Thursday, February 3, 2022

Japan's IP Bridge--an Avanci licensor--is suing Volkswagen in Munich while Japanese car makers run PR campaign against Avanci's patent licensing terms

A spokeswoman for the Landgericht München I (Munich I Regional Court) has just confirmed to me that Volkswagen will have to defend itself in that court on November 10, 2022, against patent infringement case no. 7 O 16858/2 (Presiding Judge: Dr. Matthias Zigann) over EP2294737 on "control channel signalling for triggering the independent transmission of a channel quality indicator."

EP'737--which has been declared essential to the 4G/LTE standard--was originally filed by Panasonic and assigned to Japan's national patent licensing entity IP Bridge, which previously brought cases against other companies over this patent, all of them in Munich:

Volkswagen has a 3G Avanci license for its volume brands (and 4G only for premium brands like Porsche, Audi, Lamborghini). In Volkswagen's own country, 3G has already been switched off. Acer sued Volkswagen in the Eastern District of Virginia (traditionally a "rocket docket" for patent cases) because a 3G license is not a defense to 4G infringement any more than you could buy the cheapest Golf, return to the store, and steal an ID4. Now, with IP Bridge suing Volkswagen in Munich, the pressure is increasing on Europe's largest automotive group to upgrade its license.

This newly discovered litigation once again confirms that Munich is the automotive patent enforcement hotspot: just yesterday I reported on a couple of Sisvel v. Ford cases in Munich (Sisvel, too, is an Avanci licensor). Mannheim continues to be a major automotive patent venue, where almost-wholly-owned Volkswagen subsidiary Audi is being sued (in case no. 7 O 132/21; Presiding Judge: Dr. Peter Tochtermann) over German Patent DE102009060504 on "a circuit and method for adjusting an offset output current for an input current amplifier" with parallel litigation pending in the U.S., also against parent company Volkswagen).

About ten years ago, when European policy makers were discussing where to set up the different appellate divisions of Europe's Unified Patent Court, it was part of the consideration that Munich might be a suitable venue for automotive patent cases. At the time, however, different types of patents than cellular SEPs were on the agenda.

Japanese companies like Sony, NTT, and Panasonic hold a significant number of cellular SEPs, and seek compensation from car makers, particularly through the Avanci pool which provides a one-stop solution: a license to roughly four dozen SEP portfolios. But Japanese car makers Toyota, Honda, and Nissan still appear to be adamantly opposed to the Avanci licensing model, despite car makers in other countries increasingly having embraced the pool licensing option.

On Tuesday, Nikkei Asia published an article with the headline Qualcomm, Nokia demand patent fees from Toyota, Honda and Nissan, but mentions right below the headline that "48 companies including [Japan's own] Sony, NTT join move to seek $15 for each connected car."

The following passage on Toyota is...well, interesting:

"Toyota aims to sell 10.29 million vehicles across the group in the fiscal year ending March 2022. If all of its cars were equipped with communication devices and used the patents, it will have to pay about 18 billion yen, or 0.7% of its expected consolidated net profit for the same period."

This makes it sound that the end of profitability justifies the means of patent infringement. Patent license fees are a small part of the cost of making cars, while the value of connectivity to drivers as well as the industry itself (maintenance etc.) increases almost evey day. If Toyota has a profitability issue with a $15 license to four dozen SEP portfolios, it might have to look for other ways to increase its margins.

Daimler wasted millions and millions defending itself against patents it could have licensed at a fairly low cost. That Nikkei article appears to indicate that Japanese car makers have not learned a lesson from the outcome of Daimler's efforts. As long as they aren't licensed, the likes of Toyota will at some point be slapped with SEP infringement actions in Munich, too. That's just the way it goes.

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