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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`HUAWEI TECHNOLOGIES, CO, LTD, et
`al.,
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`Plaintiffs,
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`v.
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`SAMSUNG ELECTRONICS CO, LTD., et
`al.,
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`Defendants.
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`Case No. 3:16-cv-02787-WHO
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`ORDER DENYING HUAWEI'S
`MOTION TO ALTER OR AMEND, OR,
`IN THE ALTERNATIVE, RECONSIDER
`THE APRIL 13, 2018 ORDER
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`Re: Dkt. No. 285
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`Plaintiffs Huawei Technologies Co., Ltd., Huawei Device USA, Inc. and Huawei
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`Technologies USA, Inc. (collectively, “Huawei”) filed a motion pursuant to Federal Rule of Civil
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`Procedure 59(e) to alter or amend my Order Granting Samsung’s Antisuit Injunction (the
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`“Order”)(Dkt. No. 280[redacted]; Dkt. No. 281[under seal]), or in the alternative, for leave to file
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`a motion for reconsideration of the Order.1 Huawei’s FRCP 59(e) Mot. to Alter or Amend the
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`Court’s April 13, 2018 Order Granting Samsung’s Mot. for Antisuit Injunction (“Mot.”)(Dkt. No.
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`285). In the Order, I enjoined Huawei from enforcing injunction orders issued by the Intermediate
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`People’s Court of Shenzhen (“Shenzhen Court”) based on an analysis of the factors outlined in E.
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`& J. Gallo Winery v. Andina Licores S.A., 446 F.3d 984 (9th Cir. 2006). See Order at 7–21.
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`“In general, there are four basic grounds upon which a Rule 59(e) motion may be granted:
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`1 Huawei notes that it moves for relief under these alternate bases to preserve its right to appeal the
`Order because the “District’s practices concerning this situation are not entirely uniform.” Mot. at
`1 n.1. Compare Zhang v. Safeco Ins. Co. of Am., Inc., No. C 12-1430 CW, 2013 WL 6058307, at
`*2 (N.D. Cal. Nov. 14, 2013) (denying L.R. 7-9 motion but reaching merits of independently-filed
`motion seeking relief under Fed. R. Civ. P. 59(e) and 60(b)), with Thomas v. County of Sonoma,
`No. 17-cv-00245-LB, 2017 WL 2500886, at *2 (N.D. Cal. June 9, 2017) (finding L.R. 7-9 applies
`to motions for reconsideration under Fed. R. Civ. P. 59(e)). Because the Order grants an
`injunction it is an appealable order under 28 U.S.C. § 1292(a)(1), and it is therefore a “judgment”
`because it is “an[] order from which an appeal lies.” Fed. R. Civ. P. 54(a).
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`United States District Court
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`Case 3:16-cv-02787-WHO Document 310 Filed 06/19/18 Page 2 of 6
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`(1) if such motion is necessary to correct manifest errors of law or fact upon which the judgment
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`rests; (2) if such motion is necessary to present newly discovered or previously unavailable
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`evidence; (3) if such motion is necessary to prevent manifest injustice; or (4) if the amendment is
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`justified by an intervening change in controlling law.” Allstate Ins. Co. v. Herron, 634 F.3d 1101,
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`1111 (9th Cir. 2011). The court’s discretion to grant a Rule 59(e) motion is not limited to these
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`situations. Id.
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`Huawei insists that the Order “rests on factual and legal errors… .” Mot. at 1. First, it
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`underscores that Samsung’s counterclaims were filed in August 2016 “months after” Huawei filed
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`the May 2016 complaints underlying the Shenzhen Court orders, and it insists that those
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`counterclaims provide the “only potential overlap” between the cases. Mot. at 1–2; see id. at 3–6.
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`Second, it argues that the Order’s conclusion that it “need not analyze the traditional Winter
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`factors for obtaining a preliminary injunction,” Order at 8, is contrary to Supreme Court precedent.
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`Mot. at 2; see id. at 6–8.
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`I will first dispose of the second argument. The Order included a discussion of this precise
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`issue and concluded that the Ninth Circuit’s decision in Microsoft Corp. v. Motorola, Inc., 696
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`F.3d 872 (9th Cir. 2012)(“Microsoft II) indicated that an analysis of the traditional Winter factors
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`for determining the propriety of injunctive relief was inapplicable in the context of a foreign anti-
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`suit injunction. Order at 7–8. I have already considered and rejected Huawei’s argument, and it
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`has not convinced me that the decision was in error. And, even if I assessed the other Winter
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`factors (irreparable harm, balance of equities, and the public interest),2 see Winter v. Natural Res.
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`Defense Council, Inc., 555 U.S. 7, 20 (2008), those factors would not alter my conclusion.3 There
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`2 The Gallo court held that a party seeking an antisuit injunction “need not meet our usual test of a
`likelihood of success on the merits of the underlying claim… .” Gallo, 446 F.3d at 991.
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` The analysis of these factors largely tracks that of the district court in Microsoft Corp. v.
`Motorola, Inc., 871 F. Supp. 2d 1089, 1102–04 (W.D. Wash.)(Microsoft I). Samsung faces
`irreparable harm in closing its manufacturing plant and ceasing the sale of infringing devices in
`China. See id. at 1102 (“Microsoft has provided this court with convincing evidence that it will
`lose market share, which will be difficult to regain, and suffer harm to its business reputation.”).
`The balance of equities tips in Samsung’s favor because it would be placed in an untenable
`bargaining position, which would have lasting effects, whereas Huawei is only being enjoined for
`approximately six months. See id. at 1103 (“It would seem clear that a negotiation where one
`party (Microsoft) must either come to an agreement or cease its sales throughout the country of
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`Case 3:16-cv-02787-WHO Document 310 Filed 06/19/18 Page 3 of 6
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`is no basis under Rule 59(e) or Local Rule 7-9 to alter or amend the Order on this ground.
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`Moving on to the issue of factual error, I note that Huawei did not focus on this
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`“counterclaim timing argument” in its opposition to Samsung’s motion for an anti-suit injunction.
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`See Order at 9–20 (addressing the parties’ arguments). It explains that Samsung’s motion focused
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`on Huawei’s complaint so it had “no reason to address the timing of Samsung’s counterclaims in
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`its opposition brief.” Reply at 3 (Dkt. No. 291). But Samsung’s focus does not impact Huawei’s
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`obligation to underscore facts favorable to it, especially if they are as critical as Huawei now
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`contends. While it mentioned the fact that Samsung’s counterclaims were filed two months after
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`Huawei’s complaint, see Huawei’s 3/14/18 Presentation Slides (Love Decl. ¶ 2; id., Ex. A; Dkt.
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`No. 285-2); 3/14/18 Hr’g Tr. at 4:14–6:5 (Dkt. No. 254), it did not highlight the “counterclaim
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`timing” as a critical distinction. To the contrary, it repeatedly referenced that “this lawsuit, and
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`the Chinese case were filed simultaneously.” 3/14/18 Hr’g Tr. at 6:6–7; see also id. at 6:7–13
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`(“And there’s a lot of confusion generated in their briefs where they say first filed, first filed, later
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`filed. Not so. The cases were filed at the same time. China’s a day ahead of us and that’s why
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`there are different dates. May 25 versus May 24. But these cases were filed at the same time. Not
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`like Microsoft where somebody months later did an end run around the U.S. case.”).
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`The foundation for Huawei’s argument is weak. Under the first Gallo factor, the issue is
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`not limited to the timing of specific claims; rather, it assesses “whether or not the parties and the
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`issues are the same in both the domestic and foreign actions, and whether or not the first action is
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`dispositive of the action to be enjoined.” Order at 9 (quoting Microsoft II, 696 F.3d at 882).
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`Germany fundamentally places that party at a disadvantage.”); id. (“By issuance of an anti-suit
`injunction, this court is in no way stating that Motorola will not at some later date receive
`injunctive relief, but only that it must wait until this court has had the opportunity to adjudicate
`that issue.”). And the public interest lies in this court adjudicating the propriety of injunctive
`relief for the parties’ standard essential patents (SEPs). See id. (“The court finds that the public
`interest is served by issuing an anti-suit injunction and permitting Microsoft to continue its
`business operations without interruption until this court has had the opportunity to adjudicate the
`injunctive relief issue before it.”); see also Order at 15–17 (analyzing the Unteweser factor of
`whether foreign litigation would frustrate a policy of this forum). The overlap between the
`Unteweser factors and the Winter factors further bolsters the conclusion that the full Winter
`analysis is unnecessary when applying the Gallo test. See Gallo, 446 F.3d at 991 (“Gallo need
`only demonstrate that the factors specific to an anti-suit injunction weigh in favor of granting the
`injunction.”).
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`Precedent makes clear that it is the issues and the actions that drive the analysis of this factor, not
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`the timing of specific claims. In fact, the cases emphasize that “[t]he consideration should be
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`approached functionally, ‘not in a technical or formal sense, but in the sense that all the issues in
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`the foreign action … can be resolved in the local action.’” Order at 9 (quoting Microsoft II, 696
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`F.3d at 882–83).
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`Huawei seizes on one sentence of the Order to argue that it contains a “manifest factual
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`error.” See Mot. at 3. I incorrectly stated that “[t]he appropriate remedy for Huawei’s breach of
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`contract claim may very well be the injunctive relief issued by the Shenzhen court.” Order at 15.
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`But my overall analysis was not in error. In assessing the first Gallo factor, I concluded:
`Both parties have presented me with a breach of contract claim
`based on the other’s alleged failure to abide by its commitments to
`ETSI. Neither party disputes the other’s right to enforce that
`contract as a third-party beneficiary. And the availability of
`injunctive relief for each party’s SEPs depends on the breach of
`contract claims. As in Microsoft, “[t]he contractual umbrella over
`the patent claims” controls, Microsoft II, 696 F.3d at 883, and
`dictates that this action is dispositive of Huawei’s Chinese actions.
`See id. (“In other words, the party was ‘not seeking to enjoin [a
`party from litigating in] a foreign court on the basis of a patent
`validity or infringement finding by a United States court’ but on the
`basis of a contract interpretation by a U.S. court.”)(quoting
`Medtronic, Inc. v. Catalyst Research Corp., 518 F.Supp. 946 (D.
`Minn. 1981), aff'd, 664 F.2d 660 (8th Cir. 1981)).
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`Order at 13 (footnote omitted). Nothing in Huawei’s “counterclaim timing argument” alters this
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`conclusion.
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`At the hearing on Samsung’s motion, Huawei repeatedly emphasized that the issue
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`presented to the Shenzhen court was “the question of compliance with FRAND.” 3/14/18 Hr’g Tr.
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`at 6:25–7:1; id. at 6:21–23 (“[Huawei] told the [Shenzhen] court, We want an injunction, but we
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`have to have complied with FRAND to do it and we're putting that issue before you.”); id. at 7:17–
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`19 (“In truth, the Shenzhen court did conduct a thorough and searching and detailed FRAND
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`analysis before issuing the injunction.”); id. at 8:13–14 (“[T]he court made findings as to
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`compliance with FRAND.”); id. at 8:17–18 (“Huawei had complied with FRAND, which is a
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`predicate for issuing an injunction on SEP's.”); id. at 10:19–20 (“In terms of the posturing of the
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`two cases, the issue has been put before the Chinese court and decided.”). The Shenzhen court
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`addressed the FRAND issue as a prerequisite to Huawei’s request for injunctive relief against
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`Samsung. Huawei put the same issue before this court in its breach of contract claim because it
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`must demonstrate that it was a willing licensee and did not violate FRAND obligations as a
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`condition precedent to establishing that Samsung breached its FRAND obligations. Compl. ¶¶
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`53–60 (Dkt. No. 1[redacted]); Dkt. No. 3-4[under seal]). As I concluded in the Order, the issues
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`are the same.
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`On the precise question of “whether or not the first action is dispositive of the action to be
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`enjoined[,]” the same answer follows. Huawei underscores that it is my resolution of Samsung’s
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`breach of contract claim (filed two months after Huawei’s breach of contract claim) that will
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`ultimately determine the propriety of injunctive relief for Huawei’s SEPs, but that does not alter
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`the analysis because Samsung’s counterclaims are part of this domestic action.
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`Huawei also argues that the “counterclaim timing” impacts my analysis of the third Gallo
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`factor, the injunction’s impact on comity. See Mot. at 5–6. It contends that “[t]he only potential
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`overlap with the Shenzhen Actions comes from Samsung’s counterclaims, filed three months after
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`the Shenzhen Actions.” Id. at 5. But this argument also falls short because it too narrowly focuses
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`on the timing of the counterclaims, as opposed to the actions. As discussed above, Huawei’s own
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`breach of contract claim put the parties’ compliance with FRAND before me, even if the propriety
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`of the precise relief sought in the Shenzhen actions will only be determined in assessing
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`Samsung’s counterclaim.
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`Moreover, Microsoft II dictates that “[t]he order in which the domestic and foreign suits
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`were filed, although not dispositive, may be relevant to this determination depending on the
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`particular circumstances.” 696 F.3d at 887 (emphasis added). The decision makes clear that the
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`situation presented by a defendant’s subsequent filing of a foreign action “raises the concern that
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`[it] is attempting to evade the rightful authority of the district court[.]” Id. (quoting Applied Med.
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`Distribution Corp. v. Surgical Co. BV, 587 F.3d 909, 921 (9th Cir. 2009)). That is not the
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`situation we have here. By arguing that Samsung’s domestic counterclaims present an “especially
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`grave” impact on comity, Huawei flips the analysis on its head. See Mot. at 5 (“[T]he Order
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`endorses Samsung’s tactic of raising counterclaims in this Court months after Huawei filed suit in
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`China, and using those later-filed claims to evade the outcome of the Shenzhen Actions.”). And it
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`neglects to offer any support for its version. See Mot. at 5–6 (relying only on Microsoft II).
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`My assessment of this factor provided several reasons why the injunction’s impact on
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`comity is tolerable. See Order at 19–20 (explaining that the dispute involves a private contractual
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`matter rather than public international law or government litigants; the injunction is against
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`Huawei, not the Chinese courts; and it is limited in scope to two patents, a specific form of relief,
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`and may last less than six months). The “counterclaim timing” has no bearing on this analysis and
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`provides no basis for altering or amending the Order under Rule 59(e) or Local Rule 7-9.
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`In accordance with the foregoing, Huawei’s motion is DENIED.
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`IT IS SO ORDERED.
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`Dated: June 19, 2018
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`William H. Orrick
`United States District Judge
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`Northern District of California
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`United States District Court
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