United States District Court, D. Delaware
E. Farnan, Michael J. Farnan, FARNAN LLP, Wilmington, DE;
Peter J. McAndrews, Thomas J. Wimbuscus, Paul W. McAndrews,
Anna M. Targowska, James P. Murphy (argued), MCANDREWS, HELD
& MALLOY, Chicago, IL, Attorneys for Plaintiff
Kenneth L. Dorsney, MORRIS JAMES LLP, Wilmington, DE; Yitai
Hu, Brianna Ford, ALSTON & BIRD LLP, East Palo Alto, CA;
Elizabeth H. Rader (argued), Celine Liu, ALSTON & BIRD
LLP, Washington, DC. Attorney for Defendants
ANDREWS, U.S. DISTRICT JUDGE
before the Court is Defendants' Motion for Expedited
Consideration of a Preliminary Injunction (D.I. 390) and
related briefing (D.I. 391, 412, 423). The Court heard oral
argument on December 19, 2017. (D.I. 458 ("Tr.")).
predecessor, Aware, Inc., helped to develop the DSL
standards. (D.I. 391 at 4). In 2012, Aware signed and
provided Patent Declarations to the International
Telecommunications Union for each relevant DSL standard.
(D.I. 28-1, Exh. A). In doing so, Aware committed to grant
other parties patent licenses on RAND terms "to make, use and
sell implementations of the specified ITU DSL
standards." (D.I. 391 at 4-5).
2013, Plaintiff wrote to Defendants regarding its patent
portfolio. (D.I. 1 at ¶ 12; D.I. 19 at 46, ¶ 8).
Defendants wrote back, expressing interest in a license.
(D.I. 1 at ¶¶ 12-17; D.I. 19 at ¶¶ 12-14,
16). The parties never came to an agreement. Defendants
allege that the "parties discussed terms for an NDA to
allow for informed license negotiations but did not finalize
terms of that NDA before [Plaintiff] filed this action."
(D.I. 391 at 5 (citing D.I. 1 at ¶¶ 12-17; D.I. 19
at ¶¶ 12-14, 16)). Plaintiff alleges that it
"attempted to negotiate in good faith with [Defendants],
but [Defendants] did not reciprocate." (D.I. 412 at 1
(citing D.I. 1 at ¶¶ 12-19)).
December 2013, Plaintiff filed this patent infringement suit,
asserting its portfolio of DSL patents against Defendants.
(D.I. 1). Defendants subsequently filed a counterclaim,
alleging that Plaintiff breached its obligations to the ITU
by failing to conclude a RAND license with Defendants for
patents which Plaintiff believes are standard-essential, and
instead suing Defendants, seeking a permanent injunction.
(D.I. 19; D.I. 391 at 3-4).
2017, Plaintiff filed suit in the High Court of Justice in
London, England, against ZyXEL UK and ZyXEL Communications
A/S (incorporated in Denmark) for infringement of two
European patents. (D.I. 394-1). One of these two patents, EU
1, 792, 430, "is the European counterpart to claims in
the Family 5 patents asserted in this action." (D.I. 391
at 6). The other does not correspond to a patent asserted in
this action. (D.I. 394-1 at ¶ 3). Plaintiff also seeks a
declaration that the terms of an offer it made to the UK and
Danish companies on May 26, 2016 are FRAND. (D.I. 391 at
Plaintiff filed the UK action, the High Court of Justice
issued its main judgment in Unwired Planet International
Ltd. v. Huawei Technology Co. Ltd., 2017 EWHC 711 (Pat.)
5 Apr. 2017. (D.I. 391 at 5). The decision provided that
there is only one royalty rate that qualifies as FRAND for
any given set of standard-essential patents and products, and
a patent holder does not breach FRAND obligations by offering
a license at higher than FRAND rates unless the rate is
"significantly" above the true FRAND
rate. (Id.). Defendants characterize
the decision as "groundbreaking, " and accuse
Plaintiff of forum shopping. (D.I. 391 at 5; D.I. 423 at 6;
Defendants move for Expedited Consideration of a Preliminary
Injunction. (D.I. 390). Defendants ask the Court to enjoin
Plaintiff from pursuing the UK action. (D.I. 391 at 1).
Third Circuit Court of Appeals has established a test for
determining whether an anti-suit injunction should be entered
to restrain the advancement of a foreign parallel proceeding.
In General Electric Co. v. Deutz [AG], the Third
Circuit adopted the restrictive approach, advising the
district courts that it would "rarely permit[ ]
injunctions against foreign proceedings." [270 F.3d 144');">270 F.3d 144,
160-61 (3d Cir. 2001).] Under this restrictive approach,
domestic and foreign parallel proceedings may ordinarily
proceed simultaneously, "at least until one has reached
the stage where its ruling becomes res judicata."
[Id. at 157.] District courts may appropriately
enjoin "foreign parallel proceedings only to protect
jurisdiction or an important public policy."
[Id. at 161.] These exceptions to the ordinary rule
against issuing anti-suit injunctions are to be interpreted
narrowly. [See Stonington Partners, Inc. v. Lernout &
Hauspie Speech Prods. N.V., 3\O F.3d 118, 127 (3d Cir.
2002).] Vexatiousness, harassment, or inconvenience to the
parties are usually insufficient grounds upon which a court
may enjoin a foreign parallel proceeding. [See
Deutz, 270 F.3d at 161.] Likewise, duplication of issues
in the two suits is insufficient to justify an anti-suit
injunction. [Stonington, 310 F.3d at 127 (discussing
Compagnie dex Bauxites de Guinea v. Ins. Co. of N.
Am., 651 F.2d 877, 887 (3d Cir. 1981)).]
there has been scant litigation clarifying how the Third
Circuit expects district courts to apply the restrictive test
set forth in Deutz, its decisions have reflected its
serious concern for comity, its respect for the sovereignty
of other courts, and its faith in the ability of other courts
to handle parallel proceedings in a fair and just manner
without interference. [Deutz, 170 F.3d at 160-61.]
Its emphasis on comity is especially significant in the
international context. [See Id. at 160
("Although [comity] is a consideration in federal and
state litigation, it assumes even more significance in
international proceedings.").] As the Court noted in
Deutz, "the proper exercise of comity
demonstrates confidence in the foreign court's ability to
adjudicate a dispute fairly and efficiently .... Failure to
accord such deference invites similar disrespect for our
judicial proceedings. Reciprocity and cooperation are worthy
goals of comity." [Id. at 161 (summarizing the
Sixth Circuit's discussion of comity in Gau Shan Co.
v. Bankers Trust Co.,956 F.2d 1349, 1355 (6th Cir.
1992)).] The Third Circuit's adoption of the restrictive
approach and its emphasis on comity suggests its desire to
avoid sending foreign courts the '"the message,
intended or not, that the issuing court has so little
confidence in the foreign court's ability to adjudicate a
given dispute fairly and ...