IPCom v. Lenovo, Court of Appeal of Paris

3 March 2020 - Case No. RG 19/21426

http://caselaw.4ipcouncil.com/french-court-decisions/court-appeal-paris/ipcom-v-lenovo-court-appeal-paris-rg-1921426

A. Facts

In 2007, IPCom GmbH & Co. KG (IPCom) acquired a portfolio of over 160 patent families covering 2G, 3G and 4G standards from Robert Bosch GmbH [1] . One of the patents is EP 1 841 268 B2 (EP 268), essential to the 3G standard [2] .

IPCom submitted a FRAND commitment (FRAND stands for Fair, Reasonable and Non-Discriminatory) to the European Telecommunications Standards Institute (ETSI) considering patents that are or might become essential to the practice of a standard [3] .

In September 2018, IPCom made a licensing offer to Lenovo [2] . On 1 March 2019, IPCom sent a formal notice to Lenovo and asked Lenovo to reply to its licensing offer by 15 March 2019 [4] . IPCom indicated that, absent a reply by this deadline, it would initiate legal proceedings to protect its rights [5] .

Claiming that IPCom’s offer was not FRAND in view of the offered rate and the fact that the portfolio included expired or soon to expire patents, the US subsidiaries of the Lenovo group, Lenovo Inc. and Motorola Mobility LLC initiated on 14 March 2019 an action against IPCom before the District Court for the Northern District of California (US District Court) [6] . They claimed that IPCom had breached its duty under the commitment towards ETSI to offer Lenovo a licence on FRAND terms and requested the US District Court to set up the terms for a worldwide FRAND license for IPCom’s patent portfolio [2] .

On 2 July 2019, IPCom filed an infringement action against the group UK subsidiaries, Lenovo technology (UK) Limited and Motorola Mobility UK Ltd., before the London High Court of Justice. IPCom sought an injunction against infringing products, unless a license was concluded within the proceedings pending in the United States [7] .

On 18 September 2019, the US subsidiaries Lenovo Inc. and Motorola Mobility LLC filed an anti-suit injunction motion before the US District Court to prevent IPCom from pursuing the pending infringement proceedings in the UK and to file any new infringement action against any entity of the Lenovo group or to seek any anti-anti suit injunction before a foreign court as long as the US District Court has not ruled over what constitutes FRAND terms and conditions [8] .

On 25 and 28 October 2019, IPCom summoned the French entities of the group, Lenovo (France) SAS and Motorola Mobility France SAS, before the Court of Paris [9] . IPCom’s aim was to have the US anti-suit injunction motion withdrawn and forbid Motorola Mobility LLC and Lenovo Inc. from filing any complaint preventing IPCom from enforcing its rights [2] . IPCom initiated proceedings to the same also in the UK [10] .

IPCom had, in parallel, summoned Lenovo (France) SAS and Motorola Mobility France SAS, Modelabs Mobile Limited and Digital River Ireland Ltd. before the Court of Paris in proceedings, in which it sought a preliminary injunction against them [2] .

On 8 November 2019, the Court of Paris decided that there was no reason for the case to be deferred to the US District Court [11] . The Court of Paris ordered Lenovo Inc. and Motorola Mobility LLC to withdraw the US anti-suit request, immediately and no later than 14 November 2019, as far as it related to any infringement proceedings with respect to the French counterpart of EP 268 and for any facts perpetrated on the French territory by the entities of the Lenovo Group, including any of their wholesalers, distributors, customers and any intermediary [12] . The Court of Paris also prohibited Lenovo Inc. and Motorola Mobility LLC to file any new action to the same end before a foreign jurisdiction [2] . The decision came along a penalty fee of EUR 200,000 per violation and per day of non-compliance [2] .

On the same day, the London High Court of Justice ruled that it would be vexatious and oppressive to prevent IPCom from defending the infringement and validity of EP 268 and ordered the English entities of the Lenovo group to not impede proceedings under English jurisdiction [13] .

The US subsidiaries of the group withdrew their Californian anti-suit injunction with respect to the French proceedings [14] .

On 14 November 2019, IPCom initiated main proceedings for EP 268 infringement against Lenovo group French entities, Modelabs Mobile (importer) and Digital River Ireland Limited (distributor) before the Court of Paris [15] .

On 22 November 2019, Lenovo Inc., Motorola Mobility LLC, Motorola Mobility France et Lenovo (France) filed an appeal against the ruling rendered by the Court of Paris on 8 November 2019, granting an anti-anti-suit injunction to IPCom [16] .

On 12 December 2019, the US District Court ruled that Lenovo and Motorola did not provide prima facie sufficient evidence of the court’s jurisdictional competence to decide over IPCom’s liability for a breach of its contractual duty towards ETSI and for the determination of a worldwide FRAND licence [17] . The US District Court allowed for a discovery to potentially review at a later stage its decision over the jurisdictional competence and terminated the anti-suit injunction [2] .

On 20 January 2020, the Court of Paris rejected in preliminary proceedings IPCom’s request of temporary measures, including an injunction, recall and confiscation of products until the patent expiration [18] . The court considered the measures were manifestly disproportionate and could create a distortion between the parties enabling IPCom to take an unfair advantage of the situation and impose non-FRAND terms and conditions [19] .

With the present judgment, the Court of Appeal of Paris (Court of Appeal) confirmed the first instance decision on the anti-anti-suit injunction [20] . However, the Court of Appeal excluded any new motion for anti-suit injunction that may be filed in the future by Lenovo Inc. and Motorola Mobility LLC from the scope of the anti-anti-suit injunction [2] .

The other court proceedings between IPCom and companies of the Lenovo group mentioned above are still pending.

B. Court’s reasoning

Lenovo’s arguments

The entities of Lenovo group considered that the French courts are not competent to review the measures requested by IPCom against the US subsidiaries. They claimed that the suspension of the French proceedings would not damage IPCom as the US District Court has been seized to determine a FRAND rate [21] . The only risk for IPCom to have the French proceedings suspended was to deprive IPCom from an injunction, however the Court of Paris in its decision in the parallel proceedings had already rejected this request [22] .

Furthermore, Lenovo argued that the anti-suit injunction requested in the US could rebalance the rights of the parties by avoiding multiple infringement proceedings by which IPCom intended to gain an advantage in licensing negotiations [23] . Accordingly, it claimed that IPCom’s behaviour constitutes an abuse of a dominant position, as IPCom had requested an injunction against their products although they were willing to take a license [2] .

Lenovo further took the view that the anti-suit injunction motion preserves the competence of the first jurisdiction seized with the case; it does not impede the sovereignty and competence of French courts and is, therefore, not contrary to French or European international public order [24] . It added that their anti-suit injunction motion did not differ from IPCom’s anti-anti suit injunction. Accordingly, the Court of Appeal should question the impact of its decision over the sovereignty of the US jurisdiction [2] .

Lenovo supported this argumentation with case law of the French Supreme Court that accepts anti-suit injunctions as long as they aim to sanction the breach of a pre-existing contractual duty [25] . It considered this applied in the present case, as IPCom had breached its FRAND commitment towards ETSI, by refusing to offer a FRAND license [2] .

Finally, Lenovo argued that the anti-suit injunction motion had not a manifestly illicit character and did not violate either IPCom’s right to a judge nor its property rights, since IPCom could exercise the right to a judge before the US District Court and it would be compensated by licensing fees [26] .

IPCom’s arguments

On the other hand, IPCom claimed that the French court was materially and territorially competent based on Article 46 of the French Code of Civil Procedure, since it could face damages in France [27] . Additionally, there was a possibility for the US District Court to be seized for a new anti-suit injunction motion after the discovery, as the US lawsuit had been temporarily suspended until the end of the discovery [2] .

IPCom further argued that the anti-suit injunction motion created an imminent harm to its fundamental rights, including the right of industrial property and the right to a fair trial, as guaranteed by Articles 1, 6-1 and 13 of the European Convention of Human Rights and Articles 17 and 47 of the European Charter of Fundamental Rights. There was also a risk of an imminent harm due to the fact that an anti-suit injunction could still be issued [28] .

IPCom also stated that the US anti-suit injunction motion was threatening the sovereignty of the French state and violated the French and European international public order [29] , since it sought to prohibit the French jurisdiction from exercising its jurisdictional powers [30] . On the contrary, IPCom’s request of an anti-anti-suit injunction did not have as an object or effect to deprive the claimants from their fundamental rights or the US courts from exercising their jurisdictional power [31] . Indeed, the decision did not aim to prohibit the US subsidiaries of Lenovo from continuing their action in the US [2] .

Moreover, the anti-suit injunction motion had breached the international public order as it was impeding the French courts to exercise the powers they were allocated by Articles 7-2 and 24.4 of the European regulation 1215/2015, i.e. reviewing the validity and infringement of EP 268 in France [32] ; and depriving IPCom from an effective jurisdictional protection of its intellectual property rights in any Member State of the European Union covered by the patent [2] .

The assessment of the Court of Appeal

The Court of Appeal agreed with the Court of Paris that had confirmed the competence of French courts for the claim raised [33] , as damages may occur in France [2] .

The Court of Appeal found that, if IPCom’s request was rejected, the latter would be deprived from the possibility to act and raise its rights arising from the French part of EP 268 before the French courts [2] . French courts were, however, competent based on Article 46 of the French Code of Civil Procedure (referring to tort claims) [2] .

The Court of Appeal added that the jurisdiction of French courts covered also preliminary proceedings, because such proceedings are attached to the court that would review the claims in the main proceedings, which could be affected by the anti-suit injunction motion [34] .

With respect to the merits of IPCom’s request, the Court of Appeal found that the US anti-suit injunction motion would create a manifestly illicit harm to IPCom, because it would prevent IPCom from pursuing or filing any new infringement action [35] . This would breach Article 17 of the European Chart of Fundamental Rights, as well as L611-1 and L615-1 of the French Intellectual Property Code, as IPCom would be deprived from the right to be heard by the sole judge competent to decide on the infringement [36] . Furthermore, IPCom’s right to a fair process would be taken away, in violation of Articles 6 para. 1 and 13 of the European Convention of Human Rights [2] . Finally, IPCom’s fundamental right to property would also be harmed [2] .

However, the Court of Appeal rejected IPCom’s claim to prohibit entities of the Lenovo group to file any new anti-suit injunction motion [37] . The Court of Appeal held that the sole possibility of harm did not suffice for such an order [38] . Therefore, it overturned the first instance decision to that extent [39] .

• [1] Court of Appeal of Paris, judgement dated 3 March 2020, page 2, par. 4.
• [2] Ibidem
• [3] Court of Appeal of Paris judgement dated 3 March 2020, page 2, par. 5.
• [4] Court of Appeal of Paris, judgement dated 3 March 2020, pages 2 and 3, par. 6.
• [5] Court of Appeal of Paris, judgement dated 3 March 2020, page 3, par. 6.
• [6] Court of Appeal of Paris, judgement dated 3 March 2020, page 3, par. 7.
• [7] Court of Appeal of Paris, judgement dated 3 March 2020, page 3, par. 8.
• [8] Court of Appeal of Paris, judgement dated 3 March 2020, page 3, par. 9.
• [9] Court of Appeal of Paris, judgement dated 3 March 2020, page 3, par. 10.
• [10] Court of Appeal of Paris, judgement dated 3 March 2020, page 3, par. 12.
• [11] Court of Appeal of Paris, judgement dated 3 March 2020, page 3, par. 13.
• [12] Court of Appeal of Paris, judgement dated 3 March 2020, pages 3 and 4, par. 13
• [13] Court of Appeal of Paris, judgement dated 3 March 2020, page 4, par. 14.
• [14] Court of Appeal of Paris, judgement dated 3 March 2020, page 4, par. 15.
• [15] Court of Appeal of Paris, judgement dated 3 March 2020, page 4, par. 16.
• [16] Court of Appeal of Paris, judgement dated 3 March 2020, page 4, par. 17. The Lenovo subsidiaries requested the Paris Court of Appeal to reform the anti-anti-suit injunction granted on 8 November 2019, to deny competence to review the action filed by Lenovo Inc. and Motorola Mobility LLC before the US District Court, consider the US judgement common to Lenovo (France) SAS and Motorola Mobility France SAS, refer IPCom to the US District Court, reject all claims of IPCom against Lenovo Inc. and Motorola Mobility LLC and condemn IPCom to pay 50,000 as process costs.
• [17] Court of Appeal of Paris, judgement dated 3 March 2020, page 4, par. 19.
• [18] Court of Appeal of Paris, judgement dated 3 March 2020, pages 4 and 5, par. 20.
• [19] Court of Appeal of Paris, judgement dated 3 March 2020, page 5, par. 20
• [20] Court of Appeal of Paris, judgement dated 3 March 2020, page 12, par. 1.
• [21] Court of Appeal of Paris, judgement dated 3 March 2020, page 6, par. 25.
• [22] Court of Appeal of Paris, judgement dated 3 March 2020, page 6, par. 26.
• [23] Court of Appeal of Paris, judgement dated 3 March 2020, page 6, par. 28.
• [24] Court of Appeal of Paris, judgement dated 3 March 2020, pages 6 and 7, par. 29.
• [25] Court of Appeal of Paris, judgement dated 3 March 2020, page 7, par. 30.
• [26] Court of Appeal of Paris, judgement dated 3 March 2020, page 7, par. 32
• [27] Court of Appeal of Paris, judgement dated 3 March 2020, page 7, par. 34.
• [28] Court of Appeal of Paris, judgement dated 3 March 2020, page 8, par. 37.
• [29] Court of Appeal of Paris, judgement dated 3 March 2020, page 8, par. 39.
• [30] Court of Appeal of Paris, judgement dated 3 March 2020, page 8, par. 39-40.
• [31] Court of Appeal of Paris, judgement dated 3 March 2020, page 8, par. 40.
• [32] Court of Appeal of Paris, judgement dated 3 March 2020, page 8, par. 41.
• [33] Court of Appeal of Paris, judgement dated 3 March 2020, page 9, par. 45.
• [34] Court of Appeal of Paris, judgement dated 3 March 2020, page 9, par. 46.
• [35] Court of Appeal of Paris, judgement dated 3 March 2020, pages 10 and 11, par. 56-57.
• [36] Court of Appeal of Paris, judgement dated 3 March 2020, pages 10-11, par. 57.
• [37] Court of Appeal of Paris, judgement dated 3 March 2020, page 11, par. 61- 64.
• [38] Court of Appeal of Paris, judgement dated 3 March 2020, page 11, par. 62-63.
• [39] Court of Appeal of Paris, judgement dated 3 March 2020, page 11, par. 64.