ZTE moves for dismissal of Samsung’s California FRAND contract and antitrust action

Context: ZTE is facing an unprecedented multi-jurisdictional onslaught of FRAND (fair, reasonable and non-discriminatory licensing) lawsuits by Samsung, with parallel filings in the U.S., UK and Germany (March 3, 2025 ip fray article). Infringement litigation is also progressing. For example, ZTE obtained a standard-essential patent (SEP) preliminary injunction in Brazil (February 13, 2025 ip fray article). Samsung is also asserting patents, such as in the Unified Patent Court (UPC) (March 12, 2025 ip fray article).

What’s new: ZTE has responded to Samsung’s U.S. complaint with a motion asking Judge Araceli Martínez-Olguín of the United States District Court for the Northern District of California to dismiss the case right away (and to stay discovery in the meantime). ZTE’s motion raises jurisdictional as well as substantive arguments. An attachment to the motion reveals that Samsung amended its particulars of claim in the UK so as to seek an interim license, a controversial instrument.

Direct impact: Despite the relatively low hurdle for complainants at the motion-to-dismiss stage, ZTE’s arguments for dismissal have the potential to put an end to Samsung’s case. Even though the legal and factual issues are entirely unrelated, there are some abstract parallels with the Samsung’s declaratory judgment action against Oura, which the same court threw out (March 27, 2025 ip fray article).

Wider ramifications: It is questionable whether parallel FRAND actions in three jurisdictions will yield better results for Samsung than focusing on just one, which would be conventional wisdom. In each of the three jurisdictions, the courts can see that Samsung is trying to overwhelm ZTE with standalone FRAND/SEP contract and competition lawsuits.

Here’s ZTE’s motion to dismiss:

25-05-27 NDCA3-25cv2000 ZTE motion to dismiss Samsung’s SEP FRAND lawsuitDownload
The first question ZTE raises is whether the district court even has jurisdiction, given that ZTE wound down its U.S. operations. There does not appear to be any particular involvement of any U.S. subsidiary of ZTE (while such subsidiaries existed) with the issues Samsung raises. ZTE employees based in the U.S. may have been involved with 3GPP/ETSI standardization (in France), but what Samsung disagrees with are the royalty rates ZTE seeks, and those were not set or negotiated in the United States.

The easy part should be that the district court has no general jursidiction over ZTE. That would require a substantial presence of ZTE in the district. And since 2018, none of the persons responsible for ZTE’s licensing business have resided in the United States.

As to specific jurisdiction in this case, ZTE says no meetings were held in the United States, and the parties primarily negotiated in China and South Korea. A key precedent cited by ZTE is a case in which Arnold Schwarzenegger sued a company for using his likeness without a license to promote a car dealership in a different part of the United States. The United States Court of Appeal for the Ninth Circuit laid out multiple criteria. One important consideration is whether any actions are directed specifically at California.

ZTE argues that even if this was not a case in which the court would absolutely have to dismiss Samsung’s case for a total lack of jurisdiction, it could and should dismiss the case because the exercise of its jurisdiction would be unreasonable in this case. Here it plays a role again that ZTE was forced out of the U.S. market for geopolitical reasons, but also that Samsung brought cases in the UK and Germany. And Samsung’s own past positions, such as in 2021 in a dispute with Ericsson (where Samsung argued that China was the ideal jurisdiction for rate-setting purposes), are now held against it.

ZTE says Samsung’s “request for a FRAND rate determination in the U.K., and SEG’s request to the German court to order ZTE to accept a license agreement (attached to the German complaint) that Samsung claimed to be on FRAND terms, would, if granted, moot all of Samsung’s claims here. Conversely, its requests for ‘specific performance’ and ‘injunctive relief’ here would moot its requested relief in the U.K. and Germany.” It was not previously known that Samsung attached a proposed license agreement to its Frankfurt complaint, asking the German court to obligate ZTE to enter into such an agreement.

ZTE also tells the U.S. court about the status of the UK proceedings. Mr Justice James Mellor scheduled a FRAND trial for January 2026, not as soon as Samsung had wanted, but it is another case in which the High Court of Justice for England & Wales (EWHC) granted an expedited trial despite the complexity of the case.

Back to the U.S. case. If Samsung gets over the jurisdictional hurdles, it also has to defend its federal antitrust (Sherman Act) claim against ZTE’s motion to dismiss. Patent-related antitrust complaints have previously been dismissed by U.S. courts. In fact, since Broadcom (against Qualcomm) about two decades ago, no one has gotten far with such claims. Samsung itself defended itself against Apple with the argument that participating in standardization is separate from a subsequent disagreement on royalty rates. ZTE’s motion explains that Broadcom, a decision that has not been adopted by the Ninth Circuit so far and has been rejected somewhere else, involved very specific allegations of antitrust violations, very much unlike Samsung’s complaint in the present case.

ZTE argues that if Samsung surmounts the initial jurisdictional hurdles, but loses its Sherman Act claim on substantive grounds, the court no longer has subject matter jurisdiction for lack of diversity jurisdiction. That is because only the Sherman Act claim is a matter of federal law, unlike Samsung’s contract or state competition law claims. In any event, ZTE also seeks, for alleged pleading deficiencies, the dismissal of Samsung’s contract and California Unfair Competition law claims.

It would not reflect favorably on Samsung’s litigation tactics if another patent-related complaint of the “pre-emptive strike” type got thrown out in the Northern District of California shortly after the one against smart-ring maker Oura.