China’s Global anti-suit injunctions threaten to cement control over emerging tech – every hour without the counterplan risks Xi deciding to get rid of the access hatch to the death star

Not all ASIs are created equal. If a Chinese court said to a German or U.S. court, “you have no right to adjudicate the validity, infringement, or licensing rate of a Chinese patent,” that would be a “limited ASI” that may be consistent with U.S. practice. U.S. practice has generally been that absent consent or contractual obligations of the parties, ASIs should not determine the validity, infringement, or value of foreign patents.

Recently, China has been issuing what I would call “global ASIs.” Global ASIs attempt to prohibit other courts from adjudicating matters that could affect the ability of a court to determine a global licensing rate for patented technology. They may also be part of broader industrial or judicial policies to increase national influence, extend judicial jurisdiction, or even retaliate against other courts or governments. As you can imagine, when a Chinese court tells a German, Indian, or U.S. court to stop considering issues involving German, Indian or U.S. law and patents arising under that law, it evokes a strong reaction. These courts may respond with counter-ASIs, or AASIs. A judge in the United States called this type of order an “anti-interference” injunction.

Global ASIs are especially concerning as they are intended to drive down the price of foreign technology and patents in order to support China’s industrial policy efforts. They may also affect the ability of courts to make assessments of the comparative values of standard-essential patents in different markets as part of a global portfolio license. In many cases, the ASIs have also been granted without notice to the affected party and the decisions have not been published, highlighting the broader transparency concerns. Moreover, Chinese law does not offer other avenues for effectively challenging the jurisdiction of the court. For example, a company may not be able to effectively argue that another court is the more “convenient” or “appropriate” forum. Foreign companies are also leveraging this ASI process to drive down the prices of foreign technology. The most recent public case was Samsung vs. Ericsson in the Wuhan intermediate court. Ericsson filed a parallel litigation in Texas, where it requested a limited ASI. Although Samsung is a foreign company, both companies do more business in the United States than in China. The case has since settled.

Chinese courts have also become more aggressive in handling high-value parallel litigation. In some respects, China has become an attractive destination for these courts: judges are well-trained, and the litigation is relatively inexpensive. Chinese courts also want to play a larger role in these disputes, as they have a direct impact on China’s goals regarding standards for emerging technologies (e.g., 5G+ or the Internet of Things). At the same time, China is keen to set prices for U.S., European, and Japanese technology worldwide, thus reducing the price for foreign technology inputs in Chinese manufactured products. For example, a German court case awarded a royalty rate eighteen times the rate of a Chinese court in a parallel litigation matter. China is also responding to the difficult situation that companies such as Huawei face in overseas markets, where they have been precluded from selling their products but nonetheless have rich patent portfolios. This problem is global in nature. Trade diplomats and others should be engaging with China to find ways to de-escalate the tensions in this important area.