Thursday, December 16, 2021

Acer sues Volkswagen over handful of 4G patents, decries VW's hold-out tactics against Avanci including 'licensing negotiation groups'

Intellectual Ventures predicted an "IP reckoning" for the automotive industry and did its part to turn this into a self-fulfilling prophecy (by suing GM, Toyota, and Honda). Just yesterday I reported on Sisvel v. Ford, and now I've become aware of the latest SEP enforcement action against a car maker: Acer, a Taiwanese device maker known to be a very reasonable patent holder (as that company is on the receiving end of patent suits all the time), is tired of Volkswagen's hold-out tactics vis-à-vis the Avanci 4G patent pool that offers a one-stop license to dozens of SEP portfolios. Acer has brought a patent infringement complaint against VW in the Eastern District of Virginia, which (as I'll show you further below) points to a couple of FOSS Patents posts:

21-12-15 Acer v. Volkswagen... by Florian Mueller

Some of you saw me at the short-lived Apple v. Qualcomm trial in San Diego in April 2019, and while I don't expect anyone to remember this, I used an Acer notebook for my live commentary from the overflow room. On the only occasion so far that I attended a patent trial involving Acer, they were being sued in Mannheim over WiFi SEPs, with the accused components being supplied by Broadcom. While Acer holds a number of standard-essential patents, it's primarily an implementer of standards, much more so than it is a patent enforcer.

So why does a peaceful and usually defensive company tell Volkswagen that "enough is enough" and bring an infringement complaint over five 4G standard-essential patents (SEPs)? The answer is in the complaint--and it's all about Volkswagen's Avanci license only covering 2G and 3G patents (as I noted in a post on Volkswagen's indirect license deal with Huawei), but not 4G SEPs (VW did, however, take a 4G license for some of its premium brands, namely Porsche and Audi, the latter of which is the corporate parent of, inter alia, Lamborghini).

Here are the sections of the complaint that expose Volkswagen's hold-out tactics (and we're now getting closer to the passage that points to FOSS Patents):

3. Plaintiff, through their licensing agent Avanci, LLC, has offered a license to the Patents in Suit on FRAND terms, and are prepared to grant a license agreement to Defendants’ infringing products on terms and conditions that are fair, reasonable, and non-discriminatory (“FRAND”). Plaintiff brings this action because Defendants have refused the FRAND offers of Plaintiff’s licensing agent, have refused to negotiate in good faith, but continue to sell products that practice, use, or otherwise comply with the standards covered by the Patents in Suit.

25. The Patents in Suit are part of a licensing platform that is managed by Avanci, LLC.

26. Plaintiff, through its licensing agent Avanci, has made a FRAND offer to Volkswagen AG to license the Patents in Suit as part of a license to the licensing platform managed by Avanci. This offer was on terms made to, and accepted by, other licensees who have taken licenses from the Avanci licensing platform. Notwithstanding the FRAND offer, Defendants have refused to license the patents for 4G LTE technology.

27. Specifically, Avanci first discussed a license with Volkswagen AG in 2016. Since that time, Avanci has had many meetings, phone conferences, and email exchanges with Volkswagen AG to discuss and explain Avanci’s 2G/3G and 2G/3G/4G license offers. Volkswagen AG concluded a 2G/3G license with Avanci in April 2019. Although Volkswagen AG affiliates Audi and Porsche also concluded 2G/3G/4G license with Avanci, Volkswagen AG did not execute a 2G/3G/4G license with Avanci at that time.

28. Over the past two years since signing the 2G/3G license agreement, and although Volkswagen AG has increasingly incorporated 4G connectivity into its connected vehicle line-up, it still has not concluded a 2G/3G/4G license with Avanci. Instead of signing a license on the same terms as others in the industry, Volkswagen AG has engaged in delay tactics, including efforts to create a “licensee negotiation group” including many companies in the auto industry to jointly negotiate more favorable licensing terms for Volkswagen AG and other participants in the group. See;;

FOSS Patents posts have been mentioned in various court filings over the years, not only but mostly in the U.S., but this may be the first time for FOSS Patents to be mentioned in a complaint. Here's a screenshot of that passage (click on the image to enlarge):

Let that sink in: for its high-volume brands, Volkswagen only has a license up to 3G, a standard that is already deprecated in some countries such as the country in which VW is headquartered, when in reality VW is already selling huge numbers of 4G-connected cars--and increasingly incorporates 5G into its products (I believe it won't take long before Avanci also announces its 5G rate). Acer decided not to tolerate that type of infringement after all those years, and turned to IP litigation boutiques Davidson Berquist Jackson & Gowdey (of Virginia) and TechKnowledge Law Group (of California). I wouldn't be surprised if other Avanci licensors were equally annoyed as Acer, so Volkswagen may face more 4G patent assertions soon unless it upgrades its license. Also, it would be a logical step for Acer to sue in Germany as well, and I'll try to find out more about that.

The complaint provides non-exhaustive lists of Volkswagen models that implement the relevant 4G techniques, such as VW ID4, Arteon, Atlas, Atlas Cross Sport, Golf, Golf GTI, Jetta, Passat, Taos, and Tiguan. Those types of cars may be less expensive than the average Porsche or Audi, but Avanci's 4G license costs $15 per unit, so there's no way Volkswagen could afford it only if a car costs $100K. As the complaint notes, "Defendants tout their communications technology marketed as Car-Net as including 4G LTE connectivity." According to the complaint, Car-Net "was introduced into Volkswagen cars at least as of the 2020 model year."

These are the five patents-in-suit:

Some of the relevant claims are product claims, making Volkswagen a direct infringer if the allegations are proven. Other claims-in-suit are method claims, raising the question of contributory infringement (as Volkswagen directs and induces its customers to infringe, provided that Acer is right about 4G essentiality).

In the U.S., Acer is not asking for an injunction at this stage but seeking damages for past infringement as well as "post-trial damages in the form of a counter-determined royalty" and, which is granted in the U.S. only under exceptional circumstances, a recovery of its legal fees. Should Acer sue Volkswagen in Germany, chances are that VW would be considered an unwilling licensee and, as a result, enjoined.

Share with other professionals via LinkedIn: