Before I forget, let me remind you of next week's Frankfurt Auto IP conference where various of the players mentioned below will be present, some of them even as keynoters and panelists.
Oh my. Tesla, Toyota, and Honda wanted--but failed miserably--to submit an amicus curiae ("friend of the court") brief in support of Continental's petition for rehearing en banc (full-court review) of a panel decision not to revive Conti's self-described 'antitrust' action against the Avanci patent pool and some of its licensors, most notably Nokia. The deadline was a couple of hours ago (midnight Central Time).
The problem is that instead of filing a Tesla-Toyota-Honda brief, they actually attached to their motion a brief that was separately submitted by French industrial conglomerate Thales (this post continues below the document):
22-04-20 Tesla Honda Toyota... by Florian Mueller
The first seven pages of the PDF are Tesla, Toyota, and Honda's motion for leave to file an amicus brief. And then, starting on page 8, there's a "Brief of amicus curiae Thales in support of Plaintiff-Appellant's petition for rehearing en banc" (which Thales filed in its own name, too). Conti itself also misfiled because it failed to comply with the Fifth Circuit's rules (for example, it forgot to provide a statement of facts).
Not only is it uncertain whether the Fifth Circuit will mercifully allow Tesla and its allies to correct their oversight, but there is a serious issue here that cannot be undone:
This misfiling exposes that what was meant to look like broadbased support for Conti is nothing but a coordinated ploy at worst, or an echo chamber at best. The amicus briefs submitted in support of Conti's petition--which would be duplicative enough even without Tesla and its Japanese friends inadvertently having refiled Thales's brief--can be traced back to orchestration by the automotive industry on the one hand and organizations funded by Apple (to advocate the devaluation of standard-essential patents (SEPs)) on the other hand.
Auto + Apploturfers. That's quite an unholy alliance. By "Apploturfers" (Apple astroturfers) I mean essentially the same bunch of Apple-bankrolled organizations that launched the Save Our Standards campaign (they couldn't come up with a more alarmist name, could they?). I recently exposed SOS's highly deceptive advocacy: they sponsored an "interview" with one of their member companies that untruthfully claimed to be a small app developer having issues with SEP owners, when in reality that company never implemented a standard itself, thus never had to license a SEP!
This has become absurd. They keep making themselves ridiculous. And it's not just because of misfilings and astroturfings. The real issue relates to the substance of this (or lack thereof).
Conti's petition and the amicus briefs filed in its support urge the Fifth Circuit to rearrange deck chairs on the Titanic. All that brouhaha about the alleged need for automotive suppliers like Conti to secure exhaustive component-level patent licenses aside, the Fifth Circuit--one of the nation's busiest appeals courts--would just be wasting its time on a rehearing because Conti's complaint is ripe for dismissal on multiple grounds.
The case has had problems from the start. Judge Lucy Koh in the Northern District of California (now, thankfully, on the Ninth Circuit) denied an antisuit injunction and disposed of that case by dumping it on the Northern District of Texas. There, a very experienced judge--Chief United States District Judge Barbara Lynn--dismissed it for two reasons, any single one of which is sufficient in its own right: lack of antitrust standing, and no Sherman Act claims (neither Section 1 nor 2). Conti apparently didn't fully believe in its appeal as it started a parallel and partly duplicative action in Delaware (Chancery Court). After the Fifth Circuit's panel decision, the complaint is even "deader" than before. As I explained, the panel majority held that Conti didn't even have basic Article III standing to begin with. The single judge in the minority joined the majority for what was a unanimous dismissal, but clarified in a footnote that he'd have simply upheld Judge Lynn's decision.
This means that for Conti even to be allowed to conduct discovery, the judges who have previously looked at the matter would have to be overruled in three ways:
Article III standing
antitrust standing
actionable claims under Sherman Act 1 and/or 2
Even if all of that happened (which would frankly amount to a long shot), does anyone seriously believe that Conti could ultimately win this? That a court would ultimately find that Avanci is responsible for most SEP holders declining to grant a certain type of license to component makers, when the key players among them already had that policy long before Avanci was created and--which makes Conti's case completely meritless--Avanci's contracts don't in any way restrict its licensors' ability to extend such licenses? In fact, some Avanci licensors (Sharp, Conversant) have demonstrably granted exhaustive component-level SEP licenses.
Conti is desperately trying to explain with a conspiracy theory what can be adequately explained with long-standing industry practice.
The en banc petition and the amicus briefs place the emphasis on how certain FRAND licensing pledges should be interpreted for all sorts of reasons. But that's the wrong focus.
I've been watching and criticizing this dumpster fire of an "antitrust" case for almost three years. Conti had some contract law claims based on those FRAND declarations. Judge Lynn declined to entertain them after the federal antitrust claims had died. The 5th Cir. panel's casual remark about Microsoft being a member of the relevant standard-setting organizations (SSOs) in its landmark FRAND case against Motorola and about Broadcom being a Qualcomm competitor in another historically important case doesn't change the fact that Conti failed to establish antitrust, not contract law, standing.
If Conti wants to make a contract-law argument, it can do so in that case it brought in Delaware (and which hasn't been a particularly productive effort either, at least so far).
But where's the antitrust injury? How come none of the five judges who have dealt with the case so far--all five of them being really distinguished federal judges--found Avanci's licensing terms quite as outrageous as Conti and its auto-and-Apple amici claim?
There won't be any such harm until some Avanci licensors prevent Conti from supplying its component to its car-maker customers. But they all leave Conti alone. If they ever were to sue Conti, Conti could raise all sorts of defenses. If Conti's customers are licensed (as some of them like Daimler and Volkswagen are), or can elect to take a license, the whole argument comes down to a conclusory allegation that car makers end up paying more--for the same patents used in the same end product--than component makers. Not only is that (as I said) conclusory, but it wouldn't mean Conti gets treated worse than other suppliers, so if anyone had a problem here, it would be the car makers, and patent law provides ways to defend oneself against excessive royalty demands. If amici like Tesla want to pay less, they have every opportunity in their own cases to dispute the reasonableness of certain royalty rates.
Conti has always just talked about indemnification claims in the abstract. It still can't point to a case where a car maker actually had Conti pick up SEP license fees.
The question of whether Conti lacks Article III standing or "only" antitrust (Sherman Act) standing is really academic. Even whether Conti has any kind of standing is not going to make a difference. The petition and all those amicus briefs fail to convince me that Conti could ever win. On one basis or another, that complaint belongs on the federal judiciary's dustbin.
Automotive suppliers are not even consistent when it comes to their stated desire to secure component-level licenses. Case in point, Thales--which is pursuing its own ill-conceived case against Avanci (in Munich)--points in its amicus brief to its litigation with Philips, which is an Avanci licensor. That dispute is not specific to connected vehicles. And that dispute actually shows that Philips wants Thales to take a license, just that Thales isn't prepared to pay what Philips demands.
The Fifth Circuit panel was pragmatic, and that's what I strive to be, too. Avanci has signed up dozens of SEP holders and has licensed dozens of automotive brands. I was skeptical a few years ago, but in the end you can't argue with success. It works. Has the world descended into chaos as a result of this? The automotive industry has its problems. It has to deal with the transition from combustion engines to electromobility, and with a chip supply shortage. SEP licensing is a non-issue for car makers. Some of them just don't like to pay.
At least one of those amicus briefs stresses the enormous economic importance of 5G. And the Save Our Standards brief (ACT | The App(le) Association, CCIA, and HTIA) states how many patents the members of one of those organizations own. When it comes to 5G patents, Avanci has most of the major contributors--with Huawei and Samsung being the only heavyweights missing from the list (for now)--on board. Those who seek to bring down SEP royalty rates and facilitate hold-out by unwilling licensees may very well be innovative in other fields and own a lot of patents. But their contribution to 5G is either next to nil (automotive industry) or very limited (Apple mostly just acquired such patents from the likes of Intel and Nortel) compared to what those Avanci licensors like Ericsson, Qualcomm, Nokia, and that rising star named OPPO--have brought and continue to bring to the standard-setting table.
If the Fifth Circuit figures out that those amicus briefs are just a campaign that doesn't make Conti's case any more meritorious, then it's possible that the court won't even have to hold a vote.
While this is also unrelated to the merits, I did want to mention something in closing. The Alliance for Automotive Innovation, which claims that its members make 98% of all cars sold in the United States, and the German VDA (Association of the Automotive Industry) submitted a brief that lists one of this blog's recent articles in its Table of Authorities. Below you can find a screenshot of that passage followed by the actual document.
22-04-20 VDA AllianceAutoIn... by Florian Mueller
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