Tuesday, May 3, 2022

By signing up General Motors, Avanci patent pool reaches milestone with over 50 million connected cars licensed: agreement struck without prior litigation

Less than two months after Volkswagen upgraded its Avanci standard-essential patent (SEP) license to 4G for all of its brands, the patent pool firm has announced a new license agreement with General Motors, the largest U.S. car maker with about 6 million vehicles sold per year between its Chevrolet, Buick, GMC, and Cadillac brands. According to the press release, Avanci has now licensed a total of 37 automotive brands and "[m]ore than 55 million connected vehicles on the world's roads."

To the best of my knowledge, no infringement litigation by any of Avanci's licensors--four dozen SEP holders including some of the largest ones such as Ericsson, Qualcomm, and LG--was pending, so this agreement resulted only from negotiations. If any enforcement action had been needed, GM's exposure in Germany would have been rather limited: GM sold its European brands (Opel, Vauxhall) to PSA Group a few years ago, and its remaining brands are basically operating in a small niche of the European automotive market (for instance, Cadillacs are available through a very few dealerships).

GM has traditionally been very interested in connectivity. Its OnStar subsidiary has been focusing on subscription offerings (such as in-vehicle security and emergency services) for more than a quarter century. It's possible that GM's success in generating incremental revenues from such services gives that company a different perspective on the cost of a pool license ($15 per car is the published rate) vs. the value that automakers can derive from connectivity.

While GM is the first U.S. automaker with whom Avanci has announced an agreement, Tesla was presumably the first one to have taken a license (that's still kept under wraps) as I noted in a recent post. Ford, which makes approximately four million cars annually, is currently defending against SEP infringement actions by five Avanci licensors, one of whom (Korea's Sol IP) just amended its complaint in the Eastern District of Texas by throwing in 16 more SEPs (on top of the previously asserted 5). I have no idea what Ford's envisioned endgame is...

Avanci's GM deal does not fit the narrative of some of the patent pool's detractors who say or suggest that only premium brands from Europe accept its licensing terms. The licensees increasingly include volume brands as the two most recent deals (Volkswagen's 4G upgrade followed by today's GM announcement) show. At last week's Auto IP & Legal conference in Frankfurt, a Continental IP executive said Avanci had yet to offer terms that the automotive industry at large would accept, a demand that is unsupported by the increasing diversity of the licensees and the fast-growing number of licensed vehicles. Conti can't stop the tide as far as I can see.

The German automotive supplier mostly known for its tires is desperately trying to revive its failed U.S. antitrust complaint against Avanci and some of its key licensors such as Nokia. What the automotive supplier wants the United States Court of Appeals for the Fifth Circuit to do is basically to rearrange deck chairs on the Titanic: even if the rehearing en banc modified the panel decision, Conti's case is doomed one way or the other because Avanci's licensors all remain free to license their SEPs to anyone, including to suppliers like Conti or even higher up in the value chain if they so choose. Such deals are not just a theoretical possibility: they have indeed happened (case in point, Sharp's agreement with Huawei).

Avanci and Nokia filed an unopposed request for a 30-day extension to respond to Conti's petition for rehearing en banc, with a major part of the reason being other obligations of their outside lawyers. Avanci is still being represented by Winston & Strawn's Jeffrey Kessler,

Avanci and Nokia filed an unopposed request for a 30-day extension to respond to Conti's petition for rehearing en banc, with a major part of the reason being other obligations of their outside lawyers. Avanci is still being represented by Winston & Strawn's Jeffrey Kessler, who has an amazing track record in antitrust also in a sports context. I recently commented on one of his sports cases because Apple had (prematurely) cited it.

The fact that America's largest car maker accepted Avanci's license terms without litigation may bear some weight with U.S. courts, not only when Conti is the plaintiff but also when Ford is the defendant and criticizing the Avanci model.

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