By Weidan Fan
U.S. courts are showing themselves to be increasingly friendly to motions for anti-suit injunctions. The use of anti-suit injunctions traces back to medieval England, where writs of prohibition were used by common law courts to stop parallel proceedings [1]. At first, such practice was limited to other English courts. After centuries of use, the practice gradually extended to include lawsuits in British colonies and even foreign countries [1], which is where we are at today.
On March 25, 2024, the U.S. District Court for the Northern District of Illinois (“US Court”) granted an anti-suit injunction to Motorola Solutions, Inc.(“Motorola”) and ordered Hytera Communications Corp. Ltd. (“Hyters”) to stop pursuing an IP infringement case against Motorola in China.
In 2017, Motorola filed a lawsuit against Hytera for trade secret misappropriation and copyright infringement at the US Court. The case went to trial in November of 2019 and resulted in a verdict of trade secret misappropriation and copyright infringement and an award of $543.7 million.
In June of 2022, Hytera filed a lawsuit in Shenzhen Intermediate People’s Court in China (“Shenzhen Court”), seeking a declaratory judgment that its products do not infringe Motorola’s copyrights and Hytera has not misappropriated Motorola’s trade secrets. The Shenzhen Court accepted the case and ordered Motorola to provide rebuttal evidence by April of 2024.
Motorola responded by filing a motion in the case still pending in the US Court, requesting the court issue an anti-suit injunction and initiate contempt proceedings declaring that Hytera is in contempt for not paying royalties for the infringed products under the royalty order.
In deciding whether the anti-suit injunction should be issued, the US Court relied on a standard for granting anti-suit injunctions spelled out in the Neto case [2]. A movant needs only demonstrate that the two (2) factors specific to an anti-suit injunction weigh in favor of granting the injunction. The two factors are (1) “whether or not the parties and the issues are the same,” and (2) “whether or not the first action is dispositive of the action to be enjoined.” If these two factors are met, the court then asks whether letting the two suits proceed is gratuitously duplicative.
Here, the US Court found for factor (1) that: a) the parties are precisely the same in both cases, i.e., the current case and the case that Hytera filed in Shenzhen, China; and b) the issues are the same as Hytera’s Statement of Claim in the action in China described the detail of the current case which is being litigated in the U.S., and both actions involve the same U.S. trademarks and copyrights. The US Court characterized Hytera’s action as expressly a precise mirror image of this case with a minor exception that Hytera seems to cover the H-Series product in the Shenzhen Court. Overall, the US Court agreed with Motorola that the issues overlap substantially and weigh in favor of an anti-suit injunction.
About factor (2), the US Court adopted the Neto case again and found that the interest in avoiding vexatious litigation does outweigh the international-comity concerns inherent in enjoining a party from pursuing claims in a foreign court. Between Motorola and Hytera, pretrial, trial, and post-trial have already occurred in the US Court. The entire US case has been extraordinarily fact-intensive and document-intensive and has reached a final judgment. Those all happened prior to the Chinese lawsuit filed by Hytera. Thus, again, the US Court found the factors are strongly in favor of an anti-suit injunction.
The US Court initiated the contempt proceedings and issued the anti-suit injunction on March 25, 2024. Because of the anti-suit injunction, Hytera must act in the Shenzhen Court to relieve Motorola from an obligation to provide rebuttal evidence. Shortly after the grant of the anti-suit injunction, the US Court ordered Hytera to withdraw the action in China on March 29, 2024.
Though Hytera filed a motion to withdraw the case in the Shenzhen Court on March 30, 2024, the motion was denied by the Shenzhen Court, and Hytera attended the hearing held by the Shenzhen Court. As a result, on April 2, 2024, Hytera was sanctioned by the U.S. Court to pay the US Court a daily fine of a million dollars until it is in full compliance with the anti-suit injunctions. In addition, Hytera was also ordered to not enforce or rely on any order or judgment issued by the Shenzhen Court.
Hytera, on April 4, 2024, appealed the order in front of the Court of Appeals for the Seventh Circuit, and on the following day April 5, 2024, filed an emergency motion for stay pending appeal and temporary administrative stay. But the motion was denied by the Court of Appeals on April 6, 2024. The Court of Appeals indicated in its decision that Hytera asking the Shenzhen Court for its litigation to be withdrawn is too little and too late to be the basis for the Court of Appeals granting the requested emergency relief from sanctions imposed by the lower US Court.
The situation Hytera is in now was created by its own actions, which is a lesson learned for foreign defendants in U.S. litigations. The defendants should be very careful when considering filing a parallel action in their home country. Otherwise, the defendants can easily find themselves in the same situation as Hytera. Hytera thought it saw a path to get around the U.S. litigation and the injunction of its design-around products by bringing a parallel suit in China while employing delay tactics in the U.S. litigation. Instead, Hytera is now in the middle of a fight between the U.S. and Chinese courts.
References
- S. I. Strong, Anti-Suit Injunctions in Judicial and Arbitral Procedures in the United States, 155, 156 (2018).
- 1st Source Bank v. Neto, 861 F. 3d 607 (7th Cir. 2017).
