Thursday, November 3, 2022

Continental gives up antitrust battle against Avanci patent pool--no cert petition filed--but keeps pursuing long-shot case against Nokia in Delaware Chancery Court

While the automotive industry has by now overwhelmingly adopted the Avanci patent licensing model, some clean-up on the litigation front is still needed.

In the summer, the United States Court of Appeals for the Fifth Circuit denied Continental's second petition for a rehearing en banc of its "antitrust" case against the Avanci patent pool and some of its key licensors (Nokia, Sharp, Optis). Conti had until Halloween to file a petition for writ of certiorari with the Supreme Court of the United States, and I actually thought they would, given that they had been impervious to reason throughout that multi-year litigation that never went anywhere.

Surprise, surprise: a partial cure has been found for Continental's procedural incontinence. Whatever pill the tire maker has taken, by now nothing has surfaced along the lines of a cert petition, so Conti v. Avanci et al. is a case that has ceased to be. It may have cost tens of millions of dollars to get there--and for Conti to get nothing.

I have a theory as to what the magic pill was: Conti's outside counsel would presumably still have wanted to give it a try, and Conti's in-house counsel, too--but at least they knew they would have needed a critical mass of support from amici curiae. There would basically have been two pools from which to enlist amici: automotive industry players (but it would have seemed strange if companies like Ford, just a few months after taking the Avanci license, had signed anti-Avanci amicus briefs) and the Apple-led movement pursuing the devaluation of standard-essential patents (SEPs), particularly through the proposal of a Smallest Salable Patent-Practicing Unit (SSPPU) royalty base. Apple is very experienced in litigation and presumably recognized--and I'm sure never had to read this blog to figure out (though my commentary may indeed have helped some other potential amici)--that Conti's case was going nowhere. The Fifth Circuit had designated the opinion as non-precedential. Since the original filing in the Northern District of California in 2019, no judge ever believed that Conti had a case. From the Supreme Court's perspective, it would have been easy to see that even if the top U.S. court--in a purely hypothetical scenario--had reversed the Fifth Circuit, the case would just have been a waste of court and party resources anyway.

So there came a point when Conti had to call it quits. I took a critical perspective on that case from the beginning as those who already read my commentary on Conti v. Avanci back in 2019 may well remember. But Conti's in-house counsel relied on bad advice instead of listening to people like me. I'm not a habitual naysayer in the antitrust context. For instance, I'm very optimistic that Epic Games will win at least a partial reversal and remand in the Ninth Circuit on "November Fortnite." But Conti should never have brought that case in the first place, or at least they should have given up after the Ninth Circuit's FTC v. Qualcomm ruling.

Conti and the organizations it would have wanted to support the cert petition that was never filed are still trying some other things.

At yesterday's Munich Auto IP conference, a Conti exec misleadingly claimed that Avanci's licensors had to bring 51 lawsuits against car makers, but Qualcomm's Fabian Gonnell was quick to correct him by pointing out that there were only six disputes (I should add that three of them were extremely short-lived), but in Germany each patent assertion is filed as a separate case (or gets severed by the courts).

There is one other Conti case over automotive patent licensing that is still pending, and while Avanci is not a party to that one, Nokia still has to defend itself. In early 2021, Conti brought a complaint in the Delaware Chancery Court (the same court that would presumably have ordered Elon Musk to consummate the Twitter acquisition if he hadn't given up getting out of that deal):

21-01-25 Continental v. Nok... by Florian Mueller

The issues in that case partly even mirror some of the claims in what used to be the case against Avanci et al., and the remaining issues were closely related. It's all about making sure Conti's telematics control units (TCUs) would be covered by a Nokia patent license, be it an old Nokia-Qualcomm license (a theory that appears next to implausible) or a new license that Conti would want the court to force Nokia to extend.

I found out that the parties had oral argument concerning Nokia's motions to dismiss, and a U.S. subsidiary of the German Continental Group continues to push for their claims to move forward in the Delaware Chancery Court at this time. I'm confident that the state court will draw its conclusions from the now-definitive failure of Conti's federal claims.

There's more. A group of academics and former government officials sent a letter to U.S. antitrust chief Jonathan Kanter, urging the Assistant Attorney General to modify, nuance, or downgrade his predecessor's Business Review Letter regarding Avanci's future 5G patent pool. That is something Conti would like to see happen (as would Apple), though it would come too late for its federal lawsuit anyway. Also, there's an obscure Thales v. Avanci & Nokia case pending in the Munich I Regional Court. The court told me that the original hearing date had been vacated and on October 11, a spokeswoman for the court said that no new hearing date had been scheduled. I'm sure that case will be thrown out, even if only after wasting some more time and money.