Introduction

On 4 March 2021, the Wuhan Intermediate People’s Court (“Wuhan Court”) granted the world’s first ever cross-border antisuit injunction in the patent dispute case between Xiaomi Communications Co., Ltd and its affiliates (collectively, “Xiaomi”) and the US patent giant, InterDigital, Inc. and its affiliates (collectively, “InterDigital”), prohibiting InterDigital from taking out relevant proceedings in any part of the world before its lawsuit with Xiaomi in Wuhan is concluded in order to prevent unlawful interference and obstruction to litigation. This first ever antisuit injunction granted in intellectual property proceedings in China has caught the attention of and led to much discussion in the industry both domestically and abroad.

Background

InterDigital is a company incorporated in the US specialising in wireless communication technologies and video encoding / decoding technologies. It has participated in defining various global wireless communications standards for the industry. InterDigital has given an undertaking to the National Development and Reform and Commission of the People’s Republic of China that it would grant licences to patent exploiters of wireless communication standards on the basis of fairness, reasonableness and non-discrimination. Rounds of negotiations that have taken place between Xiaomi, as a patent exploiter of wireless communication standards, and InterDigital on patent licensing since 2013 ended up in deadlock

On 9 June 2020, Xiaomi commenced proceedings in the Wuhan Court, seeking a judgment on royalty. On 29 July 2020, InterDigital filed a claim against Xiaomi in the Delhi Court in India (“Delhi Court”) for patent infringement and sought a judgment on the dispute over royalty rate in addition to injunctive relief. On 4 August 2020, Xiaomi filed an application to the Wuhan Court for an antisuit preservation injunction.

PRC judgment

The Wuhan Court handed down its judgment on 23 September 2020, requiring InterDigital to immediately withdraw or suspend its application for judgment on royalty rate and injunction against Xiaomi in India and elsewhere in the world; otherwise, a penalty of RMB 1 million a day would be imposed. The Wuhan Court upheld its jurisdiction over this case on the grounds that the place of incorporation of Xiaomi was China and one of its affiliates was also situated at Wuhan. Besides, the PRC court had accepted this case before the India court did so. Where there are parallel proceedings in different jurisdictions, basically the court that has first accepted the case should have jurisdiction. Prohibiting InterDigital from bringing a claim abroad before the conclusion of this case would not cause any actual loss to it. InterDigital’s subsequent application for reconsideration of the decision was later dismissed by the Wuhan Court.

Judgments in India and Germany

After the antisuit injunction was granted by the Wuhan Court, on 29 September 2020, InterDigital filed an application to the Delhi Court for an anti-antisuit injunction, which was granted by the Delhi Court accordingly on the basis that the Wuhan Court had deprived InterDigital of its right to legal remedies and violated the Delhi Court’s right to exercise its jurisdiction under India law. The Delhi Court instead ordered Xiaomi not to enforce the antisuit injunction granted by the Wuhan Court before the conclusion of proceedings in the Delhi Court.

In the judgment, it is stated that “… An anti-suit injunction is a judicial order restraining one party from prosecuting a case in another court outside its jurisdiction. It does not extend to directing the party to withdraw the proceeding initiated before the foreign Court… The Wuhan Court has not merely restrained the plaintiff from prosecuting the present proceedings before this Court; it has mandated withdrawal, by the plaintiff, of these proceedings. In the event of non-withdrawal, the Wuhan Court has mulcted the plaintiff with punitive costs, on a daily basis… Allowing such an order to operate would amount to recognising the jurisdiction of a foreign Court to remove a proceeding, from the docket of a judicial forum in India, before which the proceeding has been instituted.”

Since the antisuit injunction granted by the Wuhan Court targeted not only at India but also elsewhere in the world, it literally covered Germany as well. On 30 October 2020, InterDigital filed an application to the First Court of Munich for an anti-antisuit injunction directly without any previous patent infringement claim having been filed. The First Court of Munich decided to grant an interim injunction without conducting a hearing. It required Xiaomi to immediately withdraw any part of its application to the Wuhan Court for antisuit injunction involving Germany, or by other procedural means conclusively revoke any part of the antisuit injunction granted by the Wuhan Court involving Germany. It also prohibited Xiaomi from requiring InterDigital to observe such part of the antisuit injunction involving Germany or from obstructing, through any other judicial or administrative procedures, InterDigital from filing any infringement claim necessary for its patent standards in Germany. If Xiaomi violates the above interim injunction, it would be liable to a maximum fine of 250,000 Euro and detention up to 6 months. 

Legal basis of the antisuit injunction in China

Article 100 of the Civil Procedure Law of the People’s Republic of China states that, “For a case where, for the conduct of a party or for other reasons, it may be difficult to execute a judgment or any other damage may be caused to a party, a people’s court may, upon application by the other party, issue a ruling on preservation of the party’s property, order certain conduct of the party or prohibit the party from certain conduct; and if no party applies, the people's court may, when necessary, issue a ruling to take a preservative measure.”

It can be seen from the Xiaomi case that the court has adopted a broad interpretation of the above provision, which is conventionally used to protect the personal rights or proprietary rights of the applicant but rarely to obtain an antisuit injunction. As far as the patent dispute in the Xiaomi case is concerned, the Provisions of the Supreme People’s Court on Several Issues concerning the Application of Law in Cases Involving the Review of Act Preservation in Intellectual Property Disputes (Judicial Interpretation No. 21 [2018]) is silent on the grounds for the court in granting an antisuit injunction. It seems the Wuhan Court in the Xiaomi case had made reference to the common law principles in granting the antisuit injunction. Under the English common law, an antisuit injunction can be granted generally if (1) England is the natural forum and the exterritorial proceedings in question are vexatious or oppressive; or (2) the exterritorial proceedings in question are in breach of a valid exclusive jurisdiction or arbitration clause between the parties. In the Xiaomi case, the Wuhan Court held that the exterritorial proceedings in question are vexatious and that the proceedings commenced in India aimed to obstruct the outstanding litigation in China. However, the Wuhan Court did not further explain how the patent proceedings in India would obstruct the outstanding litigation in China.

Conclusion

Xiaomi is not the only case where a PRC court has granted an antisuit injunction. Huawei has also applied for and obtained an antisuit injunction from the Supreme People’s Court. In Huawei’s case, the court made reference to the common law principles of the US. While the Huawei case is outside the scope of discussion of this article, we can see that the PRC courts are inclined to adopt common law principles in granting antisuit injunctions. It is likely that we might see the PRC courts make use of common law principles more frequently in future cases involving antisuit injunctions.