Reuters just reported that the Avanci patent pool has concluded 4G (including 2G and 3G) standard-essential patent (SEP) license agreements with several major Japanese and European car makers: Toyota, Nissan, Honda, and the Stellantis group (Fiat Chrysler, Opel, and other brands). Litigation by Avanci licensors was pending only against Nissan and Stellantis (in Munich, the world's #1 SEP enforcement hotspot), and will now obviously be withdrawn.
If a pool sets out to provide a one-stop licensing solution for a given industry, and then reaches the point at which its licensors own the vast majority (80% or so) of all patents essential to the standard(s) in question and where virtually all implementers in that industry (80-85% according to Reuters) have taken that license, then that's what's called "mission accomplished."
It appears that Avanci's "final boarding call" (as I dubbed it) has been heeded: various automakers preferred to take a license now over possibly paying $20 (instead of $15) per car later. The first automaker that became known to have taken an Avanci license after that final boarding call was the Hyundai-Kia group.
Let us now look past 4G and on to 5G, which thanks to higher throughput and (which may be even more important) lower latency is going to be at the heart of increasingly autonomous driving technologies. I have a lot of faith in Avanci being able to determine, once again, a sweet spot at which most patent holders and most implementers will determine that licensing is more efficient than litigation. What that rate will be remains to be seen. Who the initial licensors and licensees will be is also going to be interesting. Last time, BMW was an early adopter, and others were slow followers.
What do the critics say? Let's make a distinction between people being entitled to their own opinion (as we all are) and some believing they're entitled to their own facts (which we are not). Continental's Michael Schloegl ("Schlögl") in German claimed at a Frankfurt Auto IP conference less than five months ago (the next edition of which will be held in Munich by the way) that Avanci's license fees were rejected by the automotive industry. At the time, Avanci already had quite some significant market penetration, but by now, Mr. Schloegl's position is indisputably untenable. No wonder Conti's U.S. litigation failed at all levels.
It is not unreasonable for car makers to argue that they'd rather have their suppliers (tier 1 suppliers make telematics control units, tier 2 suppliers make network access devices, and tier 3 suppliers make chipsets) take patent licenses. That's how the automotive industry apparently has been handling patent licensing in other fields for a long time. But in telecommunications, the end product is typically the licensing level, and with the vast majority of connected vehiclse in the world now being licensed to the Avanci pool, no one can reasonably claim anymore that end-product level licensing isn't workable. It clearly is--otherwise we'd have heard about problems with the performance of all those license agreements.
I voiced criticism as well, but realized that Avanci was unstoppable after Daimler's settlement with Nokia last year, which showed that in the end it was just about money, not principle. Apparently a few others don't have the same degree of flexibility to adjust their positions to reality. They may ignore their customers' decisions to take car-level licenses and prefer to throw good money after bad on the litigation front and on policy initiatives.
With what Reuters has just reported, there can be no doubt that there would have been a lot more 4G SEP litigation targeting automakers if the Avanci pool option had not been created. If dozens of car makers had been sued by dozens of patent holders, that would have meant hundreds of patent infringement disputes--some of which would likely have been far more protracted.
That's why my advice to the automotive industry is the following:
Set the right priorities. Understand the difference between fundamental threats and a mere cost of doing business. SEP licensing is the latter; Apple's and Google's schemes to take control over the most lucrative revenue streams are what you should really be concerned about. If you want to spend money on lobbying, by all means, fight for such important goals as making sure that map services will fall under the Digital Markets Act's search engine rule. You're not going to make much headway devaluing SEPs: that's Apple's agenda, and let them rely on their astroturfers.
Support Avanci's 5G efforts because the alternative will almost certainly be costlier.
A few years ago, some people in the automotive industry appeared to blame Avanci for the problem the pool firm was simply trying to solve efficiently. Would car makers have gotten a free ride if Avanci had not been around? Obviously not. In the aggregate of those 51 patent holders, the sum of license fees and transaction costs would most likely have exceeded (even by far) $15 per car. It's not unreasonable for patent holders to seek a higher royalty for 5G--even Avanci's 4G rate increased to $20 per car this month.
In the end, Avanci is just a platform bringing two sides together, but the two sides determine what happens. Automakers have the opportunity to indicate a willingness to pay a 5G pool rate that will make the pool attractive to 5G SEP holders large and small. If they complicate the process despite the lessons learned from 4G, they have no one to blame but themselves.
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