Friday, July 22, 2022

Fifth Circuit denies Continental's SECOND petition for rehearing en banc of its failed 'antitrust' case against Avanci, Nokia, others over automotive patent licensing

A couple of weeks ago, Continental brought--which is rather unusual--a second petition for rehearing en banc, desperately trying to revive its "antitrust" action against patent pool firm Avanci and some of its licensors (Nokia, Sharp, Optis). A prior rehearing petition had resulted in a modification of the panel opinion but the same outcome: there is no such thing as a case here.

There were signs of the renewed petition being viewed unfavorably by the United States Court of Appeals for the Fifth Circuit. First, Conti's request for two additional weeks was denied. Second, the Fifth Circuit treated the tireless, tiresome tire company as a nuisance by not even ruling on its modified request for more time (other than denying it as moot--but only after the deadline Conti sought to get extended). Third, unlike in the case of the first petition, the defendants weren't invited to respond.

On Friday (July 22), the renewed petition was formally thrown out "[b]ecause no member of the panel or judge in regular active service requested that the court be polled on rehearing en banc":

Two amicus briefs had been filed again, but they didn't cure the deficiencies of the petition.

Apart from a similarly non-promising case in Delaware state court against Nokia, the only thing left for Conti to do in its U.S. litigation campaign against Avanci and its key licensors is to file a petition for writ of certiorari with the Supreme Court. But this case is doomed either way--while the Fifth Circuit panel's original holding that Conti lacked Article III standing went a bit far, the modified opinion affirmed the district court. Under the affirmed decision, Conti lacked antitrust standing and failed to plead Sherman Act claims. The panel opinion 2.0 didn't mention standing explicitly, but whatever the panel meant: Conti is still at least two steps away from even being allowed to begin discovery. And how can Conti tell the Supreme Court that there is a circuit split when the modified panel opinion is unpublished and non-precedential?

A smart company in Conti's place would try to preserve its credibility with the top U.S. court with a view to cases it could actually win, and which might be even more important (for example, there could be legal issues that are relevant to its core business of making rubber tires). Having watched that "case" for three years now (and having voiced skeptical opinions at all stages, though recently I've mostly been bored and annoyed by it), I guess Conti will file for cert and employ the same tactics I've seen from them lately, which means they'll take some sentences out of context. If one looks at the whole picture, Conti's complaint is utterly deficient as a matter of law, and even if--in an alternative universe--they got discovery, Conti could never establish any wrongdoing here.

Conti and its counsel should be grateful to the Fifth Circuit not imposing abuse-of-procedure sanctions.

While Conti is living in the past and appears unwilling to recognize its error, things are moving fast in the real world. Avanci announced that the window for its early-bird licensing terms is closing. Car makers have until August 31 to take a 4G license on the same terms as the very first licensee, BMW. Come September 1, the rate will go up by a third. I'd be surprised if this didn't result in the remainder of the automotive industry taking licenses. No automaker has so far had a benefit from choosing litigation over licensing. Tesla (obvious given near-simultaneous dismissals, though never officially confirmed), Daimler, Ford, and (with respect to an upgrade from 3G to 4G for its volume brands) Volkswagen all ended up taking the one-stop license rather than deal with roughly four dozen individual patent holders. At the moment, a number of standard-essential patent (SEP) assertions by Avanci licensors against Stellantis (Fiat Chrysler, Opel etc.) and Nissan are pending in Munich, but the rational thing would now be for those companies to take the license ahead of the rate increase.