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Interdigital vs. Xiaomi: India’s First Anti-Enforcement Injunction Order

04

JUN

2021

The concept of anti-suit injunction and anti-enforcement injunction is gaining prominence worldwide including in India. Recently, the Delhi High Court in Interdigital Technology Corporation vs. Xiaomi Corporation & Ors.[1] granted an anti-enforcement injunction. It was held that a foreign court cannot restrain a party from pursuing its cause before Indian Court when Indian jurisdiction is the only forum competent to adjudicate the claim. In this article, the author will try to analyze why this judgment is a breakthrough for international dispute redressal proceedings. The article will also focus on the implications of this judgment.

Background of case

Interdigital had filed a case of infringement against Xiaomi in July 2020 in the Delhi High Court for the alleged use of technology of their SEPs without due authorization. Interdigital claimed that it grants licenses at rates that are fair, reasonable, and non-discriminatory (FRAND). In this case, the plaintiffs did not seek an absolute injunction against the defendants from using SEPs but sought an injunction in case they don’t acquire licenses at FRAND rates.

The case filed in India is inextricably linked with China where prior to the case of infringement filed in the Delhi High Court, the defendants had already filed SEP royalty rate-setting suit before the Wuhan Court. In Wuhan Court, the defendants sought to fix the global FRAND rate of worldwide SEPs of the plaintiffs, on the basis of which they could obtain a license from the plaintiffs. Further, the defendants filed an anti-suit injunction before the Wuhan Court for restraint from prosecuting the suit before the Delhi High court. Vide order dated 23rd Sept 2020, the Wuhan Court issued directions for either withdrawing or suspending the application for temporary or permanent injunction in China or elsewhere besides imposing a fine of RMB 1 million yuan per day calculated from the date of violation of the order of the Wuhan Court.

By the present application (anti-anti-suit), the plaintiffs sought an injunction against the defendants from enforcing against them, the directions of the Wuhan Court. Thus, the issues relating to the jurisdiction of China and India, comity of courts, and several other issues.

Arguments

Before Delhi High Court, the plaintiffs argued that the suit filed in India was filed a seeking anti-enforcement injunction against infringement of the Plaintiff’s Indian suit patents and was preferred under section 104 of the Indian Patents Act. It was also argued that the Wuhan Order prevented the plaintiffs from seeking appropriate remedy available under the Indian laws and thus, amounted to interference in the laws of a sovereign country. Additionally, Plaintiffs claimed the order to be vexatious and oppressive in its operation and effect. On the other side, the defendants stated that the plaintiffs’ suit relating to FRAND rates is already under consideration at the Wuhan Court. Therefore, this is an overlap of the subject matter being taken up in two different jurisdictions. Defendants also made it clear that it is very likely that the two courts may arrive at different conclusions destroying the comity of courts. Lastly, the defendants insisted not to interfere in the matter in which a foreign court ensured compliance with its order.

Judgment

In the final judgment delivered on 3rd May 2021, the Delhi High Court created history by confirming and making absolute India’s first anti-enforcement injunction granted in favor of US technology giant and innovator, interdigital and against Chinese multinational Xiaomi Corporation. The court observed that the Wuhan Court failed to consider the fact that the cause of action arose in India as the proceedings before it was of perceived infringement of six specific Indian patents.

There are no specific rules pertaining to the grant of anti-suit injunction in India, however, the jurisprudence has been developed on the basis of considerable precedence. The Court placed reliance on the principles laid down in the case of Modi Entertainment Network[2] and held that a substantial part of the cause of action arose within the jurisdiction of the Court and that the parallel suit filed is vexatious, oppressive, and prevents the Plaintiff from availing the remedies.

Further, the court pointed on the distinction between an Anti-Suit injunction; an Anti-Anti-Suit injunction, and an Anti-Enforcement injunction. It was also observed that as Wuhan Anti-Suit proceedings had already concluded, the Indian injunction was in the nature of an Anti-Enforcement injunction. The High Court clarified that there is no reason for an anti-enforcement injunction to be seen as rarer than an anti-suit injunction, however, owing to the delicate nature of the proceedings, Courts must continue to exercise caution while granting any such request. The Court upheld the principle that Comity is a two-way street after all.

It was also pointed by the court that even if the notice was issued to the plaintiff but the proceedings were not transparent in this case as the copy of the anti-suit injunction application filed by the defendants in the Wuhan Court, was never provided to the plaintiff. Additionally, any overlap between the proceedings in Wuhan and those in India is minor, and unless an overlap is such that it makes the Indian proceedings oppressive and vexatious, there was no reason for the Wuhan Court to have restrained Interdigital from pursuing its claims for an injunction against Xiaomi in India.

Further, the Court went on to conclude that if the Wuhan Court enforces its anti-suit injunction order, and directs the plaintiff to deposit penalties for prosecuting its Indian suit, then Xiaomi must compensate plaintiffs by depositing a corresponding amount with the court in India.

Analysis

Grants of anti-enforcement suit and other subsequent reliefs have set a new tone of precedents. This is a positive and welcome development for litigants in India. With this decision, the Delhi High Court has opened doors to new principles of Indian jurisprudence that govern the grant of an anti-anti-suit or an anti-enforcement injunction. These principles will surely shed light on this area as there was no precedent in Indian law for this aspect previously. The court has given special mention to the limited application of the principle of comity of courts, especially when the impugned order itself was oppressive and did not respect the jurisdiction of an Indian court to adjudicate matters covered under Indian law. It is necessary for courts to balance the rights of the parties along with providing justice and equity while determining each case on its own merits. After this judgment, it is very likely that we might see the litigants making use of principles involving anti-suit injunctions. Hence, this judgment will contribute immensely not only to Indian but also to international jurisprudence.

Author: Tamanna Sharma, a 5th-year student of BA LLB (Hons.), at Institute of Law, Nirma University, (Ahmedabad), intern at Khurana & Khurana, Advocates and IP Attorneys. In case of any queries please contact/write back to us at aishani@khuranaandkhurana.com.

References:

[1]I.A. 8772/2020 in CS(COMM) 295/2020.

[2]Modi Entertainment Network &AnrVs W.S.G. Cricket Pte. Ltd. AIR 2003 SC 1177.

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