The (Mis)Use of Anti-Suit Injunctions in International IP Litigation: Can foreign courts enjoin enforcement of US patent rights?

Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's practice groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of practice group Teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 Guy DeSanctis:  Welcome to The Federalist Society's webinar call. Today, February 3, we discuss The Use/Misuse of Anti-Suit Injunctions in International IP Litigation: Can foreign courts enjoin enforcement of US patent rights? My name is Guy DeSanctis, and I'm Assistant Director of Practice Groups at The Federalist Society. As always, please note that all expressions of opinion are those of the experts on today's call.

     

      Today we are fortunate to have with us our moderator Eliza Beeney, Associate, McKool Smith PC. Throughout the panel, if you have any questions, please submit them through the Question & Answer feature so that our speakers will have them for when we get to that portion of the webinar.

 

      With that, thank you for being with us today. Eliza, the floor is yours.

 

Eliza Beeney:  Thanks, Guy, and good afternoon, everyone. Thank you for joining us. I'm very excited to kick off our panel on anti-suit injunction and introduce our panelists. 

 

      The first is Judge Paul Michel. Judge Michel served on the U.S. Court of Appeals for the Federal Circuit for over 22 years, and during his service on the bench, he heard over a thousand cases, of course sitting on the Federal Circuit heard a fair number of patent cases in his time on the bench. Since Judge Michel's retirement in 2010, he's played a very active role in the public dialogue about intellectual property policy of the United States and around the globe.

 

      Our second panelist is Professor Ann Bartow. Professor Bartow is at the University of New Hampshire Franklin Pierce School of Law, where she joined in 2015. Previously Professor Bartow was at Pace and the University of South Carolina. And during the 2011 academic year, she was a Fulbright Scholar at a university in Shanghai, China. Professor Bartow teaches various courses in intellectual property and focuses her scholarship -- or among the focus of her scholarship are the intersection of IP and public policy.

     

      Finally, Steve Akerley is the Global Head of Litigation at Interdigital. Before joining Interdigital in 2020, Mr. Akerley spent 28 years in private practice where he counseled primarily in complex patent infringement cases.

 

      So the first thing I'd like to do is just set the table. As those listening may or may not know, anti-suit injunctions are not new. Actually orders preventing or enjoining a party from initiating or continuing litigation in another jurisdiction date back to the 15th century in England. But what I'd like the panelists to do first, if they will, is address why are we talking about anti-suit injunctions now and why have they come up recently in the context of intellectual property litigation. So I'm not sure if we have a volunteer or maybe, Judge Michel, you can kick is off.

 

Judge Paul Michel:  All right. Thank you, Eliza, and thanks for your moderating role. I think what's different recently compared to prior decades or even prior centuries is the amount of money involved and the consequences of anti-suit injunctions and the reaction to the court effectively, although indirectly, enjoined to frequently issue what I think is better termed an anti-interference injunction. So a lot of this has to do with the globalization of commerce with the amount of monies involved particularly in standard essential patent disputes involving, for example, handsets like smartphones. So it's just an artifact of recent economics, essentially.

 

Steve Akerley:  Eliza, if I can join also right now on the heels of Judge Michel's background, I think the other thing that is happening here, the reason we're seeing them in the last several years is in the context of standard essential patent litigation, right. And that to me has been the -- that's the intended hook by the courts that have either been considering anti-suit injunctions or have issued anti-suit injunctions is that there's an effort or at least a basis for arguing that that court can undertake to set a global licensing rate, for instance. And the basis for those courts that have issued anti-suit injunctions to basically order parties not to go and assert their rights elsewhere is the purported or argued overlap of that case where the anti-suit injunction issues and the other cases that that order is actually trying to stop from proceeding.

 

Judge Paul Michel:  Of course there's nothing in the FRAND contract that obligates parties to agree to a particular court setting global rates. So the purported foundation is false.

 

Steve Akerley:  I couldn't agree more, Judge. And I will add for the benefit of the folks on the call that aren't steeped in this very niche area of the practice -- Eliza, you were talking about the history a little bit of anti-suit injunctions. And having been involved in these on a number of occasions, I've taken a look back at it, right. And the reality is is that anti-suit injunctions historically were issued primarily in cases where the parties had in fact earlier agreed to a particular forum for adjudication of its dispute, right.

 

      If you think about it, if a party had agreed to arbitrate a dispute as part of its contact with another party and instead of honoring that arbitration provision, they went and they found -- they did some forum shopping, and they went to a court that they thought would be friendlier. Well, the party wanting to enforce the arbitration clause could do to either that court or could go to another court to ask for an anti-suit injunction to prevent that party from skirting their, in this case, their arbitration obligations. And so it's a fundamentally different context than what we've been dealing with for the last several years.

 

Prof. Ann Bartow:  I was just going to chime in. I'm not sure of anything that useful to add. But, I mean from a few steps back, it's like anything. It's just about power and control and exercising that power and showing you I have the power to do this. So in some ways, it's a political question as well as, maybe more so, than a legal question.

 

Eliza Beeney:  And maybe, Professor Bartow, could you walk us through what the procedure has been in a lot of these SEC cases where anti-suit injunctions have issued, just before we get into some of the more detailed questions?

 

Prof. Ann Bartow:  Wow. So China for the last few years has been -- I don't know if it's fair to say experimenting -- they've been implementing specialized courts and the idea of specialized courts. And I know the court in Xinjian got a lot of attention. I think there was some interest in what happened with a court in Shanghai. But the actual mechanics are just -- I mean at my level of comprehension, I have to be honest here -- are just that they -- as it was described, it's almost a macro version of what happens with choice of law clauses and arbitration and when it's going to be binding and how you can avoid that. The idea just being that it gives China another way, if that's their agenda, to protect Chinese companies because I think the cases where that's happened has mostly been protective of Chinese companies, Chinese patents -- just to show that they're a big, important player, I think.

 

Judge Paul Michel:  Also, the benefit to domestic Chinese companies isn't hard to discern because on the whole damage levels in China are way lower than in other jurisdictions. So if a global rate is successfully set by the court in Wuhan or Xinjian or wherever, the Chinese companies will get a huge break because they'll globally pay a much lower rate. So I think that's the real game that's going on here.

 

Steve Akerley:  And one more thing to add to that, when you look at, at least from the Chinese perspective, the Chinese courts became more active after the Unwired Planet decisions came down in the UK. There was -- and not necessarily immediately after the trial court decision, but certainly there was increased activity and discussion, by the way, and rhetoric around the authority, jurisdiction, ability for Chinese courts to set global rates in response to the appellate decision in the Unwired Planet case, but then also the UK Supreme Court, where it ratified basically the trial court's decision to set the terms of a global license in the telecommunications context.

 

Judge Paul Michel:  Except that there's a big distinction. In the UK case, there was ultimately an option, a choice, and the party agreed to a global rate. And secondly, the UK judge did not issue an anti-suit injunction. He just found infringement of a valid, enforceable patent, set damages, said he found grounds to issue an injunction, but he'd withhold doing that if the infringer, now adjudicated infringer, would agree to a global rate. So it was not a precedent for issuing an anti-suit injunction. No anti-suit injunction was actually issued.

 

Eliza Beeney:  Maybe, Steve, could you talk a little bit about the practical impact of some of these anti-suit injunctions and how it affects the companies or the parties in the litigation?

 

Steve Akerley:  Sure. So again, for the benefit of folks on the call, I started at Interdigital in mid-2020, and we started litigation against Xiaomi shortly after that. And we learned a couple of things in short order. One was that Xiaomi had, in fact, already filed in Wuhan. They had held the complaint back for some period of time. And so we just had no idea that that was pending. And then what happened probably about two months after we learned about the complaint for the first time, was we got notification of -- well, we learned through a publication, a Chinese tech publication, that the Wuhan court has issued an anti-suit injunction against the company.

 

      And so if you think of it in that context, what had always happened before -- because this was not the first attempt to get an anti-suit injunction in the SEP context, that occurred when Continental, in their battles with Nokia going back to 2017 and 2018, had attempted to get an anti-suit injunction in the Northern District of California. While that was pending decision, Nokia, Nokia's lawyers in Germany sought an anti-anti-suit injunction in Germany, and they prevailed. And that sort of shut it down.

 

      And then if you move forward in time, there was a dispute between Lenovo and IPCOMM where that same playbook played out, where Lenovo had attempted to get an anti-suit injunction in the Northern District of California. Again, while it was pending, IPCOMM was able to get anti-anti-suit injunctions in the UK and France.

     

      So what we were dealing with in 2020, if you fast forward, we were dealing with an anti-suit injunction which had actually issued. And it had issued without notice to Interdigital, without an opportunity to be heard. And so from that perspective, what we did at that time is looked at our options. And we had a case pending in India, and so we sought relief from the Indian court in the form of an anti-anti-suit injunction at that point in time. The anti-suit injunction --

 

Prof. Ann Bartow:  - Can I interrupt you? I'm sorry. What does that mean when you went to India, what were you exactly asking for in the anti-anti-suit injunction? What precisely was the thing that you were asking for?

 

Steve Akerley:  Sure. It's a great question. In the first instance we were asking for the court to order Xiaomi not to enforce the anti-suit injunction. And one of the other forms of relief we were looking for, which was not initially granted, but it was subsequently granted, was for the court to order Xiaomi to indemnify Interdigital for any fine that resulted from enforcement of the Wuhan anti-suit injunction.

 

      And again, by way of background, the anti-suit injunction that we were facing in Wuhan was very broad. It effectively ordered us to cease any requests in any other court, including Chinese courts other than Wuhan, by the way, but we'll just limit it to -- it's easier just to talk about foreign courts. But it purported to preclude us from filing on any of our foreign SEPs or seeking injunctive relief in any other court in the world and also caried with it a potential for a daily fine of 1 million RMB. So over the course of the time that we were facing that, it probably averaged out to $800,000 to $1 million a week, U.S. dollars, was the penalty that we were facing.

 

      And so in the context -- that's another important point from my perspective is that it was the breadth of that anti-suit injunction and the fact that it had already issued was new. And the, what I think is a coercive amount in terms of the fine is also something that was new. There were fines, by the way, in the anti-anti-suit injunctions that IPCOMM obtained. And I believe that Nokia obtained in those respective cases, I believe, carry potential penalties with then, but I believe they were one time penalties of 250,000 Euros. And so if you think about it in comparison, the Wuhan court really changed the game.

 

Judge Paul Michel:  You know, I think Professor Bartow correctly highlights, in asking Steve to explain some of the practical impacts, that we should look at this in a broad perspective. And when I step back from the fact that these injunctions are directed to a specific party before a particular tribunal, when I step back, I say, "Well, what's the practical effect of such in injunction?" The practical effect, if it's honored because of the terror of the consequences of fines and other sanctions, is to deprive the courts of an overseas jurisdiction of its proper jurisdiction involving a patent in its territory that was infringed in its territory by somebody over whom the court there has personal jurisdiction. And so it's a direct affront to national sovereignty and to the jurisdiction of the court that's effectively kicked out of the litigation picture.

 

Steve Akerley:  I couldn't agree more. And the reaction of now courts in India, Germany, France, the UK, and the U.S. in issuing anti-anti-suit injunctions have largely relied on that, what you just said Judge, which is that the patent rights being asserted by definition national rights. It is  impossible for a Chinese court to adjudicate validity -- I say impossible -- it's certainly impractical, and probably there's no jurisdiction to do so -- to adjudicate infringement and validity of an Indian patent and vice versa, by the way. The India court shouldn't do that with Chinese patents. And that's what, in granting anti-anti-suit injunctions, that's been the basic premise of virtually every court that's dealt with the issue.

 

Prof. Ann Bartow:  I have a -- this is kind of a weird question, maybe, but I've been talking to my students a lot for various reasons really the last couple years about science and the whole experience of the pandemic and how government institutions and courts and lawyers are dealing with it all – I think badly [inaudible 00:17:48] but it's been very hard. I mention my son's partner is a public interest lawyer, and the courts and still closed, and she has clients who don't even have phones. So you experience these things at many different levels and in many different layers.

 

      So going back up, one of the things I talk about to my students a lot is just the role of law and why we're important. Maybe we can't invent vaccines, but we can, if it's working correctly, provide a way for people to resolve disputes peacefully, big disputes, ugly disputes, expensive disputes. Nobody dies if they come to court. We have a big, important job, and I think sometimes we lose sight of that.

 

      And when we look at this particular issue, my question then is if this isn't an option for China, China doesn't just give up trying to protect its companies. What does it do instead? Is it something that's also going to be like an injunction and within the courts? Or is going to be a different statute, something along those lines? Because they're not going to give up on this idea. And I'm not -- well, we can talk about the fairness and where this is all coming from maybe later. But I just wonder, then, do we clean up patent law and just push the mess somewhere else or the complication, I guess?

 

Steve Akerley:  Well, again, a very good question. And, I would say, you're absolutely right. There's no chance, in my view, that China is going to stop attempting to -- and let's step back another -- in terms of this. These are not -- this is an attempt, in my view, to control not just the litigation between two parties at any given time. This is an effort to control pricing in the global telecommunications market by a country that has an enormous investment, government investment, in the companies that, in these individual cases, it may be protecting by these actions.

 

      And so again, when I was talking about Unwired Planet, that's when we first started hearing courts in China talk about that fact that they had jurisdiction. They had the ability to set global rates as well. And that's again where this all started. And so I don't know where it ends up.

 

      Professor Bartow, there are service issues. There are due process issues that we face also in Chinese cases, aside from the example that I have from the anti-suit injunction issuing. It's not a -- it's not like federal court in the United States or going to the high court in the UK, where there are set procedures and there are set schedules and things get decided in a way that you can have some comfort in how that's happening.

     

      So it may be that procedurally, it's case management issues that come up. Jurisdiction is -- we've challenged jurisdiction. I'll give you just an example, a personal example. We've challenged jurisdiction. We have no operations in the country in China whatsoever. We don't have people there. We don't own property. We don't lease property. We're not there. We do own Chinese patents. And in every instance -- and this goes back before my time with the company -- but in every instance where we've challenged jurisdiction, effectively personal jurisdiction, we lose. And so there's -- seems to me there's nothing a company can do to avoid being brought into a Chinese court if that's where somebody decides to sue you.

 

Judge Paul Michel:  You know, another basic reality, I think, in these situations, that's pretty much unique, I think, to China, is that China does not seem, from my perspective, to have a truly independent judiciary in the sense that the U.S. and other jurisdictions do.

 

      Steve appropriately mentions the fact that the Chinese government has a huge, enormous, direct financial stake in the pricing that implementers in China making cell phones and other such gear will have to pay. But even aside from their pecuniary interest, the Chinese government and Chinese economy are highly controlled from the very top, essentially by the Chinese Communist Party. And if you look at the available public literature, the Party's made very clear that they intend to have a bigger role globally and to protect their own companies. So I think it's an inevitable inference from that that they will try other maneuvers.

     

      So even if their procedures were very open and carefully structured and entirely fair with no secrecy, it would still be a mess because their judiciary is not truly independent and their judges, however competent, are under enormous pressure, I think, to do what the government wants done. And in China, you don't defy the government if you want your family to fare well and be safe. So we can expect, I'm afraid to say, more what kindly can be called shenanigans.

 

Prof. Ann Bartow:  So one of the things that -- I started going to China in 2008, actually, right after the Beijing Olympics. I didn't see the immediate stuff change. So I saw a lot of changes from 2008 on when I started going regularly. And of course, I lived in Shanghai for a year. During all that time, I've been studying Chinese. I don't have a real flair for languages generally, and I reached a point where I can communi-, -- I know tourist Chinese and a few other, some legal Chinese, and I'm good at charades.

 

      And my point is that one of the things that's held me back and unfortunately will always hold me, I suspect, is if you don't read and write and speak Chinese, if you're not fluent and literate, you miss a lot and you're never going to make up for it. And the things that are written in Chinese and translated into English, a lot of the translations are not very good. A lot of stuff never gets translated, and a lot of stuff never even gets written. So the knowledge gap about what's really going on in China with the courts and things, I think is really huge.

 

      So I want to say from teaching there during the year and having so many students and professors as friends and judges, that most of them most of the time are trying to do the right thing. They're not -- you know what I mean -- the Chinese people -- I feel like it's a generalization, but they're very energetic, resilient, creative people to make a generalization. The government is complicated, I think we can say. I think I can be very critical of the Chinese government and rightfully so. But I would make the same criticisms of the U-, -- there are always parallel criticisms about what's going in U.S.

 

      So I feel like most of the -- because the judges, being a judge there is a civil service kind of job. You actually take an exam, and if you score highly enough, you can get into the judge corps. To me, that's actually really appealing. No offense to Judge Michel. He is a great judge, but you didn't get to be a judge because you are a great lawyer. That was just a nice coincidence. When we look at what's happening now at the Supreme Court or how people get to be judges in the U.S., I think it's really hard to justify that system. Whereas in China you can say they're trying to go for a merit approach.

 

      So I just feel uncomfortable, and I wish on this panel it'd be nice if somebody actually that worked on the Chinese legal system could tell us because it's -- talking to my students or litigators or judges because a lot of them are young judges. They go right to judging from law school, but then they get promoted to more serious courts. That's where you really figure out what's going on. And many of them actually have fairly good feeling because it's like, yeah, when we talk about settlements with our -- I teach torts, and I always talk about settlements. If everyone's unhappy it's a good settlement, right, when both sides are unhappy.

 

      So you can kind of talk to the students about in China about the same thing. That when you have Huawei versus Xiaomi, right, what's going to happen? Maybe justice because they're both well connected and powerful.

 

Steve Akerley:  And Professor Bartow, I think that's absolutely fair. And by the way, it'd be a shame if this was a panel on anti-suit injunctions not anti-China anything. It just so happens that the only two issued anti-suit injunctions came out of the Wuhan court, and they were broad, and they were -- at least ours was done without notice. And I don't know if Samsung obtained their anti-suit injunction without notice.

 

Judge Paul Michel:  Yeah. They did. They did.

 

Steve Akerley:  So that just gets into the conversation, obviously. But the one thing that I will say, and I think it's true of the -- I don't have any contacts or relationship with current judges, but certainly a number of former judges who are now in private practice in China that I deal with. And I would agree with what you just said.

 

      I think the only -- the real issue comes down to what Judge Michel noted, which is a simple fact. This isn't anti-Chinese rhetoric in anyway. It is not an independent judiciary. The Party makes that clear every several years. I was reminded recently of a 2017 article that relayed comments made by the judge who was then the highest ranking judge in China at the annual Party congress. And it was very inflammatory, very pro Party, very anti-West rhetoric, really, from a judge who had been considered to be, prior that that time, fairly reformist.

 

      And so to me, this isn't something that the government in China hides or even tries to hide. That there are open statements pretty regularly that the courts are there to serve the Party interests. And so if I was involved in a litigation with a non-Chinese company in China, I might get a fair result. If I was involved in a case in China with a small Chinese company that didn't have government interests or investment, I might get a fair result. But I question whether the system could even allow for that if it was a typical case that we might see with a very large Chinese entity where the government has a lot of interest.

 

Judge Paul Michel:  Yeah. Two reactions to Professor Bartow's helpful perspectives, one is that I think that China has changed enormously since she was on the ground there. The Xi regime in the last six or eight years has just gone off the charts in coercive behaviors in my opinion. And the second thing is that the situations are not parallel in important respects. Putting aside secret proceedings issuing injunctions, just as a matter of openness, of transparency, in the U.S. trials are all reported, and they're publicly available easily to anybody on the globe.

     

      I recently saw an estimate by, I think, about the foremost expert on Chinese realities, currently, current realities, suggesting that 85 percent of the Chinese court decisions are not publicly reported. You cannot find out what the court decided or what its reasoning was. So that's a colossal lack of transparency. And it makes comparisons between the U.S. system or U.S. judges and China judges quite skewed.

 

      And I want to be clear that I entirely agree with Steve that this is not a China bashing discussion. I think the Chinese judges are extremely well-educated, extremely bright, hardworking, perfectly capable. But the system is the system, and it's so powerful that it can overpower the intellect and the good ethics of individual actors. And I think that's what happens, at least in cases where it's a foreign, a Western patent owner trying to assert patents against a Chinese company of any size or political connection or government investment.

 

      So it's not a question of competence. It's a question of the system and what happens behind the scenes. I was told by Judge Rader, who was defending the Chinese anti-suit injunction practice, including in the Wuhan court, he said, "Well, you know, there's been no formal order by the top of the government or the Chinese Communist Party to skew justice to protect Chinese companies." And I said, "Of course there's no formal order. Nobody's stupid enough to issue a formal order that's such a self-indictment." So it's all done behind the scenes.

 

      It reminds me of some time I spent in Armenia. A very different situation, of course, but the judges there they contrasted the Soviet era with the post-Soviet, independent country era, after the Soviet Union broke up. And they said, "Now, we decide the cases based on the law and the facts. Before the breakup, we studied the case on the law and the facts, and the night before the verdict, we got a call from the local party leader telling us how the case was to come out." He called it telephone justice.

 

Prof. Ann Bartow:  That sound pretty bad, and if we want to tell horror stories, I can probably have more than you. But I have them both in China and the United States. Like the worst one I ever heard involved the death penalty in China, where the death penalty was administered so quickly they had killed the guy before the person he supposedly murdered showed up. He was still alive. So that's when the supreme court of China decided they should hear all the death penalty appeals, and that was a good choice because they just had so much chaos going on below, they thought if they centralized, or whatever -- so I can tell you . . .

 

      But then I can also tell you -- because my students get reassured when I tell them all my screw ups when I was a junior lawyer. But luckily there weren't that many because I didn't practice that long. I went into teaching. So, yeah, anyway, so but one of my favorites—I'm being sarcastic—was I did a bunch of pro bono family law even though it's my area of practice because there was such a desperate need. And I did a lot of stuff with domestic violence. And in the state I was in at the time, there was a change in the law. And because I didn't practice family law, I only did the pro bono, I was sometimes struggling to keep up. I needed to keep up to do a good job for my pro bono clients, but I was struggling with my real work or whatever too.

 

      And so I found myself in court on a stay away order where there'd been violence, and the judge ruled from the bench. And I thought when he ruled from the bench he'd done something wrong, but I didn't -- my confidence level wasn't high enough. And I said, "You're sure, Your Honor? I think there's been a finding on that something something." And he was very, "No, you're an idiot. No, get out of my face."

 

      And I went back to my office, and I was right and he was wrong. There had been a change in the law, and he'd done something incorrect when he ruled from the bench. So what do you do when you're a junior attorney? I didn't know. I didn't know that the real answer was to get someone else to call him so that he could figure out the mistake by himself and fix the mistake.

 

      Like an idiot, I called him up and I spoke to his clerk, and I said, "Here's the case. I’m sorry I didn't have the citation, but this makes the ruling problematic." And so, guess what the clerk said? "We can't proceed until you give us $26,000 so we have a transcript." Do you think my client had $26,000 for a transcript? My client did not. So we had an illegal stay away order, and there was not a damn thing I could do because I followed the rules, and I didn't know what the real rules were. I was following what I thought the real rules, but a new attorney where you deal with everything transparently and ethically. When in fact, when this particular judge made a mistake, he was only going to fix it if he could fix it if he could do it in a way where it looked like he found the mistake and he was the hero.

 

      Anyway, so I have a lot of learning experiences like that. It doesn't seem to have a lot to do with patent law except that when you think about an entire legal system, it's pretty complicated. And at the end of the day, when we talk about patent law, we're just talking about money. It's a lot of money.

 

Judge Paul Michel:  But the reality is that judges have much, much higher competence and insight and wisdom in cases dealing with money than they do in family law matters. Family law matters aren't really law. It's psychology, psychiatry, sociology, etc., and it's not surprising to me that horror stories in family court may be fairly common experiences even if they're not the norm. But commercial law, of which I suggest patent law is a part, I think are quite different. And courts, in general, do way better in a commercial context than in something dealing with family violence or family marital problems or other human, as opposed to economic, disputes.

 

Prof. Ann Bartow:  Well, I promise just only one more story. But this is another story from when I was doing the Fulbright. So when I got the Fulbright was before Xi Jinping took power. And if fact I got it when -- it was kind of fun being a Fulbright. They treat you really nicely, so you get to meet the ambassador, and you get shown around a little and taken to different parties. So I got to meet some people that were high up, and all that was really fun.

 

      And in fact because Xi Jinping hadn't taken over yet, I could still, when I first got to China, could still access the New York Times, the Wall Street Journal. It was before the Great Wall of China was fully formed. It was before they reported on all the financial information of the leaders' families. That's what got the New York Times banned.

 

      So I had a VPN, and before I left, I asked -- the Fulbright people did a lot of coaching. They told us, "Don't talk about Tibet. Don't talk about Taiwan." There are the three T's, all the different things not to talk about and how to be a good ambassador for your country. So we understood all that. But my one question was if I have -- the only way to get to certain things was a VPN even then -- are VPNs legal? And the Fulbright people said, "We don't know." So I said, "Well, I'm a lawyer, and I'm going to literally teach at a Chinese law school, so surely I'll be able to answer this question."

 

      I asked the ambassador's staff, the United States ambassador to China at the time. I asked the Fulbright people. And when I got to Tongji Dàxué, the Tongji University School of Law, I asked the dean and the associate dean and every professor there. And none of them had an answer for me whether VPNs were legal or not. So I just used mine and hoped for the best. But I did find that sort of frustrating, and I can't imagine trying to do business in a country where it's so hard to get an answer to a question which so obviously needs an answer and people want to do the right thing.

 

Eliza Beeney:  You know what? We've been focused on the China anti-injunctions a lot, which of course is natural given the recent decisions that have come down. But I'm curious if the folks on the panel think that maybe in a different jurisdiction an anti-suit injunction would be, could be a good thing or could provide some benefit for the system?

 

Judge Paul Michel:  Sure. It would be a very good thing provided that both parties agree to a global rate being set. That's the key because it's an objective, documented fact that both parties agree or one party at least says, "No, I don't agree." Anything else just becomes a power play. And it's to remember, I think, that these suits are private lawsuits between two parties over, as was pointed out, national rights, patents being a territorially restricted, national right. And if the parties consent, obviously there's an efficiency at a global rate being rate, assuming it's set competently, that you don't have if parties end up litigating in multiple jurisdictions. So in theory, of course a global rate has certain desirability from an efficiency standpoint. But in a private lawsuit, it's up to the parties to decide how they want to proceed.

 

      And the last thing I'll point out is that almost all infringement suits are settled voluntarily between the parties. For example, the federal trial courts only try a couple hundred cases a year out of five or six thousand suits filed. So settlement is the norm. And in lots of ways, that is beneficial because the parties better know the underlying economic realities in full detail, including future market projections and product plans and all kinds of things that judges aren't normally aware of and don't have good insight into. So settlements are good.

 

      But settlements, again, are voluntary. And global rates should also be voluntary. If there's consent, fine. Two parties can consent. A whole industry could consent. A standard setting organization could require arbitration, but none of them do. In fact, we could have a world court, but we don't have a world court. So in the absence of a world court, bilateral treaties, multilateral treaties, party agreements, and so forth, courts are a default mechanism. When everything else fails, the court settles it. That's the reality. It's kind of sad, but to me, it shows the importance of giving primacy to the consent of the parties to a private dispute.

 

Steve Akerley:  And to pick up on what you said, Judge, about these are power plays -- and let's take this straight out of China. If you look at every anti-suit injunction in the patent context that's been filed, it is clear to me, at least, that they have all been filed as a forum selection effort. They're forum shopping.

 

      If you go back to the first instance, it's Continental seeking an anti-suit injunction to keep Nokia from getting a -- proceeding in its case in Germany because Germany has injunctive relief still for patent cases. So of course they want to stop that. They don't want to go to the Northern District of California, which has a terribly long calendar. You can't get injunctive relief in the U.S. anymore. That's very, very rare occasions. And so it's forum shopping plain and simple. And it was exactly the same thing in the Lenovo case against IPCOMM.

 

      And so in terms of parties seeking that breadth of anti-suit injunction, I think the reaction, which has been global and unanimous by the way -- there's not a single request for an anti-anti-suit injunction that has been denied. They've all been granted in all of these cases now as I went through the countries earlier.

 

      So what you have now is you have precedent, very strongly worded, and I think, well-reasoned precedent, by the way, from each of these jurisdictions who have issued anti-anti-suit injunctions. So it's an uphill battle, and somebody will be creative at some point and try something different, whether it's narrowing the scope of it, whether it's -- I don't know what the other options are necessarily. But there are a lot of creative lawyers out there. Because this wasn’t really done until 2018, and it's how these issues come up and how they change. And so something, somebody will try something new.

 

Judge Paul Michel:  It's fair and accurate to call it forum shopping. But it would be equally incisive to call it rate shopping because that's what we're really talking about, to get the lowest rate for your favorite companies to have to pay.

 

Steve Akerley:  Yeah.

 

Judge Paul Michel:  That's what's going on when a Chinese court issues an anti-suit injunction.

 

Prof. Ann Bartow:  Yeah. I wanted to actually chime in also. As you were speaking -- I know we're trying to get beyond China, but it really is kind of cool the way China, when they detect an issue they move so quickly, like the IP. But look at how long it took the U.S. to get around to trying the federal circuit versus how quickly China decided to try IP courts and different ways and things that have been very flexible.

 

      And I think the other thing -- I think in fairness -- obviously, we can't get too deeply into any particular case -- is the U.S. government does stuff for U.S. companies all the time too, so some of it more transparent than others. So I do think it's always important -- and I know because when I got to China and teach -- just to be fair and just look at the balance.

 

      And it has nothing to do particularly with patent law, but all the issues with Ukraine right now and Putin and Russia. And everyone keeps talking about seizing assets, seizing assets, like that's the first thing we're going to. And I think that's what China's doing a little bit or companies can do with these anti -- they're threatening to have these huge fines. And they're making us -- incapacitating your ability to protect your rights in other venues or other countries. Really, that's, again, the government is involved, and that is kind of a manipulation.

 

      And in fact when I -- while I was doing the Fulbright and Randy Rader was still the chief judge then, he came over a couple times and gave lectures at the school where I was doing the Fulbright. So I was able to listen to his lectures and chat with him a little bit. And one of the things he kept complaining about what his court was underfunded and his court was overworked and his people were overworked. And I wanted to say, "Well, then go home and get your work done. Why are you in China lecturing?" But he saw his role as being some kind of ambassador about the rule of law. And I know it was met with some condescension by the Chinese. They were like, "Well, we're the ones who are funding our courts. We're the ones that are expanding our courts. We know what do to do handle these issues."

 

Judge Paul Michel:  Well, in many ways, the Chinese patent practice in courts is enviable. They're trials are far faster, far less disruptive, far cheaper. Injunctions are practically routine. As Steve pointed out, they're now quite rare in the U.S. They've modernized their patent law about every other year for the last half decade or longer. And by contrast, Congress hasn't touched the patent law in a meaningful way since 2011 when they passed the American Advance Act. And really, the last serious revision of U.S. patent law was in 1952. So in terms of speed and efficiency and a process that has efficacy to it, I'm envious of much of what the Chinese achieve. But that doesn't mean that certain practices have to be accepted because they're efficient and trying hard to modernize and address problems, which is all true.

 

      And you know, ultimately, I think legal regimes are about limits. Of course governments try to help their own companies, no doubt about it. But the question is by doing what. Is it within some understood, widely practices norms, or is it just criminal behavior? And if it's the later or anything close to the later, it should be considered unlawful, unacceptable because it's outside the limits of a civilized global order. And I think that's what we're dealing with when we talk about anti-suit injunctions against the consent of the party that's being hurt.

 

Prof. Ann Bartow:  I just have to laugh a little because the internet -- I've been doing this a long time, and the internet and internet law became the hot topic around 1994, 1995. And the late Joel Reidenberg, who was on the faculty at Fordham Law, knew a lot about privacy law. And he was one of the few people, when France said we're going to -- we don't like Nazi memorabilia, so we're going to protect our borders. He got creamed. How could you even think this? The internet is global. A good internet roots around. Censorship is if it were damaged, blah, blah, blah. Joel got creamed. I wish he was still alive to hear this conversation. How in patent law everyone's saying national borders are important because that was the argument he was trying to make. But to his credit, I respected him. I didn't agree with him necessarily, but I know it's a hard position.

 

Judge Paul Michel:  Eliza, do we have questions from the audience we should attend to?

 

Eliza Beeney:  Yeah. Absolutely. I'm just going to say we just got an interesting one. And now's the perfect time, I think to open it up. So if people have questions, please type them in the Q&A box, and I'll present them to the panelists.

 

      So the question we just got is could the WTO play a role in prompting China to reevaluate the ASI at the Wuhan court?

 

Judge Paul Michel:  Short answer: yes they could, but no they won't.

 

Steve Akerley:  So I'll add a little bit to that in that the -- oh gosh, this was four or five months ago. The WTO actually issued a set of questions to -- I confess I don't know who -- if it was to the Chinese government or to the judiciary -- I don't know -- but presumably the representative to WTO -- asking for the basis, the detailed legal basis for these anti-suit injunctions. And the response was, I think, two sentences that came back. And again, the Chinese body that responded said, "This isn't an appropriate question under WTO rules. It's not a --" The way they responded they said they were only required to respond to typical legal proceedings or something like that. And so they simply refused to answer. So again, the WTO did at least try, facially, to get a response and without success.

 

Prof. Ann Bartow:  It might be that they can't.

 

Steve Akerley:  What's that?

 

Prof. Ann Bartow:  It may not be that they could, but they won't. It may be that they can't, from what you're saying.

 

Steve Akerley:  No. I'm just saying that the response was not a substantive response.

 

Prof. Ann Bartow:  Okay. So they don't want to or -- ?

 

Steve Akerley:  My reaction to it is that they simply did not care to engage with WTO to explain themselves. Yeah.

 

Prof. Ann Bartow:  Gotcha.

 

Judge Paul Michel:  And the WTO will not do anything about it because it's too politically expensive in the context of the international, consent-focused organizations. So they won't levy any sanction against China no matter what it says or refuses to do. They just don't do that. They are not a reliable enforcement entity.

 

Steve Akerley:  Yeah.

 

Eliza Beeney:  Okay. Another question. Are there other jurisdictions that are likely to issue ASIs other than China?

 

Judge Paul Michel:  In the case of the U.S., we know the answer because there have been a half a dozen cases. And the answer is yes, but only if both parties consent.

 

Steve Akerley:  Or in the context -- as I look back historically, right, the Microsoft Motorola case is the basis that most people use to say that the court can issue an anti-suit injunction. That of course wasn't really an anti-suit injunction. It was an anti-injunction injunction. It was an anti-enforcement injunction. But Judge Michel's right. In that case, there really was party consent.

 

      The only other time that I'm aware has happened was in Huawei's case against Samsung in the Northern District of California. But that was a case where Huawei was called out effectively because they had filed -- they had affirmatively filed in the Northern District of California, Huawei had. They filed in the Northern District of California and in China and wanted the benefit of both of those cases going on. And I forget who the judge was in San Francisco who basically said that they couldn't enforce the Chinese injunction while this case was pending because they had voluntarily gone to his court. Again, it didn't preclude any party from filing a case, proceeding through a case, and enforcing their foreign national patent rights.

 

      So I don't know where it would come up, Eliza. And again, given the unanimous global response in ensuing anti-anti-suit injunctions, you really have to thread a lot of -- if you look at those decisions, they're very hard to thread all of the reactions and the legal bases for issuing the anti-anti-suit injunctions.

 

Eliza Beeney:  So it really seems like this is not -- I'm sure there will be other creative solutions and like you mentioned before, maybe a more limited forum or something like that. But are we all in agreement that we're not likely to see this come up in this way in the near future?

 

Judge Paul Michel:  Well, if we give a lot of emphasis to in this way, I would agree with your proposition. But it won't necessarily have to be something totally different. It may be a variation rather than something that is completely of a different character. Time will tell.

 

Steve Akerley:  Yeah. And I would say that I'm hopeful that that would be the result. But like I said, there are -- these are high stakes cases. There's a lot of money involved and some very, very capable, creative lawyers on both sides.

 

Eliza Beeney:  Absolutely. Well, I think that's a great place to end unless there are any final thoughts. I don't see any more questions. But thank you so much. This was really interesting. Yeah. Go ahead, Professor.

 

Prof. Ann Bartow:  Yes. I just wanted to say I enjoyed this a lot, and I wanted to thank you for including me. But I really did want to make the point -- I'm sorry if it's rude -- but I can't emphasize enough how much this would have benefitted from folks who are actually Chinese practicing Chinese law who could speak to use about the way the Chinese courts work. That would just really have added a lot to our understanding, I think. So maybe next time that's a thought.

 

Judge Paul Michel:  Well, maybe The Federalist Society will have a follow up session, and I can suggest some people who seem to be quite expert in that field, including Berkeley's Mark Cohen.

 

Prof. Ann Bartow:  Sure. Mark Cohen, but also people actually work and practice in China.

 

Steve Akerley:  Yeah.

 

Judge Paul Michel:  Sure.

 

Eliza Beeney:  Thank you.

 

Judge Paul Michel:  Eliza, thanks for your leadership here.

 

Steve Akerley:  Yeah. Thanks, Eliza.

 

Judge Paul Michel:  Nice to work with Ann and Steve. Take care.

 

Steve Akerley:  Yes. Thanks, Judge. Thanks.

 

Guy DeSanctis:  On behalf of The Federalist Society I want to thank our experts the benefit of their valuable time and expertise today. And I want to thank our audience for joining and participating. We also welcome listener feedback by email at [email protected]. As always keep an eye on our website and your emails for announcements about upcoming Teleforum calls and virtual events. Thank you all for joining us today. We are adjourned. 

 

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Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s Practice Groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at www.fedsoc.org.