Apple Inc. v. Qualcomm Incorporated

Filing 141

ORDER Denying 92 Motion for Anti-Suit Injunction. Signed by Judge Gonzalo P. Curiel on 9/7/17. (dlg)

Download PDF
Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8321 Page 1 of 34 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 APPLE INC., 12 13 Case No. 3:17-cv-00108-GPC-MDD Plaintiff, vs. 14 15 QUALCOMM INCORPORATED, 16 ORDER DENYING ANTI-SUIT INJUNCTION Defendant. (Redacted version) 17 18 ECF No. 92-1 19 20 QUALCOMM INCORPORATED, Counterclaim-Plaintiff, 21 22 v. 23 APPLE INC., 24 Counterclaim-Defendant. 25 26 27 28 1 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8322 Page 2 of 34 1 Before the Court is a motion for anti-suit injunction filed by Defendant and 2 Counterclaim-Plaintiff Qualcomm Incorporated (“Qualcomm”). Dkt. No. 92-1. The 3 motion has been fully briefed. Plaintiff and Counter-Defendant Apple Inc. (“Apple”) 4 filed an opposition on August 8, 2017 and Qualcomm filed a reply on August 15, 2017. 5 Dkt. Nos. 108, 114. The Court heard oral argument on August 18, 2017. Dkt. No. 118. 6 Upon review of the moving papers, the exhibits attached in support thereof, the 7 applicable law, and for the following reasons, the Court DENIES Qualcomm’s motion 8 for anti-suit injunction. 9 I. INTRODUCTION The underlying dispute arises out of what the parties refer to as the “FRAND 10 11 commitment” or the “FRAND Bargain.” In response to the globalization of the 12 telecommunications industry, key players in the industry have formed standard-setting 13 organizations (“SSOs”) or standard-development organizations (“SDOs”) to facilitate 14 worldwide connectivity. The European Telecommunications Standards Institute 15 (“ETSI”) is one of the most important and influential SSOs in the cellular 16 communications industry. Both Apple and Qualcomm are members of ETSI, along with 17 eight hundred members from sixty-six other countries. Before promulgating standards, ETSI requires — as do other SSOs — that any 18 19 putative owner of a standard-essential patent (“SEP”) agree to make licenses available on 20 “fair, reasonable and non-discriminatory” (i.e., FRAND) terms to willing licensees. SEP 21 holders make this prohibitory promise with the understanding that they are entitled to 22 seek royalties from any and all entities that want to practice the standard. The “FRAND 23 commitment” or “FRAND bargain,” therefore, is a contractual obligation between the 24 SEP holder and the SSO. Here, the contractual obligation is between Qualcomm and 25 ETSI. 26 Qualcomm holds thousands of FRAND-encumbered SEPs that comprise ETSI’s 27 3G/UMTS and 4G/LTE cellular communication standards. Apple’s iPhones and other 28 cellular devices practice the 3G and 4G standards. For years, Apple has practiced 2 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8323 Page 3 of 34 1 Qualcomm’s SEPs by relying on a license agreement between Qualcomm and the 2 manufacturers who build Apple’s iPhones and iPads (the “Contract Manufacturers”).1 3 Apple and Qualcomm have never executed a licensing agreement. 4 Since the introduction of the iPhone in 2007, Apple and Qualcomm have 5 periodically engaged in negotiations regarding a direct license for Qualcomm’s cellular 6 SEP portfolio. The most recent took place between 2015 and 2017. In June 2016, 7 Qualcomm offered Apple a license to Qualcomm’s Chinese 3G and 4G cellular SEPs. A 8 month later, and pursuant to Qualcomm’s oral representations, Qualcomm offered Apple 9 a license to Qualcomm’s “rest-of-world” patent portfolio. Apple rejected both offers on 10 the grounds that they were non-FRAND. Not long thereafter, Apple filed the instant suit. 11 II. BACKGROUND 12 A. Standard-setting organizations & intellectual property law 13 Standard-setting organizations are industry groups that create common platforms 14 for the practice of modern technologies including telephones, the Internet, and other 15 electronics. See Microsoft Corp. v. Motorola, Inc., 871 F. Supp. 2d 1089, 1092 (W.D. 16 Wash. 2012); see also Mark A. Lemley, Intellectual Property Rights and Standard– 17 Setting Organizations, 90 Calif. L. Rev. 1889, 1892-93 (2002) (positively cited in 18 Microsoft Corp. v. Motorola, Inc., 696 F.3d 872, 875 (9th Cir. 2012)). Through 19 standardization, manufacturers from across the world can create products that interface 20 with one another. See Microsoft, 871 F. Supp. 2d at 1092. Standardization benefits the 21 consuming public by ensuring interoperability, lower product costs, and increased price 22 competition. Microsoft, 696 F.3d at 876 (citing Apple, Inc. v. Motorola Mobility, Inc., 23 2011 WL 7324582, *1 (W.D. Wis. June 7, 2011)). 24 25 26 1 27 28 Qualcomm has sued the Contract Manufacturers in a related action for breach of their license agreements. Qualcomm Inc. v. Compal Electronics Inc. et al., 3:17-cv-01010-GPC-MDD (complaint filed May 17, 2017). The two cases were consolidated at the Court’s August 18, 2017 hearing. Dkt. No. 118. 3 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8324 Page 4 of 34 1 Yet as countless authorities have recognized, this private standardization process 2 becomes complicated when the common technological platform is made up of intellectual 3 property owned by different companies. See Motorola, 696 F.3d at 876. Entities that 4 own patented technology essential to the operation of a technological standard are said to 5 own standard-essential patents, or SEPs. In theory, SEP holders wield tremendous 6 control over standards because, as patent holders, they have the right to exclude others 7 from practicing their intellectual property. See Lemley, Intellectual Property Rights, at 8 1901. “As a result, standards threaten to endow holders of standard-essential patents with 9 disproportionate market power.” Microsoft, 696 F.3d at 876. To avoid this mischief and 10 “to reduce the likelihood that owners of essential patents will abuse their market power, 11 many standards setting organizations,” including ETSI, “have adopted rules related to the 12 disclosure and licensing of essential patents.” Microsoft, 871 F. Supp. 2d at 1093. 13 To that end, ETSI requires all SEP participants to comply with the Intellectual 14 Property Rights (“IPR”) Policy.2 The IPR policy requires members to disclose 15 potentially standard-essential patents in a timely fashion. Id. § 4.1. More importantly, 16 the IPR policy also obligates SEP holders to make a written commitment that they will 17 grant irrevocable licenses to any willing licensee on fair, reasonable, and 18 nondiscriminatory terms — that is, FRAND terms. Id. § 6.1. In the event an SEP owner 19 is not prepared to license its intellectual property on FRAND terms, the IPR policy 20 dictates that the governing body shall search for alternative technology to incorporate into 21 the standard. Id. § 8.1.1. 22 23 By requiring all SEP holders to adhere to the FRAND commitment, ETSI and other SSOs mitigate the anticompetitive effects flowing from standardization. See 24 25 26 27 28 2 See ETSI, ETSI Intellectual Property Rights Policy, Annex 6, (April 5, 2017), Apple cites to the IPR Policy in its complaint. See, e.g., FAC ¶ 45, Dkt. No. 83 at 22. Qualcomm, in its answer, “refers [the Court] to ETSI’s Intellectual Property Rights (“IPR”) Policy for its contents.” Answer to FAC ¶ 45, Dkt. No. 97 at 10. Given Qualcomm’s referral, the Court finds it appropriate to take judicial notice of the provisions included in the IPR policy. 4 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8325 Page 5 of 34 1 Microsoft, 696 F.3d at 876. For if there was no FRAND commitment, then “once a 2 standard has gained such widespread acceptance that compliance is effectively required 3 to compete in a particular market, anyone holding a standard-essential patent could 4 extract unreasonably high royalties from suppliers of standard-compliant products and 5 services.” Id. (quoting Mark A. Lemley, Ten Things to Do About Patent Holdup of 6 Standards (And One Not to), 48 B.C. L. Rev. 149 (2007)). This potential abuse is well- 7 documented in judicial opinions discussing FRAND and is often referred to as “patent 8 hold-up.” See id.; see also Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1209 (Fed. 9 Cir. 2014) (“Patent hold-up exists when the holder of a SEP demands excessive royalties 10 after companies are locked into using a standard.”). The FRAND commitment, therefore, 11 is designed to prevent patent holdup. See Microsoft, 696 F.3d at 876. 12 Qualcomm holds SEPs that are integral to practicing ETSI’s 3G and 4G standards. 13 FACC (“First Amended Counterclaims”) ¶ 96, Dkt. No. 70 at 78. Qualcomm recognizes 14 that those SEPs are encumbered by Qualcomm’s FRAND commitment to ETSI. Id. 15 Qualcomm also acknowledges that its FRAND commitment to ETSI has created a 16 “contractual obligation” between the two parties. Id. 17 B. U.S. action 18 On January 20, 2017, Apple filed suit against Qualcomm. Dkt. No. 1. Qualcomm 19 filed an answer and counterclaims on April 10, 2017 and amended counterclaims on May 20 24, 2017. Dkt. Nos. 61, 70. Apple filed a first amended complaint (“FAC”) on June 20, 21 2017. FAC, Dkt. No. 83. Qualcomm answered Apple’s first amended complaint on July 22 21, 2017, Dkt. No. 97, and Apple answered Qualcomm’s first amended counterclaims on 23 August 4, 2017, Dkt. No. 107. 24 1. Apple’s First Amended Complaint 25 Apple’s first amended complaint asserts sixty-three (63) causes of action against 26 Qualcomm. Those claims can be separated into three categories: breach of contract 27 claims, patent claims, and antitrust claims. 28 5 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8326 Page 6 of 34 Counts I through IV seek relief related to Qualcomm’s rights and obligations under 1 2 the Business Cooperation and Patent Agreement (“BCPA”), which addresses, among 3 other matters, royalty rebates that Qualcomm pays to Apple. Counts V through LVIII seek declarations stating that eighteen of Qualcomm’s 4 5 patents are not infringed by Apple’s technology and that they are invalid under U.S. 6 patent law. In the alternative and in the event that the Court finds that the patents are 7 valid and infringed, Apple asks the Court to set a FRAND royalty rate for all eighteen 8 patents. Count LIX seeks a declaration that the sale of Qualcomm’s baseband processor 9 10 chipsets to the Contract Manufacturers exhausts Qualcomm’s patent rights and that, 11 therefore, the eighteen patents-in-suit are unenforceable as to Apple. Count LX seeks 12 declaratory relief regarding the Strategic Terms Agreement (“STA”), which requires 13 Apple to pay a license fee on Qualcomm’s exhausted patents. Count LXI, relatedly, 14 seeks declaratory relief regarding the Contract Manufacturers’ obligations to pay license 15 fees on exhausted patents under their license agreements with Qualcomm. 16 Finally, Counts LXII and LXIII lodge antitrust and anticompetitive claims against 17 Qualcomm. Count LXII alleges that Qualcomm has unlawfully monopolized the market 18 for cellular chipsets in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. Count 19 LXIII alleges that Qualcomm’s licensing practices constitute unfair competition within 20 the meaning of the Cal. Bus. & Prof. Code § 17200, et seq. (the “Unfair Competition 21 Law”).3 22 23 24 25 26 27 28 Apple’s January 20, 2017 complaint asserted twenty-five (25) causes of action against Qualcomm. Dkt. No. 1. Of those causes of action, eighteen (18) were patent challenges directed at nine separate patents owned by Qualcomm. Additional challenges launched at another nine patents, along with added invalidity claims as to the nine patents already asserted in the original complaint, account for thirty-six (36) of the extra causes of action in the FAC. Thus, besides for the supplemental patent claims, the only other new causes of action raised by Apple in the FAC concern Claim LX (60), the request for declaratory relief on the STA and Claim LXI (61), the request for declaratory relief for Qualcomm’s license agreements with the Contract Manufacturers. 3 6 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8327 Page 7 of 34 1 2. Qualcomm’s First Amended Counterclaims 2 Qualcomm’s first amended counterclaims assert a number of contract-based causes 3 of action against Apple and, in addition, seek for the Court to issue a number of 4 declarations regarding Qualcomm’s FRAND commitments and anticompetitive behavior. 5 Count I seeks to hold Apple accountable for tortiously interfering with 6 Qualcomm’s license agreements with the Contract Manufacturers. Count V alleges that 7 Apple breached the Statement of Work, a contract providing for a high-speed chipset 8 feature called “carrier aggregation,” and Count XI claims that Apple breached the Master 9 Software Agreement, a contract that provides Apple with software to operate 10 11 Qualcomm’s chipsets. Counts VI through IX relate to Apple’s and Qualcomm’s obligations under the 12 BCPA. Specifically, Qualcomm alleges that Apple breached the BCPA, the implied 13 covenant of good faith and fair dealing with regard to the BCPA, and that Apple was 14 unjustly enriched by its breaches. Count IX seeks declaratory relief finding that Apple’s 15 breaches relieved Qualcomm of its obligations under the BCPA as to royalty rebate 16 payments. 17 Count X alleges that Apple violated California’s Unfair Competition Law by 18 covering up the superior performance of Qualcomm’s chipsets in the iPhone 7s, as 19 compared to Intel’s chipsets, by declaring that there was no difference between the 20 models, and by preventing Qualcomm from making statements on the matter. 21 Counts II and III seek declarations that Qualcomm’s license agreements with the 22 Contract Manufacturers do not violate Qualcomm’s FRAND commitments to ETSI and 23 do not violate competition law. Moreover and importantly for present purposes, Count 24 IV seeks a declaration that Qualcomm has satisfied and discharged its FRAND 25 commitment to ETSI with regards to Apple. More precisely, Qualcomm seeks for the 26 Court to conclude that its licensing offers to Apple, including its June 2016 and July 2016 27 SEP portfolio offers, satisfied Qualcomm’s FRAND commitment to ETSI. Alternatively 28 and in the event the Court determines that Qualcomm’s offers were not FRAND, 7 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8328 Page 8 of 34 1 Qualcomm asks the Court to set a FRAND rate for the worldwide SEP portfolio that 2 Qualcomm offered to Apple. 3 C. Foreign actions 4 Between January 23, 2017 and April 11, 2017, Apple filed a total of eleven 5 lawsuits against Qualcomm and its subsidiaries in the United Kingdom, Japan, China, 6 and Taiwan.4 All but one of these lawsuits was filed before Qualcomm had answered 7 Apple’s original complaint. The Taiwanese lawsuit was filed on April 11, 2017, the day 8 after Qualcomm filed its answer and the above-mentioned counterclaims. 9 1. U.K. action 10 Apple initiated the U.K. proceeding in the Patent Court of the English High Court 11 of Justice. Harrison Decl. ¶ 2. There are six claimants in the U.K. proceeding: Apple 12 Retail UK Limited, Apple Distribution International, Apple Operations Europe, Apple 13 GmbH, Apple Retail Germany B.V. & CO K.G., and Apple Inc. Id. ¶ 3. The four 14 defendants in the UK proceeding are: Qualcomm UK Limited, Qualcomm 15 Communications UK Limited, Qualcomm Technologies International Ltd, and 16 Qualcomm Incorporated. Id. ¶ 4. Apple does not seek any global relief in the U.K. 17 action. Id. ¶ 7 (“. . . none of these [claims] involve any global relief, including any 18 determination relating to a global licence [sic] of any of Qualcomm’s patents.”). 19 Claims 1 and 2 of the UK proceeding seek declarations that the U.K. Defendants 20 have breached their obligations under Article 102 of the Treaty of the Functioning of the 21 European Union, Article 54 of the Agreement on the European Economic Area, Section 22 18 of the Competition Act of 1998, and/or their obligations to ETSI by (1) abusing their 23 dominant position in the markets for LTE, CDMA, and WCDMA/UMTS chipsets and (2) 24 25 26 27 28 4 Apple filed a single complaint in the U.K. on January 23, 2017. Harrison Decl. ¶ 2 , Dkt. No. 108-3 at 2. It filed four complaints in Japan on February 16, 2017, Yakura Decl. ¶¶ 3, 15, Dkt. No. 108-6 at 2, 5. Thereafter, Apple filed five complaints in China. Yang Decl. ¶ 5, Dkt. No. 108-8 at 2. Finally, on April 11, 2017, Apple filed a complaint against Qualcomm in Taiwan. Wang Decl. ¶ 2, Dkt. No. 108-4 at 2. Although the Yang declaration does not include the precise date that the five Chinese actions were filed, Qualcomm has not objected to Apple’s representation that all lawsuits were filed before April 11, 2017. 8 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8329 Page 9 of 34 1 abusing their ownership of SEPs in licensing practices. Id. ¶ 8. Claim 3 requests that the 2 U.K. Defendants be required to offer the U.K. Claimants a direct license, on FRAND 3 terms, of the SEPs practiced in Apple devices for sale in the European Union. Id. Claims 4 4 through 6 seek an order declaring that the five U.K. patents-in-suit are invalid, that they 5 should be revoked, and that they are not essential to ETSI’s telecommunications 6 standards. Id. Claim 7 asserts that the U.K. Defendants’ rights under the patent-in-suits 7 have been exhausted with respect to any device that incorporates a Qualcomm chipset. 8 Id. Claims 8 through 11 seek damages, costs, interest, and other relief. Id. 9 2. Japanese action 10 Apple filed four Japanese complaints against Qualcomm Inc., Qualcomm Japan, 11 Qualcomm Technologies, Inc., and Qualcomm CDMA Technologies Asia-Pacific Pte. 12 Ltd. in three separate departments at the Tokyo District Court. Yakura Decl. ¶ 11. The 13 first complaint involves antitrust law and alleges that Qualcomm has violated Japan’s 14 Antimonopoly Act through monopolization and abuse of its superior bargaining position 15 and that it has also violated various Japanese civil codes by failing to comply with its 16 FRAND obligations. Id. ¶ 15. The second, third, and fourth complaints each challenge a 17 single Qualcomm-owned patent and allege that the patent is invalid, that it is not 18 infringed by Apple’s products, and that Qualcomm’s rights to the patent are exhausted 19 under Japanese law. Id. ¶¶ 3, 10. None of these claims request that the Japanese courts 20 determine a FRAND rate for Qualcomm’s global license portfolio. Id. ¶ 2. 21 3. Chinese action 22 The claimants in the Chinese proceedings are Apple Inc. and Apple Electronic 23 Products Commerce (Beijing) Co., Ltd. and the defendants are Qualcomm Incorporated, 24 Qualcomm Technologies, Inc., Qualcomm Wireless Communications Technologies 25 (China) Co., Ltd., and Qualcomm Wireless Semiconductor Technologies Co., Ltd. Yang 26 Decl. ¶ 2. The first claim in the Chinese proceeding asserts, in part, that the Chinese 27 Defendants have abused their market dominance under the China Anti-Monopoly Law by 28 charging the Chinese Claimants excessive royalties on Apple’s products sold in China. 9 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8330 Page 10 of 34 1 Id. ¶ 6. The second claim asks the Chinese court to settle disputes over licensing 2 conditions for the Chinese Defendants’ SEPs. Id. ¶ 2. 3 4 5 Id., Exhibit 2, Dkt. No. 140-2 6 at 22-23 (under seal). The third through fifth claims, in turn, seek for the court to declare 7 that the Chinese Claimants are not liable for patent infringement on any of the three 8 Chinese patents-in-suit. Yakura Decl. ¶ 2. None of the Chinese proceedings seek a 9 determination of a FRAND rate for Qualcomm’s global patent portfolio. Id. ¶ 5. 10 4. Taiwanese action 11 In the Taiwanese proceeding, Apple Inc. and Apple Asia LLC have sued 12 Qualcomm Incorporated, Qualcomm Technologies Inc., Qualcomm Taiwan Corporation, 13 and Qualcomm CDMA Technologies Asia-Pacific PTE Limited. Wang Decl. ¶ 1. The 14 Taiwanese action alleges that the Taiwanese Defendants have violated the Taiwan Fair 15 Trade Law and have abused their patent rights through its activities in the baseband 16 chipset market and SEP licensing market. Id. ¶¶ 2, 4. The Taiwanese suit does not 17 request any worldwide FRAND determination. Id. ¶ 5. 18 III. DISCUSSION 19 Qualcomm has moved for an anti-suit injunction against Apple. The motion seeks 20 to enjoin Apple from pursuing all of the claims in all of the foreign actions and from 21 filing any other foreign action during the pendency of the U.S. action. Neither 22 Qualcomm’s motion nor its reply asks, in the alternative, for a more limited anti-suit 23 injunction that only targets certain claims. Qualcomm contends that an anti-suit 24 injunction is appropriate because all of Apple’s foreign actions are part of a single 25 licensing dispute already before this Court in the U.S. action. Qualcomm avers that the 26 “essence of Apple’s [U.S. claim] is that Qualcomm’s royalties (both in the existing 27 license agreements with the Contract Manufacturers and in Qualcomm’s offer to Apple 28 for a direct license) are not FRAND.” Dkt. No. 92-1 at 6. Accordingly, Qualcomm 10 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8331 Page 11 of 34 1 argues, the foreign actions are duplicative because this Court will already “determine 2 whether Qualcomm has satisfied its global FRAND commitment as to Apple under the 3 ETSI contract[.]” Id. at 18. For the following reasons, however, the Court disagrees with 4 Qualcomm’s contentions and finds that none of the anti-suit injunction factors weigh in 5 favor of the requested relief. Accordingly, the Court denies Qualcomm’s motion for an 6 anti-suit injunction. 7 A. Anti-suit injunctions 8 “Courts derive the ability to enter an anti-suit injunction from their equitable 9 powers.” E. & J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984, 989 (9th Cir. 10 2006). Anti-suit injunctions “allow the court to restrain a party subject to its jurisdiction 11 from proceeding in a foreign court in circumstances that are unjust.” Id. The injunction 12 thus operates in personam. Id. The court enjoins the claimant, not the foreign court. Id. 13 Although the district court has the power to enjoin a party from proceeding with a suit in 14 a foreign country, the power should be used sparingly. Microsoft, 696 F.3d at 881. 15 A three-part inquiry governs a district court’s assessment of the propriety of an 16 anti-suit injunction. Id. First, the court must evaluate “whether or not the parties and the 17 issues are the same, and whether or not the first action is dispositive of the action to be 18 enjoined.” Applied Med. Distrib. Corp. v. Surgical Co., 587 F.3d 909, 914 (9th Cir. 19 2009). Second, the court must assess “whether at least one of the so-called ‘Unterweser 20 factors’ applies.” Microsoft, 696 F.3d at 881. Third, the court must inquire into whether 21 the impact on comity is tolerable. Id. 22 The Unterweser factors were first articulated by the Fifth Circuit in In re 23 Unterweser Reederei GMBH, 428 F.2d 888, 896 (5th Cir. 1970), aff’d on reh’g, 446 F.2d 24 907 (5th Cir. 1971) (en banc) (per curiam), rev’d on other grounds sub nom. M/S Bremen 25 v. Zapata Off–Shore Co., 407 U.S. 1 (1972). The Ninth Circuit adopted the Fifth 26 Circuit’s decision in Unterweser as instructive in Seattle Totems Hockey Club, Inc. v. 27 Nat’l Hockey League, 652 F.2d 852 (9th Cir. 1981) and has since held that “any of the 28 Unterweser factors” may justify anti-suit injunctive relief. Microsoft, 696 F.3d at 882 & 11 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8332 Page 12 of 34 1 n.9. The four Unterweser factors are as follows: whether the foreign litigation would (1) 2 frustrate a policy of the forum issuing the injunction; (2) be vexatious or oppressive; (3) 3 threaten the issuing court’s in rem or quasi in rem jurisdiction; or (4) prejudice other 4 equitable considerations. Id. at 882 (quoting Gallo, 446 F.2d at 990). Thus, so long as 5 one of these factors applies, a court may grant an anti-suit injunction. 6 7 8 B. The issues are not the same and the U.S. action will not dispose of the foreign actions Whether or not the parties and issues are the same is a functional inquiry. 9 Microsoft, 696 F.3d at 882 (quoting Applied Med., 587 F.3d at 915). There is no dispute, 10 here, that the parties in the U.S. and foreign actions are functionally the same. The focus 11 of the Court’s inquiry, therefore, is on whether the issues are functionally the same. 12 Functional similarity depends upon whether “all the issues in the foreign action can be 13 resolved in the local action.” Id. at 832-33 (internal punctuation omitted). The issues 14 “need not be ‘precisely and verbally identical,’ as ‘the verbal form of laws in different 15 countries will inevitably differ.’” Id.; see also Applied Med., 587 F.3d at 915 (“. . . . 16 requiring issues to be precisely and verbally identical would lead to counterproductive, 17 and perhaps unintended, results.”). Rather, “the crux of the functional inquiry in the first 18 step of the analysis is to determine whether the issues are the same in the sense that all 19 the issues in the foreign action . . . can be resolved in the local action.” Applied Med., 20 587 F.3d at 915. 21 1. Qualcomm’s position 22 Qualcomm argues that the issues in the U.S. and foreign actions are the same for 23 purposes of an anti-suit injunction because “[w]hether Qualcomm has complied with its 24 contractual FRAND obligations as to Apple is squarely before this Court and is raised 25 repeatedly throughout Apple’s foreign complaints.” Dkt. No. 92-1 at 18. Given the 26 parties’ inability to agree on FRAND terms for Qualcomm’s global SEP portfolio, 27 “Qualcomm has asked this Court to declare that Qualcomm has satisfied and discharged 28 its FRAND commitments as to Apple or, in the alternative, to declare the FRAND royalty 12 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8333 Page 13 of 34 1 terms for Qualcomm’s global portfolio of cellular SEPs that it has offered to Apple.” Id. 2 at 20. Thus, Qualcomm contends, “This global determination will resolve the FRAND 3 issues between Apple and Qualcomm in Apple’s foreign lawsuits.” Id. 4 As to the non-FRAND issues raised in Apple’s foreign actions, Qualcomm argues 5 that those, too, should be enjoined because they are “tied to Qualcomm’s FRAND 6 obligations” and will become “moot” by resolving the parties’ global licensing dispute. 7 Id. at 22-23. The antitrust and patent claims included in Apple’s foreign actions will 8 become moot, Qualcomm contends, because the foreign patent and antitrust claims 9 “depend on the determination of the core FRAND questions as between Apple and 10 Qualcomm” currently before this Court. Dkt. No. 114 at 8-9. In other words, and as 11 Qualcomm articulated at the August 18, 2017 hearing, Apple’s foreign claims and 12 arguments will “evaporate because they are all premised on the notion that they can’t get 13 to our technology under FRAND terms.” Transcript, Dkt. No. 122 at 52. 14 2. Functional similarity in the Ninth Circuit 15 To understand why Qualcomm’s position on the functional similarity of the U.S. 16 and foreign claims is unpersuasive, the Court must first review those cases that have 17 passed the Ninth Circuit’s threshold inquiry. Qualcomm would have this Court conclude 18 that the FRAND claims that Apple has asserted in this action, along with Qualcomm’s 19 global FRAND counterclaim, dispose of all of the claims in Apple’s foreign suits, 20 including Apple’s anticompetitive and patent claims. Such a conclusion, however, does 21 not follow from the Ninth Circuit’s reasoning in its most recent anti-suit cases, including 22 its decision in Microsoft v. Motorola, upon which Qualcomm’s position heavily relies. 23 The Court will thus address these cases first. 24 Prior to the Microsoft decision, the two seminal cases on anti-suit injunctions were 25 Gallo and Applied Medical. In Gallo, the plaintiff, Gallo, moved to enjoin the defendant, 26 Andina, from proceeding with foreign litigation in Ecuador. 446 F.3d at 986-87. Gallo, a 27 large California winery, had entered into a distributorship agreement with Andina, an 28 Ecuadorian wine and liquor distributor, that contained a forum-selection and choice of 13 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8334 Page 14 of 34 1 law clause in favor of California. Id. at 987. Subsequently and after a number of 2 disputes arose concerning late shipments and the exclusivity of Andina’s distributorship, 3 Andina filed suit in Ecuador alleging that Gallo had breached the distributorship 4 agreement under Ecuadorian law. Id. Some weeks later, Gallo filed suit in California 5 state court, and the case was removed to federal district court. Id. at 988. Thereafter, 6 Gallo moved the district court for a preliminary injunction preventing Andina from 7 proceeding with its litigation in Ecuador. Id. at 986-87. Ultimately, the district court 8 denied the injunction “because the California and Ecuador cases arose from different 9 acts” and because “enjoining the Ecuador action would deprive it [Andina] of its right to 10 pursue its claims under Ecuadorian law.” Id. at 991. 11 On appeal, the Ninth Circuit disagreed with the district court’s reasoning regarding 12 the legal differences between the two cases. Whereas the district court held that the suits 13 were distinct because they arose under different laws, the Gallo court held that the issues 14 were, in fact, functionally the same because both suits arose out of the same alleged 15 breach of the distributorship agreement. See id. The Gallo court moreover noted that 16 because the distributorship agreement contained a choice of law clause, it was not even 17 clear that Andina had the right to seek a remedy under Ecuadorian law. Id. In addition, 18 and in the section addressing whether any public policy weighed toward granting an anti- 19 suit injunction, the Gallo court held that the public policy in favor of enforcing forum- 20 selection clauses further justified enjoining the foreign action. See id. at 991-93. 21 Accordingly, the Ninth Circuit reversed the district court’s opinion with instructions to 22 grant what it deemed to be a “paradigmatic case for a preliminary anti-suit injunction.” 23 Id. at 995. 24 The Ninth Circuit’s similarity-of-issues inquiry in Applied Medical turned even 25 more explicitly on the parties’ forum-selection and choice of law clause. In Applied 26 Medical, the plaintiff was a California corporation that sold surgical supply products and 27 the defendant was a Netherlands limited liability company that purchased plaintiff’s 28 products for distribution in Europe. 587 F.3d at 911. Like the parties in Gallo, the 14 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8335 Page 15 of 34 1 Applied Medical parties had signed a distributorship agreement that included a forum- 2 selection clause in favor of California and its laws. Id. Later on, a dispute arose after the 3 plaintiff, Applied, notified the defendant, Surgical, that it would be exercising its right 4 not to renew the distributorship agreement. Id. at 912. In response, Surgical asserted that 5 any failure to renew the agreement would entitle it to compensation under the Belgian 6 Act of 1961. Id. Thereafter, Applied filed a complaint in federal district court seeking 7 declaratory relief and Surgical filed suit in Belgium a month later. Id. Both lawsuits 8 concerned whether Applied owed Surgical pre-termination damages given the terms of 9 their contract. Id. at 912-13. 10 Below, the district court had held that the U.S. and foreign suits were not 11 functionally the same because the Belgian claims were “potentially broader” than the 12 U.S. claims and, therefore, did not necessarily turn on the termination of the 13 distributorship agreement. Id. at 913. The Applied Medical court, however, found this 14 reasoning to be in error because the U.S action was nonetheless dispositive of the foreign 15 action. “We hold that the present action is dispositive of the Belgian action because all of 16 the claims in the Belgian action arise out of the Agreement, are subject to the forum 17 selection clause, and therefore must be disposed of in the California forum if at all.” Id. 18 at 916 (internal citations omitted). In other words, the Applied Medical court concluded 19 that the issues were functionally the same because the domestic action, via the forum- 20 selection clause, would dispose of all the issues in the foreign action. Id. at 915 (“ . . . to 21 the extent the domestic action is capable of disposing of all the issues in the foreign 22 action and all the issues in the foreign action fall under the forum selection clause, the 23 issues are meaningfully ‘the same.’”). 24 In Microsoft, the Ninth Circuit addressed for the first time what functionally 25 similar claims look like absent a forum-selection clause. Microsoft, 696 F.3d at 882 26 (“Although the contract at issue in this case does not contain a forum-selection clause, we 27 are nevertheless informed by Applied Medical’s emphasis on the functional character of 28 the threshold similarity-of-issues inquiry.”). The dispute between the Microsoft parties, 15 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8336 Page 16 of 34 1 unlike the Gallo and Applied Medical parties, did not arise from a contract executed 2 between the plaintiff and the defendant. Rather, it arose out of an agreement entered into 3 by the defendant, Motorola, and two standard-setting organizations, the International 4 Telecommunications Union (“ITU”) and the Institute of Electrical and Electronics 5 Engineers (“IEEE”). Id. at 875-76. Motorola, like Qualcomm, had made written 6 representations to a standard-setting organization promising to offer worldwide licenses 7 to its SEPs on RAND terms — that is reasonable and non-discriminatory terms. See id. 8 at 876. Microsoft, the plaintiff, later sued Motorola in district court alleging that 9 Motorola had breached its contract with the SSOs by offering Microsoft a global SEP 10 license that was non-RAND. Id. at 877-78. Microsoft posited that it had standing to 11 assert such a claim because it was a third-party beneficiary of Microsoft’s contractual 12 obligations to the ITU and IEEE. Id. at 878. 13 Months after the U.S. action commenced, Motorola filed suit against Microsoft in 14 Germany alleging that Microsoft was infringing upon two of Motorola’s German 15 standard-essential patents. Id. at 879. After reviewing the positions of the parties, the 16 German court rejected Microsoft’s key contention that it could enforce Motorola’s 17 RAND commitment to the ITU because German law does not recognize third-party 18 contractual rights. Id. As such, and having ultimately found that Microsoft was 19 infringing upon Motorola’s German SEPs, the German court issued an injunction 20 prohibiting Microsoft from marketing or selling any of its infringing products in 21 Germany. Id. 22 In the meantime and while the German court’s decision was still pending, 23 Microsoft asked the U.S. district court to enjoin Motorola from enforcing any injunction 24 obtained from the German court. Microsoft, 871 F. Supp. 2d at 1100. In so doing, 25 Microsoft argued that an anti-suit injunction was appropriate because the relief that 26 Motorola sought in the foreign action was “squarely before” the district court. 27 Ultimately, the district court agreed. After evaluating Microsoft’s request under the 28 three-part Applied Medical rubric, it concluded that the issues were functionally the same 16 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8337 Page 17 of 34 1 because whether injunctive relief was an appropriate remedy for infringement of 2 Motorola’s SEPs depended upon the district court’s adjudication of the parties’ 3 contractual obligations. See id. at 1099. As such, the court concluded, and because the 4 district court “in no way enjoined Motorola from pursuing the German Action” and 5 because it “in no way prohibited further proceedings in Germany,” the court granted what 6 it deemed to be a very “limited” injunction. Id. at 1100. 7 The Ninth Circuit approved of this reasoning on appeal. In its opinion, the 8 Microsoft court emphasized that the district court was correct to issue the injunction 9 because it “[wa]s not enforcing German patent law but, rather, the private law of the 10 11 12 13 14 contract between the parties.” Id. at 884. . . . the district court concluded that the pending contract action before it would be dispositive of the German patent action, because the European Patents at issue in the German Action were included in Motorola’s October 29 Letter offering a worldwide license for Motorola’s H.264 Standardessential patents, and because Motorola contracted with the ITU to license the European Patents on RAND terms to all applicants on a worldwide basis. 15 16 Id. at 880 (emphasis in original) (internal citations omitted). Accordingly and because 17 “there is no reason a party may not freely agree to reservations or limitations on rights 18 that it would have under foreign patent law (or any other rights that it may have under 19 foreign law),” the Microsoft court held that Motorola’s licensing commitment to the ITU 20 prevented it from seeking injunctive relief against infringement. Id. at 884. 21 3. The import of the decision in Microsoft 22 Qualcomm argues that the Ninth Circuit’s decision in Microsoft is “squarely on 23 point” and governs the instant anti-suit injunction. Dkt. No. 92-1 at 7-8. This is so, 24 Qualcomm avers, because here, like in Microsoft, the parties have asked the Court to 25 resolve their global FRAND dispute after being unable to reach an agreement during 26 27 28 17 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8338 Page 18 of 34 1 negotiations.5 Id. at 8. As such, Qualcomm argues, just as the anti-suit injunction was 2 necessary in Microsoft to allow the “district court to resolve the global FRAND issues,” it 3 is likewise necessary here to enjoin Apple’s foreign actions so that they cannot “impede 4 this Court’s ability to resolve the issues before it.” Id. Qualcomm’s analogy to Microsoft is specious. While Microsoft and the instant 5 6 matter undoubtedly share the same general set of circumstances, key differences between 7 the cases overpower any superficial similarities. In Microsoft, the court enjoined the 8 party — that is, Motorola — that had made the binding commitment to the standard- 9 setting organization. This distinction is legally significant. Just as the parties in Gallo 10 and Applied Medical entered into a binding forum-selection and choice-of-law clause, 11 Motorola entered into a binding commitment to offer licenses to its patented technology 12 on RAND terms. In exchange for having its SEPs incorporated into the ITU standard, 13 Motorola promised the ITU that it would license its SEPs to all willing licensees. By 14 striking this bargain, therefore and according to the Microsoft district court, Motorola 15 willingly limited itself to one of two alternatives: either make Microsoft, and all other 16 willing licensees, a RAND offer through bilateral negotiation or after adjudication by the 17 courts. Microsoft, 871 F. Supp. 2d at 1099. In other words, by making a FRAND 18 19 The Court observes that Apple’s complaint does not ask for a worldwide FRAND determination. That relief is found only in Qualcomm’s counterclaim. Notwithstanding this fact, Qualcomm argues that Apple’s complaint nevertheless places the parties’ global FRAND dispute in issue because the parties’ failed licensing negotiations precipitated the current dispute. Accordingly and because Apple’s complaint has placed the global FRAND dispute in issue, Qualcomm avers that this Court should resolve the global FRAND issues between Apple and Qualcomm. Dkt. No. 92-1 at 20. At oral argument, it became apparent that Apple’s position is that this Court does not have the authority to adjudicate Qualcomm’s counterclaim for a global FRAND determination because Apple is under no obligation to accept Qualcomm’s license offer regardless of whether the offer is FRAND and because Apple has not consented to be bound by any global FRAND determination. Transcript, Dkt. No. 122 at 41-47. As such, Apple argues that any decision by this Court setting a global FRAND rate would be an advisory opinion. See generally Microsoft Corp. v. Motorola, Inc., 795 F.3d 1024, 1039 n.13 (9th Cir. 2015); TCL Commc’ns Tech. Holdings Ltd. v. Telefonaktenbologet LM Ericsson, 2014 WL 12588293, *5 (C.D. Cal. Sept. 30, 2014); Realtek Semiconductor Corp. v. LSI Corp., 2012 WL 4845628, *5 (N.D. Cal. Oct. 10, 2012). The Court, however, need not decide this question to resolve the instant motion. Regardless of whether or not Qualcomm’s counterclaim is proper, the anti-suit injunction fails. 5 20 21 22 23 24 25 26 27 28 18 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8339 Page 19 of 34 1 commitment to the ITU, Motorola surrendered its right to seek infringement actions 2 against a willing licensee, including Microsoft, because, when all was said and done, 3 Motorola had to offer Microsoft a RAND license. 4 Understood in this way, the Microsoft court applied the same principle articulated 5 in Gallo and Applied Medical by similarly holding the enjoined party to its contractual 6 bargain. Motorola, through its RAND commitment to the standard-setting organization, 7 promised to license, on RAND terms, any entity that wanted to practice the relevant 8 standard. In so doing and according to the Microsoft court, Motorola gave up the right to 9 pursue infringement actions except against an unwilling licensee. It was, therefore, 10 plainly improper, vexatious, and duplicative for Motorola to bring an infringement action 11 in a foreign court for a patent that Microsoft had wanted to license, but could not, due to 12 Motorola’s failure to make a RAND offer. 13 This reasoning, however, does not translate into the instant set of circumstances. 14 Here, Qualcomm seeks to enjoin Apple from proceeding with foreign litigation based 15 upon Apple’s mere invitation to deal with Qualcomm. Apple, unlike Qualcomm, has not 16 made any binding commitment to ETSI.6 And Apple does not have a licensing 17 agreement with Qualcomm. The only contractual rights and obligations implicated by 18 this lawsuit are Apple’s rights and obligations as a third-party beneficiary of Qualcomm’s 19 promises to ETSI. Stated differently, Apple, unlike Motorola and Qualcomm, has made 20 no binding commitment that limits the relief that it may seek or how it may enforce that 21 relief. Whereas Qualcomm’s negotiations with Apple are constrained by its contractual 22 obligations to ETSI, Apple is free to decline or accept Qualcomm’s offer regardless of 23 whether it complies with FRAND.7 24 25 26 27 28 6 The Court observes that Apple is a member of ETSI. Qualcomm, however, has made no argument that through its membership, Apple has somehow agreed to circumscribe or limit how it may seek to enforce other members’ obligations to ETSI. 7 Of course, if Apple wishes to enforce Qualcomm’s commitment to ETSI it must demonstrate that it was a willing licensee and, therefore, a proper third-party beneficiary. The nature of that obligation, however, is different in kind than Qualcomm’s obligation to ETSI. If Apple is not a willing licensee, it 19 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8340 Page 20 of 34 1 In light of these legal rights and obligations, and notwithstanding Qualcomm’s 2 protestations to the contrary, the Microsoft holding is not “squarely on point.” The 3 Microsoft court concluded that the U.S. and foreign actions were functionally the same 4 because Motorola’s contractual commitment to the standard-setting organization 5 effectively mooted any right Motorola had to bring an action for infringement in a foreign 6 court. The same cannot be said of Apple’s U.S. and foreign actions. Apple has made no 7 binding commitment that limits where it can bring a lawsuit, under what laws, or how it 8 can enforce its third-party beneficiary rights under ETSI. As a baseline matter, therefore, 9 Apple is free to exercise its rights in the United Kingdom, China, Taiwan, and Japan 10 under those countries’ laws. Accordingly, the similarity-of-issues principle that 11 underpinned Gallo, Applied Medical, and Microsoft does not dictate the outcome of the 12 threshold similarity-of-issues inquiry here. 13 4. The U.S. action is not dispositive of the foreign actions 14 With this background in mind, the Court now turns to the question of whether this 15 Court’s adjudication of the claims before it will be dispositive of Apple’s foreign actions. 16 Qualcomm, of course, argues that this Court’s “ruling on Qualcomm’s FRAND 17 obligation will be dispositive of Qualcomm’s obligations as to Apple (and the extent to 18 which they were satisfied) worldwide.” Dkt. No. 92-1 at 7. More specifically, 19 Qualcomm asserts that this Court’s “binding, global FRAND determination as to the 20 obligations owed between Apple and Qualcomm and the extent to which they were 21 fulfilled . . . will resolve issues at the core of the foreign actions[.]”8 Id. at 25. 22 Apple begs to differ. Apple contends that even the global FRAND issue will not 23 dispose of the foreign actions because Apple’s foreign suits have challenged the validity 24 and exhaustion of Qualcomm’s foreign patents, under foreign patent law, and have 25 26 27 28 simply loses the right to enforce Qualcomm’s contract with ETSI. Yet if Qualcomm fails to offer a FRAND license, it has breached its contractual obligations. 8 The Court again observes that Apple disputes that it would be bound by any global FRAND determination made by this Court because it does not have to accept a license from Qualcomm. 20 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8341 Page 21 of 34 1 additionally challenged Qualcomm’s licensing practices under foreign competition and 2 anti-trust laws. Dkt. No. 108 at 21. Apple moreover argues that this Court does not have 3 the authority to make determinations regarding the validity of U.K., Chinese, Japanese, or 4 Taiwanese patents under their laws, and that any antitrust relief sought under U.S. law 5 could not apply out of the U.S. territory. See Dkt. No. 108 at 21-23. 6 Qualcomm’s response to these legitimate concerns is lacking and otherwise 7 unconvincing. In its reply brief, Qualcomm emphasizes that Apple’s arguments miss the 8 mark because Qualcomm’s contractual FRAND obligation applies worldwide. Thus, it 9 argues, “while a U.S. antitrust claim may concern only U.S.-related activity, the 10 contractual FRAND inquiry necessarily concern global activities.” Dkt. No. 114 at 8. 11 With regards to Apple’s patent-based contentions it argues along similar veins that 12 “Because the foreign patent claims are intertwined with the same FRAND issues before 13 this Court, the U.S. Action will dispose of core issues in the foreign patent claims.” Id. 14 (footnote omitted). Qualcomm’s response to Apple’s concerns at oral argument likewise 15 lacked specificity. When the Court directly asked Qualcomm to explain how the U.S. 16 action would dispose of Apple’s anticompetitive claims in the foreign suits, Qualcomm 17 simply reiterated, without explaining, that the parties’ FRAND dispute is a worldwide 18 contractual question and that that contractual FRAND question will moot the foreign 19 actions as was the case in Microsoft. See Transcript, Dkt. No. 122 at 9-12, 15-17. 20 Yet what Qualcomm left out of its response, both in its briefing and at oral 21 argument, is telling. Apple has asserted anticompetitive-based causes of action under 22 Article 102 of the Treaty of the Functioning of the European Union, Article 54 of the 23 Agreement on the European Economic Area, Section 18 of the U.K. Competition Act of 24 1998, Japan’s Antimonopoly Act, the Chinese Anti-Monopoly Law, and the Taiwan Fair 25 Trade Law. Qualcomm, however, has not even attempted to explain (other than relying 26 on Microsoft) why this Court’s findings on Qualcomm’s FRAND obligations to ETSI 27 would be dispositive of Apple’s anticompetition claims under these laws. Qualcomm 28 does not argue that the foreign courts are bound by this Court’s FRAND determination. 21 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8342 Page 22 of 34 1 In fact, it does not even explain why this Court’s global FRAND determination would 2 moot Apple’s suit challenging purely foreign conduct and foreign effects. Qualcomm has 3 wholly failed to demonstrate how an adjudication on the merits, here, would dispose of 4 Apple’s anticompetitive claims abroad. Accordingly and for the reasons previously 5 stated, this Court is not persuaded that even resolution of Qualcomm’s global contractual 6 obligations to ETSI will dispose of Apple’s competition-based causes of action arising 7 under foreign laws. 8 9 What is more, Apple has also asserted patent-based causes of action alleging that Qualcomm’s U.K. SEPs are invalid and exhausted under U.K. law, that Qualcomm’s 10 Chinese SEPs are invalid and exhausted under Chinese law, that Qualcomm’s Japanese 11 SEPs are invalid and exhausted under Japanese law, and that Qualcomm’s Taiwanese 12 SEPs are invalid and exhausted under Taiwanese law. But yet again, other than pointing 13 to the outcome in Microsoft, Qualcomm has failed to adequately explain how this Court’s 14 adjudication of Qualcomm’s global contractual FRAND commitment to ETSI would 15 moot Apple’s foreign patent claims. Apple is not obligated to accept a worldwide 16 FRAND license from Qualcomm. Apple, therefore, has not contracted away its right to 17 ask foreign courts for declarations that their products do not infringe upon Qualcomm’s 18 SEPs because those SEPs are either non-essential, invalid, or exhausted under foreign 19 law. Accordingly and even if this Court ultimately sets a worldwide FRAND rate for 20 Qualcomm’s global portfolio, Apple’s patent claims for invalidity and exhaustion under 21 foreign law as to foreign patents will remain unaddressed. 22 As such and in the absence of any argument explaining how the U.S. action 23 specifically moots each of the distinct claims asserted in Apple’s foreign actions, the 24 Court concludes that Qualcomm has failed to demonstrate that the issues in Apple’s U.S. 25 and foreign actions are functionally similar in the sense that an adjudication on the merits 26 here would dispose of the claims abroad. The Court moreover concludes that even if 27 Qualcomm had demonstrated that the issues in the U.S. action and the foreign actions are 28 22 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8343 Page 23 of 34 1 “functionally similar,” the Court’s ultimate decision would not change as the Court 2 additionally finds that the remaining two anti-suit factors are also absent. 3 C. None of the articulated Unterweser factors applies 4 The second step in deciding an anti-suit injunction requires the Court to assess 5 whether the foreign litigation would (1) frustrate a policy of the forum issuing the 6 injunction; (2) be vexatious or oppressive; (3) threaten the issuing court’s in rem or quasi 7 in rem jurisdiction; or (4) prejudice other equitable considerations. Microsoft, 696 F.2d 8 at 881-82. Only one of these factors needs to be met in order to weigh in favor of 9 granting an anti-suit injunction. Id. at 885. Qualcomm contends that at least two of the 10 Unterweser factors applies: namely, the second, that Apple’s foreign actions are 11 vexatious and oppressive, and the fourth, that Apple’s simultaneous U.S. and foreign 12 proceedings prejudice other equitable considerations.9 Dkt. No. 92-1 at 25. 13 1. Apple’s foreign suits are not vexatious or oppressive 14 A party demonstrates that suit is “vexatious” if it can show that the suit was 15 “without reasonable or probable cause or excuse; harassing; annoying.” Microsoft, 696 16 F.2d at 886. Qualcomm avers that Apple’s foreign lawsuits are vexatious because they 17 are duplicative and because the duplicative nature of the lawsuits demonstrates that Apple 18 seeks to harass Qualcomm in order to gain leverage in future licensing negotiations. Dkt. 19 No. 92-1 at 26-27. As such, Qualcomm argues, the “additional foreign actions [that] 20 Apple has brought . . . can only be described as vexatious.” Id. at 27. The record before the Court, however, does not support Qualcomm’s contentions. 21 22 For one, Apple filed the U.S. action in January 2017 and it filed the U.K., Japanese, 23 Chinese, and Taiwanese actions one after the other between January 2017 and April 24 2017. All of Apple’s foreign actions, therefore, were filed before the parties’ pleadings 25 26 9 27 28 The Court observes that it is telling that the two factors that Qualcomm has identified as applicable are the two factors deemed less important elsewhere. See, e.g., Ibeto Petrochemical Indus. Ltd. v. M/T Beffen, 475 F.3d 56, 64 (2d Cir. 2007) (concluding that the first and third Unterweser factors hold greater significance than the second and fourth). 23 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8344 Page 24 of 34 1 were finalized and before this Court ever made a ruling on the merits. As such, this is not 2 a case where the delay between the filing of the first action and the subsequent actions 3 raises concerns about forum-shopping or harassing motive. See Microsoft, 871 F. Supp. 4 2d at 1100 (finding vexatious duplication where Motorola filed a single foreign action 5 alleging infringement of two patents six months after Microsoft had filed a U.S. action 6 seeking to resolve Microsoft’s dispute with Motorola concerning those same patents and 7 one hundred additional patents). 8 9 Two, Apple has submitted declarations from each of their respective representatives before the U.K., Japanese, Chinese, and Taiwanese courts explaining why 10 the foreign claims that Apple has filed and the relief that it seeks under foreign laws are 11 not duplicative of the claims and relief sought in the U.S. action. See, e.g., Wang Decl. 12 ¶¶ 6-7 (“The relief that Apple seeks is primarily in the form of injunctive relief, focused 13 on ensuring that Qualcomm ceases its licensing practices and terms that are in violation 14 of the Taiwan Fair Trade Act and/or constitute abuse of patents rights in Taiwan. To the 15 extent Apple is seeking damages for past excessive royalties paid to Qualcomm, those 16 damages would be limited to royalties paid for products sold in Taiwan, to the extent 17 such royalties violate the Taiwan Fair Trade Act.”) (emphasis in original); Yang Decl. ¶ 5 18 (“The claims in the China Actions are focused on Chinese patents, Chinese markets, and 19 harm to competition in China. None of the China Actions seeks a determination of what 20 a fair, reasonable, and non-discriminatory (“FRAND”) royalty would be for Qualcomm’s 21 global patent portfolio.”) (emphasis in original); Yakura Decl. ¶ 2 (“. . . Apple has filed 22 patent and antitrust cases in Japan, focusing on Japanese patents and harm in Japanese 23 markets. None of those actions request the court to determine what a fair, reasonable, 24 and non-discriminatory (“FRAND”) royalty would be for Qualcomm’s patents on a 25 global portfolio-wide basis.”); Harrison Decl. ¶ 9 (“. . . the claims that Apple filed in the 26 United States . . . are neither dispositive of the UK proceedings, nor do the US 27 Proceedings and the UK Proceedings overlap in such a way that the outcome of the US 28 Proceedings would resolve the issues and claims raised in the UK proceedings.”). 24 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8345 Page 25 of 34 1 In light of these declarations, the Court concludes that any duplication evident in 2 the U.S. actions and foreign actions is not so “unreasonable” that it suggests motive to 3 harass or annoy. Although it is true that Apple’s foreign actions attack the same conduct 4 underlying the U.S. action, the Court does not find that Apple acted unreasonably by 5 filing the separate foreign actions. Apple’s declarations make evident that it has sought 6 to challenge Qualcomm’s patent licensing practices and anticompetitive conduct territory 7 by territory. While Qualcomm may object to this litigation strategy as duplicative, the 8 Court will not conclude that Apple’s exercise of its rights under foreign laws is vexatious. 9 See 1st Source Bank v. Neto, 861 F.3d 607, 614 (7th Cir. 2017) (concluding that it was 10 not vexatious for a party to pursue parallel litigation in Brazil where the party was 11 exercising its contractual rights to protect its interests under foreign law). Because 12 antitrust laws differ significantly from jurisdiction to jurisdiction, Apple had a legitimate 13 reason to file separate foreign actions. See F.Hoffman-La Roche Ltd. v. Empagran S.A., 14 542 U.S. 155, 167-68 (wherein foreign governments advocated for the Supreme Court to 15 hold that U.S. antitrust law did not extend to the disputed conduct because their 16 countries’ remedial schemes differed significantly from the U.S. system). 17 Furthermore, the Court concludes that Apple also had and has a reasonable interest 18 in challenging Qualcomm’s patents forum by forum. At oral argument, Apple 19 emphasized that Qualcomm’s practice of licensing its SEPs on a portfolio-level basis 20 insulates Qualcomm from challenges to the validity or essentiality of its patents because 21 licensees do not know what patents are included in Qualcomm’s portfolio.10 22 Accordingly, Apple brought patent claims in the various foreign suits as a means to 23 verify that Qualcomm’s various patents are, in fact, valid and essential before Apple 24 agrees to license Qualcomm’s global patent portfolio. See id. at 60-61 (“We want to look 25 at the patents before we pay some extraordinary amount[.]”). That Apple wants to 26 27 In its 2016 decision, the Korea Fair Trade Commission (“KFTC”) found that this practice violated Qualcomm’s FRAND commitment to ETSI. See infra Part D. 10 28 25 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8346 Page 26 of 34 1 litigate any alleged infringement of Qualcomm’s SEPs before it accepts a global offer to 2 license Qualcomm’s SEP portfolio, therefore, is yet another reasonable justification for 3 filing the foreign actions. After all, and as neither party disputes, this Court cannot 4 adjudicate or enforce the patent law of the U.K., China, Japan or Taiwan. See Microsoft, 5 696 F.3d at 884 (“To be sure, if the district court had based its injunction in an 6 expectation that U.S. patent claims could dispose of German patent claims, then it would 7 have erred.”). As such and in light of these legitimate considerations, the Court 8 concludes that any duplication between Apple’s U.S. action and foreign actions was not 9 so unreasonable that it was vexatious and designed to only harass and annoy. 10 2. “Other equitable considerations” do not justify the relief sought 11 Next, Qualcomm contends that Apple’s foreign lawsuits prejudice “other equitable 12 considerations” because (1) they are a pretext for withholding royalties to gain leverage 13 in licensing negotiations; (2) they threaten to delay a speedy and efficient resolution of 14 the FRAND issues; (3) they will cause substantial inconvenience, unnecessary expense 15 and a duplication of efforts; and (4) they could result in inconsistent rulings or a race to 16 the judgment. Dkt. No. 92-1 at 27-29. The Court will address each of these assertions in 17 turn. 18 Qualcomm argues that the Court should conclude that Apple’s foreign actions are 19 pretext for withholding royalties because “Apple has told Qualcomm that it plans to 20 withhold from the Contract Manufacturers payments for all royalties—hundreds of 21 millions of dollars each calendar quarter—until the global litigation has been resolved.” 22 Id. at 27; see also Rogers Decl. ¶ 12, Dkt. No. 92-4 at 5 (stating that Qualcomm received 23 a letter from Apple on April 25, 2017, stating that “it will continue to withhold 24 Qualcomm royalties for the indefinite future . . . until Apple’s litigation against 25 Qualcomm ends.”). The Court, however, finds that the record before the Court does not 26 support any assertion of pretextual motive. For all the reasons stated above, the Court 27 finds that Apple has legitimate reasons for pursuing parallel actions in the U.S. and 28 abroad, including Apple’s interest in vindicating its rights under foreign anticompetition 26 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8347 Page 27 of 34 1 and patent law. Accordingly, the Court rejects Qualcomm’s contention as being 2 unsupported by the facts before the Court. 3 Second, Qualcomm argues that Apple’s foreign actions will “necessarily prolong 4 the dispute and delay any final resolution.” Dkt. No. 92 at 28. The Court is unpersuaded 5 by the conclusory nature of this argument. The Court will hear the parties’ respective 6 motions to dismiss at the end of September 2017. The Court will hold a claim 7 construction hearing on March 22, 2018. Dkt. No. 117. All discovery, including expert 8 discovery, will conclude on May 11, 2018 and the final pre-trial conference will be held 9 on September 28, 2018. Dkt. No. 116. Given that the Court had already set a number of 10 key litigation dates and in light of the fact that Qualcomm has offered no reason why this 11 timeline will necessarily be delayed by the parallel proceedings, the Court declines to 12 find that the need for a speedy and efficient determination of this case requires enjoining 13 Apple’s foreign suits and overcomes Apple’s legitimate interest in pursuing those suits. 14 Third, Qualcomm argues that allowing the foreign actions to proceed will “lead to 15 substantial inconvenience, unnecessary expense, and an absurd duplication of effort.” 16 Dkt. No. 92 at 28. More specifically, Qualcomm contends that parallel proceedings will 17 force the parties to “shuttle witnesses back and forth across the globe for duplicative 18 testimony” and will “waste judicial resources” as Apple “uses courts around the world as 19 sounding boards for its position on the same issue.” Id. The Court likewise finds this 20 contention to be without merit. 21 As an initial matter and for the reasons previously stated, the Court does not find 22 that judicial resources will be wasted on the foreign actions. Apple’s foreign suits raise 23 legitimate questions under foreign anticompetition and patent law that are distinct from 24 the claims before the Court. Accordingly, the Court does not find that allowing the 25 concurrent proceedings to move forward wastes judicial resources. 26 In addition, the Court is also not persuaded that the resulting inconvenience or 27 expense to Qualcomm justifies anti-suit relief. Any defendant who faces parallel 28 litigation in a foreign suit will be inconvenienced. Any defendant who is sued in parallel 27 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8348 Page 28 of 34 1 proceedings will bear the costs of defending themselves in each. Qualcomm, however, 2 has offered no reason why the inconvenience or expense that it will incur as a result of 3 these related proceedings are so extraordinary or substantial that they justify equitable 4 injunctive relief. See China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 36 5 (2d Cir. 1987) (“Since these factors [additional expense and race to judgment] are likely 6 to be present whenever parallel actions are proceeding concurrently, an anti-suit 7 injunction grounded on these additional factors alone would tend to undermine the policy 8 that allows parallel proceedings to continue and disfavors anti-suit injunctions.”). 9 Moreover, and even if Qualcomm had offered such reasons, the Court’s decision 10 would not change. Because Apple’s U.S. and foreign actions are not identical and 11 because the foreign suits assert Apple’s rights under foreign anticompetition and patent 12 law, the Court is not prepared to conclude that any inconvenience or expense is so 13 unnecessary or absurd that it overwhelms Apple’s right to pursue concurrent proceedings. 14 Equity does not demand that a court enjoin a non-identical parallel proceeding simply 15 because it is burdensome to defend oneself. Accordingly and absent any persuasive 16 showing that Qualcomm is uniquely-situated such that it will be substantially 17 inconvenienced and expensed by the concurrent proceedings, the Court concludes that 18 this equitable consideration does not weigh in favor of an anti-suit injunction. 19 Fourth, Qualcomm argues that “Apple’s duplicative lawsuits create a serious risk 20 of inconsistent judgments” and that “Apple’s duplicative lawsuits raise related concerns 21 that Apple is engaged in an improper ‘race to judgment.’” Dkt. No. 92 at 29. The Court 22 disagrees. Both of these arguments ring hollow in light of the record before the Court 23 and the context in which these proceedings have arose. 24 One and for the reasons previously mentioned, because Apple’s U.S. and foreign 25 complaints are sufficiently distinct, they do not raise concerns that Apple is, as 26 Qualcomm says, “test[ing] the waters in each court and then opportunistically rac[ing] to 27 judgment[.]” Id. Apple does not ask this Court for worldwide relief. It has not asked 28 this Court to determine whether Qualcomm’s global license offer complies with FRAND. 28 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8349 Page 29 of 34 1 Rather, it was Qualcomm who counterclaimed for a determination that its worldwide 2 global SEP offer to Apple was FRAND. That Qualcomm asked for this relief, and not 3 Apple, belies Qualcomm’s assertion that Apple’s foreign suits opportunistically seek to 4 litigate the same or overlapping issues in five different jurisdictions. Qualcomm placed 5 global relief on the table, not Apple. Accordingly, the Court is not prepared to find that 6 the threat of granting Qualcomm the relief that it seeks, here, is reason enough to enjoin 7 the otherwise legitimate lawsuits that Apple filed elsewhere. 8 9 Furthermore, the Court is also not persuaded that any risk of inconsistent rulings among the five jurisdictions justifies the extraordinary relief that Qualcomm seeks. 10 Qualcomm suggests that it would be untenable or unfair for it to have to alter its behavior 11 territory by territory in order to comply with potentially inconsistent rulings. Yet 12 Qualcomm has already been the recipient of rulings regarding the anticompetitive nature 13 of its business model that only apply throughout the territory issuing the ruling. Take 14 China for instance. In 2013 the Chinese National Development and Reform Commission 15 (“NDRC”) conducted an investigation into Qualcomm’s licensing and baseband chipset 16 supply practices and their effect on competition in the China markets. Yang Decl. ¶ 13. 17 Upon completion of the investigation, China fined Qualcomm close to $1 billion dollars 18 and Qualcomm issued a Chinese-specific rectification plan in order to comply with the 19 resulting decision. Id. (stating that the rectification plan specifically addressed the 20 royalties paid on Qualcomm’s 3G and 4G standard-essential Chinese patents for devices 21 sold in China); see also Qualcomm’s Answer to First Amended Complaint, Dkt. No. 97 22 ¶ 201. That Qualcomm has already modified its licensing practices and conduct in order 23 to conform to a judicial ruling that only applied to one jurisdiction significantly lessens 24 the weight of Qualcomm’s otherwise conclusory assertion that it would be placed in the 25 “impossible position of attempting to alter is behavior in an attempt to satisfy conflicting 26 rulings” in different countries. Dkt. No. 92 at 29. 27 28 29 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8350 Page 30 of 34 As such, and especially in light of the fact that Apple’s foreign suits are not, as 1 2 Qualcomm contends, identical, the Court concludes that any risk of inconsistent 3 judgments does not weigh in favor of an anti-suit injunction. 4 D. The effect on comity is not tolerable. 5 “Comity is the recognition which one nation allows within its territory to the 6 legislative, executive or judicial acts of another nation, having due regard both to 7 international duty and convenience, and to the rights of its own citizens, or of other 8 persons who are under the protection of its laws.” Gallo, 446 F.3d at 994 (internal 9 citations omitted). “The extension of comity to a foreign judgment is neither a matter of 10 absolute obligation, on the one hand, nor of mere courtesy and good will, upon the 11 other.” Applied Med., 587 F.3d at 920. As such, it is not necessary to “calculate the 12 precise quantum of [an] injunction’s interference with comity,” but rather it is enough to 13 “estimate whether any such interference is so great as to be intolerable.” Microsoft, 696 14 F.3d at 886. The comity inquiry, therefore, is flexible, fact-specific, and context-specific. 15 Id. 16 Qualcomm contends that enjoining the foreign suits will have no impact on comity 17 because “[a]t its core, this is a dispute between two California corporations concerning 18 licensing negotiations that occurred primarily in California.” Dkt. No. 92-1 at 30. Since 19 the key issue in each foreign action is Apple’s “claim as a third-party beneficiary of 20 Qualcomm’s contractual commitment to ETSI” and because no foreign government is 21 involved, Qualcomm argues that there is no negative effect on comity. Id. Stated 22 differently and in Qualcomm’s own words, “Ordering one American corporation to stop 23 pursuing duplicative foreign actions concerning the contractual relationship with another 24 American corporation will have no adverse impact on comity.” Id. 25 Apple argues the opposite. According to Apple, issuing the anti-injunction would 26 plainly offend comity concerns because it would be akin to “forbid[ding] a foreign court 27 from adjudicating legal issues under its own law.” Dkt. No. 108 at 28. Specifically, 28 Apple avers that it would be improper to prevent the foreign courts from adjudicating the 30 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8351 Page 31 of 34 1 infringement and antitrust-related claims or even from delaying adjudication of either 2 type of claim. Id. In reply, Qualcomm emphasizes that the anti-suit injunction does not 3 ask this Court to adjudicate the foreign patent and foreign anti-trust claims, but rather, 4 asks this Court to prevent Apple from litigating “the same private contractual dispute 5 over and over again around the world.” Dkt. No. 114 at 11. As such Qualcomm asserts, 6 and because the “contractual FRAND determination in this action will resolve the claims 7 and issues in the foreign actions based on the same FRAND contract” any “remaining 8 foreign issues can be resolved by the foreign courts in due course, after this Court’s 9 resolution of the global FRAND issues.” Id. (footnote omitted). 10 For many reasons, the Court disagrees that enjoining the foreign suits would have a 11 tolerable impact on comity. Throughout its briefing, Qualcomm emphasizes that this is a 12 “private contractual dispute” between Apple and Qualcomm. Accordingly, and to the 13 extent that private commercial obligations do not implicate public concerns, Qualcomm 14 argues that an anti-suit injunction would have no effect on comity. See Microsoft, 696 15 F.3d at 887 (holding that district court did not abuse its discretion in granting anti-suit 16 injunction because case involved private dispute under Washington state contract law and 17 did not raise any public international issue). Yet given the specific claims raised in 18 Apple’s foreign lawsuits — which include antitrust and patent claims — and given the 19 numerous lawsuits filed against Qualcomm by international bodies, the Court finds it 20 improper to demote this action to no more than a “private contractual dispute.” 21 As Qualcomm reiterated throughout oral argument, Qualcomm’s FRAND 22 commitment to ETSI is global. Indeed, Apple is not the only third-party beneficiary with 23 an interest in enforcing Qualcomm’s contractual obligations to ETSI. ETSI’s IPR policy, 24 in fact, plainly states that any willing licensee is entitled to license Qualcomm’s 25 intellectual property at a FRAND rate. There are, therefore, any number of corporations 26 in China, Japan, the U.K., and Taiwan that are similarly-situated to Apple and that are 27 similarly entitled to benefit from Qualcomm’s FRAND promise to ETSI. Viewed in this 28 31 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8352 Page 32 of 34 1 light, it is far from accurate to say that this is a paradigmatic “private contractual dispute” 2 that only implicates the rights and obligations among Apple and Qualcomm. Moreover and because Qualcomm’s promises to ETSI are global in scope, whether 3 4 Qualcomm is upholding its FRAND commitment has global consequences and is of 5 global significance. Long before Apple ever filed suit in this Court, adjudicative bodies 6 in the countries implicated by this anti-suit injunction began to investigate Qualcomm’s 7 licensing practices.11 In 2009, the Korea Trade Fair Commission imposed a corrective 8 order and fined Qualcomm $208 million dollars “[f]or abusing its dominant position by 9 charging discriminatory royalties and offering conditional rebates.”12 Also in 2009, the 10 Japan Fair Trade Commission issued an order finding that Qualcomm had violated 11 Article 19 of the Anti-Monopoly Act by coercing Japanese manufacturers to accede to a 12 FRAND-encumbered license agreement that guaranteed Qualcomm “royalty-free licenses 13 for the intellectual property rights of the Japanese Manufacturers” and that prevented the 14 Japanese Manufacturers from “assert[ing] their intellectual property rights against 15 Quaclomm[.]”13 In 2014 and as explained in further detail above, the Chinese National 16 Development and Reform Commission concluded that Qualcomm’s licensing practices 17 violated China’s Anti-Monopoly Law. In 2015, the European Commission issued two 18 “Statements of Objections” alleging, among other matters, that Qualcomm abused its 19 dominant position in the baseband chipset market by paying a “major smartphone and 20 tablet manufacturer” significant amounts of money in order to be the company’s 21 22 23 24 25 26 27 28 The following decisions were specifically identified in Apple’s first amended complaint. See FAC ¶¶ 200-06. In its answer, Qualcomm acknowledges the existence of each of these cases, but refers the Court “to the foregoing documents for their contents.” Answer to FAC ¶¶ 200-06. Thus, the Court finds it proper to take judicial notice of the contents of these decisions and the official documents explaining the grounds for the decisions. 12 Qualcomm’s Abuse of Market Dominance, KFTC (July 23, 2009), 3eb1d83cccaf4e6854dd2&rs=/eng/files/data/result/files/bbs/2009/. 13 Cease and Desist Order against Qualcomm Incorporated, JFTC (Sept. 30, 2009), 11 32 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8353 Page 33 of 34 1 exclusive manufacturer of baseband chipsets.14 In 2017, the KFTC issued a decision that 2 specifically found that Qualcomm had violated its FRAND commitment to ETSI by (1) 3 refusing to license rival chipset makers; (2) coercing manufacturers to sign unfair license 4 agreements by linking Qualcomm’s chipset supply with their patent license agreements; 5 (3) and by offering their “comprehensive portfolio license” without “undergoing a 6 reasonable value assessment process.”15 And finally, as of the date of Apple’s complaint, 7 the Taiwanese Fair Trade Commission had begun to actively investigate Qualcomm’s 8 business model as well. FAC ¶ 208; Answer to FAC ¶ 208. 9 That multiple sovereign and international bodies have concluded or alleged that 10 aspects of Qualcomm’s business model are anticompetitive demonstrates that this dispute 11 implicates global public concerns in a way not evident from the record in Microsoft v. 12 Motorola. Through the U.S. and foreign actions, Apple has specifically alleged that 13 Qualcomm’s licensing practices are anticompetitive under U.S. antitrust law and 14 anticompetition laws in the U.K., China, Japan, and Taiwan. That anticompetitive 15 conduct is, moreover and as both parties concede, inextricably intertwined with 16 Qualcomm’s FRAND obligations to ETSI. Enjoining Apple, therefore, from proceeding 17 with its foreign suits, or even just part of them, would effectively deprive the U.K., 18 China, Japan, and Taiwan of its jurisdiction to consider whether licensing agreements that 19 Qualcomm executes within those jurisdictions, have anticompetitive effects in those 20 territories. See China Trade, 837 F.2d at 35-36 (citations omitted) (“The fact that the 21 injunction operates only against the parties, and not directly against the foreign court, 22 does not eliminate the need for due regard to principles of international comity, because 23 24 25 26 27 28 14 Press Release, Antitrust: Commission Sends Two Statements of Objections on Exclusivity Payments and Predatory Pricing to Qualcomm, European Commission (Dec. 8, 2015), 15 KFTC imposes sanctions against Qualcomm’s abuse of SEPs of mobile communications, KFTC (Dec. 28, 2016), 09afad6d4f1cd780d6e8&rs=/eng/files/data/result/files/bbs/2017/. 33 3:17-cv-00108-GPC-MDD Case 3:17-cv-00108-GPC-MDD Document 141 Filed 09/07/17 PageID.8354 Page 34 of 34 1 such an order effectively restricts the jurisdiction of the court of a foreign sovereign[.]”). 2 Yet such a result is intolerable given that numerous foreign bodies, including those slated 3 to adjudicate the foreign suits, have proactively sought to investigate and terminate the 4 anticompetitive effects of Qualcomm’s licensing and patent practices in their respective 5 jurisdictions. 6 In sum, this is not a case where the only assertion of comity is “vague and 7 omnipotent.” See Kaepa, Inc. v. Achilles Corp., 76 F.3d 624, 627 (5th Cir. 1996). The 8 record before the Court demonstrates that the boundaries of this dispute are not limited to 9 the United States. Multiple sovereign states and bodies have posed legal challenges to 10 Qualcomm’s business model on the belief that Qualcomm’s conduct in their respective 11 jurisdictions has an adverse effect on competition in their territories. To issue an anti-suit 12 injunction, therefore, would directly impede upon the ongoing efforts in the U.K., China, 13 Japan, and Taiwan to assess the anticompetitive effects of Qualcomm’s licensing and 14 chip practices on their markets. Accordingly, the Court finds that the impact on comity is 15 not tolerable and weighs against the issuance of an anti-suit injunction. 16 IV. CONCLUSION 17 For the foregoing reasons, and because the Court finds that none of the three anti- 18 suit factors weigh in favor of granting Qualcomm the injunction that it seeks, the Court 19 DENIES Qualcomm’s request for an anti-suit injunction. 20 IT IS SO ORDERED. 21 22 Dated: September 7, 2017 23 24 25 26 27 28 34 3:17-cv-00108-GPC-MDD

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?