. While stating this, the High Court held that, even if Wuhan Court was not justified in passing the anti-suit order restraining the Plaintiffs to proceed with the proceedings pending before this Court, the High Court would be just in granting an anti-enforcement suit against the said anti-suit order passed by the Wuhan Court.

Conduct of Xiaomi

The conduct of the Defendant, keeping in dark both the Plaintiffs and the High Court of the anti-suit application before the Wuhan Court was not just and the same is obtained with malafide intention. The conduct of the Defendants in obtaining the restraining order by filing an anti-suit application without the knowledge and opportunity to the Plaintiffs to defend the same can be also a sole reason to grant the anti-enforcement injunction against the anti-suit injunction passed by the Wuhan Court.

Indemnification of the Cost

The interesting fact to note, that the Wuhan Court while granting an anti-suit injunction against the Plaintiffs also in its order imposed a fine of RMB One Million Yuan per day, in case the Plaintiffs proceed with its proceedings before the High Court. The High Court concluded that, hence, the operation of the anti-suit injunction granted by the Wuhan Court is injuncted from being enforced, the question of payment of fine does not arise and in any event, the Wuhan Court passes any direction or order to deposit any sum of fine towards its order dated 23rd September, 2020, the Defendants shall submit the same amount as the fine imposed by the Wuhan Court on Plaintiffs before the High Court, which the Plaintiffs shall be entitled to withdraw upto the extent of the fine paid by it to the Wuhan Court.????

Conclusion

The said judgment passed by the High Court sets out the adjudication of the subject matter for the very first time in our country. However, the High Court has referred an extensive number of judicial pronouncements, available on the niche subject matter and has laid down the principles in the said matter. The reasoning and the decision of the High Court seems to be just and valid in the background of the facts and circumstances of the case yet, it is to be seen in the future, whether, the same judgment is appealed to a divisional bench and thereafter, to the Hon’ble Supreme Court of India. Nevertheless, it is ascertained that the further adjudication of the subject matter in our country also seems to be inevitable after this decision. ?

[1] (2019) SGCA 10

[2] (1987) 1 SCC 496

[3] (2003) 4 SCC 341

[4] (2018) 17 SCC 12

[5] (2020) EWCA Civ 599

[6] (2016) 1 WLR 2231