Monday, March 14, 2022

Acer, IP Bridge patent infringement actions against Volkswagen withdrawn following Avanci 4G upgrade while EU politician voices concern over still-unlicensed non-European car makers

This is a follow-up to last week's big standard-essential patent (SEP) licensing news, Volkswagen's agreement with the Avanci patent pool to upgrade its license to 4G for the entire VW group (as opposed to only a few premium brands being licensed up to 4G). VW's initial press release suggested that some issues (presumably relating to litigation expenses) were left to be resolved in connection with patent infringement actions pending against the car maker at the time. It appears that the clean-up has been completed:

While all German and German-owned automotive brands are now licensed under Avanci's 4G program, many car makers in the world still aren't licensed. In other words, barring the highly unlikely existence of thousands of unknown bilateral license agreements (49 Avanci licensors times numerous car makers), there's a lot of infringing products rolling on the world's roads.

This has a Member of the European Parliament (MEP) worried. Alfred Sant, a former prime minister of Malta with a long-standing interest in the EU's intellectual property policy, posed three written parliamentary questions to the European Commission last month. He's taking an interesting angle: when some companies in a given industry (here, automotive) are licensed while others are not, "competitive distortion" is indeed caused. When companies headquartered in some jurisdictions respect IP to a greater extent than their counterparts abroad, it's an issue of global trade policy.

Mr. Sant says it's "unfair to EU companies that pay for these rights when their competitors do not." To be fair, there are still some unlicensed EU companies. For example, I haven't heard of Stellantis (FIAT, Peugeot, Chrysler, Open, Citroën, Dodge, Maserati, and others) having taken an Avanci license. It's the world's sixth-largest car maker and headquartered in Amsterdam--just up the road from the EU's de facto capital of Brussels. But Mr. Sant is probably right that the degree--so many things are a question of degree rather than binary--to which EU automakers have licensed cellular SEPs is substantially greater than in other parts of the world.

All three of Mr. Sant's questions relate to measures the European Commission could take, such as raising this issue in bilateral trade talks (with "Japan, South Korea, the United States etc."). I find the second question particularly well-put:

"2. Has the Commission informed non‑EU governments that a failure by non‑EU car manufacturers to fulfil SEP licencing obligations would constitute a distortion of the competitive level playing field vis‑à‑vis EU car manufacturers that have the necessary SEP licences, and what commitments has it received?"

It would be unrealistic to expect any car maker--be it American icon Ford, which is being sued by some Avanci licensors, or a Toyota or Hyundai/KIA--to be scared into action only because of those parliamentary questions. Also, the Commission rarely gives surprising or enlightening answers to such questions. The standard response to "are you doing something about it?" is "Yes, of course we do our job" without going into the specifics one would really like to hear. But what those questions do get is mind share. They draw the Commission's attention to political concern over a problem. They show that there are politicians who want the Commission to make significant progress in a particular regard. I do believe Mr. Sant's questions have the potential to raise awareness and to persuade EC decision makers to assign a higher priority than in the past to this competitiveness issue.

It's like a law of nature in patent licensing that a party that has taken a license is interested in ensuring that its competitors, too, pay for their use of the same patents (and that they don't pay less). Daimler defended itself against Nokia for more than two years (only to get a result it could have had at a much lower cost); Volkswagen was advocating "Licensing Negotiation Groups" for a long time. By now, it's not in VW's or Daimler's interest that others remain unlicensed.

Mr. Sant's official questions also serve as a signal to the governments of countries like Japan that the EU probably won't take it lightly should those jurisdictions shield their local car makers from SEP enforcement. To some degree they're all susceptible to infringement litigation in Germany. In the United States, this month's Fifth Circuit decision in Continental v. Avanci et al. also ups the pressure on car makers to license cellular SEPs. But it obviously makes a difference whether a company has to fear effective enforcement in only a couple of export markets or may even have to close down factories if all else fails.

It's high time the car industry resolved its 3G/4G SEP licensing issues as the world is moving on to 5G at a fast pace.

Share with other professionals via LinkedIn: