Wednesday, June 29, 2022

Impervious to reason, Continental again wants full Fifth Circuit to consider its 'antitrust' case against Avanci, Nokia, others over automotive patent licensing

The tireless, tiresome tire maker is still in a state of denial and filed a motion yesterday with the United States Court of Appeals for the Fifth Circuit for a 30-day extension of time to file its second petition for rehearing en banc (full-court review) of the dismissal of Continental v. Avanci et al.. A week earlier, a three-judge panel had reached the same conclusion as in February--that Conti's case shouldn't go forward--just on a narrower and non-precedential basis.

A litigant's right to exhaust all appeals is a cornerstone of the rule of law. But that does not always make it reasonable to appeal. I remember a case in which Samsung appealed an order to the Federal Circuit--it was about Apple collecting hundreds of millions in patent infringement damages--and Judge Koh (now on the Ninth Circuit) called the appeal "frivolous." She was outraged.

I'm not outraged by Continental's latest procedural move because I'm merely watching its "antitrust case" against the Avanci patent pool firm and some of its licensors (Nokia, Sharp, Optis). I'm just convinced that this is a Dead Lawsuit Walking. Even if Conti could establish standing (in the absence of injury), bring actionable Sherman Act claims, and proceed with discovery, these are still the facts:

  • No Avanci licensor has sued Conti over cellular standard-essential patents (SEPs).

  • Avanci itself can't sue anyone over SEPs because the patents belong to its licensors.

  • Avanci's licensors remain free to sign bilateral license deals with automakers or their suppliers, as several of them are known to have (and only a minority of patent license deals are ever announced).

What could Conti realistically show in a hypothetical trial a few years down the road? A fishing expedition won't help because there simply are Avanci licensors who have consistently declined to license component makers, and who did so long before Avanci was even an idea. Any patent pool or joint licensing program can only offer to the market what the actual patent holders can agree on. It's a consensus-building process, and with respect to the licensing level in the supply chain, the outcome is then the lowest common denominator.

The evidence would show that car makers in the U.S. and in large parts of Europe have come to accept that they must take licenses at the end-product level. Component-level licensing isn't dead--Huawei (which is not an Avanci licensor at this stage) just granted such a license to IoT chipmaker Nordic Semiconductor--but no one can deprive patent holders of their right to demand that a license be taken by the maker of the end product.

Conti now intends to file yet another petition for rehearing en banc, even though no one--including its various amici pursuing the devaluation, and seeking to complicate the enforcement, of SEPs--can argue anymore that an important issue is at stake. The panel took control over the case again by treating Conti's previous petition for rehearing en banc as a petition for rehearing by the same panel,a and without a hearing per se issued a new version of the decision, which is designated unpublished and non-precedential. Also, the decision was made on the most case-specific basis possible: no Sherman Act claims. I think the panel should simply have affirmed the district court's decision all the way (by additionally holding that Conti lacked antitrust standing), and the panel didn't overrule the district court either. At any rate, last week's decision was as narrow as it could be, and as non-influential as possible (because it's now an unpublished and non-precedential opinion, i.e., it was just meant to put that case to rest).

Not only is Conti's forthcoming petition unreasonable under those circumstances but so is the request for a 30-day extension (this post continues below the document):

As the petition acknowledges, Avanci, Nokia et al. "do not oppose a 14-day extension, [but] they do oppose a 30-day extension." They won't file an opposition brief because--I assume--they feel this case is enough of a waste of time for the Fifth Circuit already. Last time, Conti got that extension already, and that was OK. But now the situation is different: the panel opinion 2.0 doesn't address the substance of the case at all. It merely affirms the district court--unanimously--with respect to the dismissal of Conti's Sherman Act Section 1 and 2 claims. So there's nothing new for Conti to digest. The district court judgment came down almost two years ago--and they've had to appeal that part of the decision all along. It doesn't make sense.

The fact that the defendants oppose the extension Conti is seeking speaks volumes. In the vast majority of cases, it's actually the plaintiffs who want their complaint to be adjudicated as swiftly as possible. Here, the defendants apparently consider the case a meritless distraction (can't blame them, really) and want this annoyance to end sooner rather than later.