In the matter of Interdigital Technology Corporation & Ors v Xiaomi Corporation & Ors, CS(COMM) 295/2020 (Delhi Suit), the Learned Single Judge of the Delhi High Court (Delhi Court) has passed a judgment dated 3 May 2021 (Decision) restraining Xiaomi (defined hereinafter) from pursuing or enforcing the anti-suit injunction order dated 23 September 2020 (Wuhan Order) passed by the Wuhan Intermediate People's Court (Wuhan Court) which inter alia directed Interdigital (defined hereinafter) to withdraw or suspend the patent infringement proceedings in the Delhi Suit.
Factual Background
On 9 June 2020, Xiaomi Corporation and its sister concerns (collectively, Xiaomi) filed a standard essential patent royalty rate-setting suit (Wuhan Case) against Interdigital Technology Corporation and its sister concerns (collectively, Interdigital) before the Wuhan Court in respect of Interdigital's global portfolio of 3G and 4G standard essential patents.
On 29 July 2020, Interdigital instituted the Delhi Suit against Xiaomi before the Delhi Court claiming infringement of 5 patents registered in India viz. IN 262910, IN 295912, IN 298719, IN 313036 and IN 320182 (said Patents) claiming them to be standard essential patents to the 3G and 4G standards, and sought injunction against the use of the said Patents by Xiaomi, including an alternative relief for permitting Xiaomi to take license of the said Patents on fair, reasonable and non-discriminatory (FRAND) terms. The Delhi Court issued summons to Xiaomi on 4 August 2020. On the same day, Xiaomi filed an application before the Wuhan Court seeking an anti-suit injunction restraining Interdigital from pursuing the Delhi Suit. Thereafter, the matter came up before Delhi Court on multiple occasions, however, Xiaomi never informed the Delhi Court or Interdigital of the anti-suit injunction application filed before the Wuhan Court.
On 23 September 2020, the Wuhan Court passed the Wuhan Order whereby it inter alia directed Interdigital to withdraw or suspend application for any temporary and permanent injunction before the Delhi Court against Xiaomi, and not to apply for any injunction before any courts in China or other countries and regions. Wuhan Court further imposed a huge fine of RMB 1 million yuan (approx. INR 1 Crore) per day upon Interdigital for violating the Wuhan Order.
Immediately on 29 September 2020, Interdigital filed an application (Application) before Delhi Court inter alia for restraining Xiaomi from pursuing or enforcing the Wuhan Order. The Delhi Court after hearing both the parties, passed an ad-interim order dated 9 October 2020 inter alia restraining Xiaomi from enforcing the Wuhan Order. The ad-interim order was carried in appeal by Xiaomi before the Division Bench of the Delhi Court, however, the Division Bench refused to interfere with the same since it was only an ad-interim order and Xiaomi had an opportunity to make further submissions in the final hearing. Subsequently, the Delhi Court took up the Application for final hearing.
Rival Contentions
Interdigital inter alia contended that (i) Wuhan Order, in effect, deprived Interdigital of its right to prosecute the Delhi Suit for protection of the said Patents which are duly granted by Indian Government, and as such the Wuhan Order was an assault on the sovereign function of the State; (ii) the Wuhan Order was destructive of the principle of comity of courts as it sought to stop an Indian court to adjudicate an infringement claim of Indian patents, which can only be done by an Indian court; (iii) no principle of comity of courts could inhibit the domestic court from protecting itself against the assault on its public policy if the order of the foreign court was in defiance of the public policy of the domestic court; (iv) the overlap between the proceedings before Wuhan Court and Delhi Court was only partial and incidental, and it did not justify the Wuhan Order; (v) the Wuhan Order was obtained by suppression of material facts and Xiaomi failed to communicate the filing of the anti-suit injunction application in the Wuhan Court or the passing of the Wuhan Order; and (vi) Wuhan Order was oppressive and vexatious inasmuch as such hefty sum of damages was imposed on Interdigital for prosecuting a lawful cause, and therefore, Xiaomi be directed to indemnify Interdigital in case the Wuhan Order is enforced.
In response, Xiaomi inter alia contended that (i) the Wuhan Order did not extinguish Interdigital's right to prosecute the Delhi Suit, and it merely delayed the recovery of royalty; (ii) there was substantial overlap between the two proceedings vis-à-vis fixation of FRAND royalty rate, which could lead to fixation of contradictory royalty rates; (iii) the Wuhan Court had the requisite jurisdiction to pass the Wuhan Order and any interference therewith would be destructive of principle of comity of courts; and (iv) Wuhan Court had issued a notice but Interdigital deliberately remained absent in the Wuhan Court, and as such there was no suppression by Xiaomi.
Findings and Decision
General principles
The Delhi Court noted that such an issue has arisen before an Indian court for the first time where it is called upon to stop enforcement of an anti-suit injunction order passed by a foreign court. The Delhi Court re-visited the judicial precedents on anti-suit injunction in India as well as certain Judgments of foreign courts on similar issues, and accorded with the following general principles in relation to anti-suit injunction / anti-enforcement injunction:
- it should be granted in rare cases as it may interfere with functioning of a sovereign forum;
- it could only be granted by a court which is the natural forum for the dispute. Protection of the jurisdiction of a court is an important factor to be considered;
- the crucial test for an anti-suit injunction / anti-enforcement injunction is if there is a possibility of palpable and gross injustice due to non-grant of injunction;
- it could be granted where there is interference to pursue legal remedies before a competent forum, as the same amounts to oppression;
- the principle of comity of courts would not apply when the foreign order was offensive to domestic public policy or customary international law; and
- certain instances would justify the grant of anti-enforcement injunction, such as obtaining the judgment too quickly or secretly, and/or fraudulently and/or where the applicant seeking such injunction had no means of knowing of the same.
Overlap between the two proceedings
After examining the contentions of the parties in the two proceedings, the Delhi Court observed that the Delhi Suit primarily dealt with infringement of the said Patents while the Wuhan Case related to setting of the global royalty rate of Interdigital's global portfolio of patents. Thus, the issues involved in the two proceedings are different. In response to Xiaomi's argument that the Wuhan Order was justified considering the possibility of conflicting orders being passed by the rival courts, the Delhi Court observed that the relief sought by Interdigital in the Delhi Suit did not even form part of Wuhan Case and the mere possibility of conflicting orders between two courts is not sufficient to impinge over the lawful jurisdiction of another court of a sovereign country.
Jurisdiction to adjudicate dispute with respect to said Patents
The Delhi Court observed that the suit for infringement in respect of the said Patents could only be filed in India, considering the territorial nature of patent rights. In passing the Wuhan Order, the Wuhan Court, without having the subject matter jurisdiction, injuncted Interdigital from prosecuting the Delhi Suit in India, which only an Indian court has the jurisdiction to entertain. Thus, the Wuhan Order was prima facie oppressive in nature.
Unfair conduct of Xiaomi
The Delhi Court observed that Xiaomi had deliberately intended to keep Interdigital and the Delhi Court in the dark regarding the filing of the anti-suit injunction application and the passing of the Wuhan Order. Having observed that this attitude is not permissible in a commercial litigation, the Delhi Court held that on this sole ground Xiaomi deserves to be injuncted from enforcing the Wuhan Order.
Indemnity on costs imposed by Wuhan Court
With respect to the fine of RMB 1 million yuan (approx. INR 1 Crore) per day imposed by Wuhan Court upon Interdigital, the Delhi Court observed that since the enforcement of the Wuhan Order has been injuncted, Interdigital cannot be fastened with a fine. To protect Interdigital's rights, Delhi Court directed that if Wuhan Court passes any order for depositing the fine amount, Xiaomi shall deposit the equivalent amount before the Delhi Court which Interdigital will be entitled to withdraw.
Comment
As noted in the Decision, this was the first instance where an Indian court was called upon to restrain a party from enforcing an anti-suit injunction order obtained from a foreign court in relation to infringement proceedings for Indian patents. The observations of the Delhi Court on the general principles in relation to anti-suit injunction / anti-enforcement injunction set the stage for similar issues arising in the future. The Decision clearly touches upon the issue of sovereignty of India and does not remain confined to a private lis between two parties. However, it remains to be seen if the Decision would be tested in an appeal before the Division Bench of the Delhi Court / the Supreme Court of India.
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