Call to vote: FOSS Patents article nominated for Antitrust Writing Awards by Concurrences and George Washington University

I am humbled and honored to announce that one of my articles has been nominated for Concurrences and George Washington University Law School's 2023 Antitrust Writing Awards. As a result, I would be grateful if you could vote for the article in case you believe it deserves your support.

The article first appeared here on FOSS Patents, and was republished by Concurrences under the following headline: The US Court of Appeals for the Fifth Circuit Holds That Standard Essential Patent Holders May Choose to Only License End-Product Makers (Continental / Avanci).

You can find the "VOTE FOR THIS ARTICLE" box below the abstract on the following page:

https://awards.concurrences.com/en/awards/2023/business-articles/the-us-court-of-appeals-for-the-fifth-circuit-holds-that-standard-essential

Whoever may win, this nomination has already exceeded my expectations. By now, FOSS Patents is indeed at least as much of an antitrust blog as it is an intellectual property blog. FRAND-pledged standard-essential patents (SEPs) are at the intersection of both fields of law. But I also comment on competition cases that are not centered around patent licensing and enforcement, such as in my previous post on the opening of a Brazilian antitrust investigation into Apple's App Store practices. I am, of course, thinking about the best approach for the future to these two topics and have some ideas, but it's too early to share them. Again, your vote will be much appreciated, provided that you feel the article provided a useful summary of the Fifth Circuit panel opinion in Continental v. Avanci. By now that dispute is over as Conti refrained from seeking cert.

The voting period will end on March 14th.

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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.

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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":

https://www.documentcloud.org/documents/22118637-22-07-22-order-denying-contis-2nd-petition-for-rehearing

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.

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Continental bothers Fifth Circuit again with petition for rehearing en banc and makes false representation of practical effects of Avanci patent pool agreement

The United States Court of Appeals for the Fifth Circuit has done everything it possibly could to make automotive supplier Continental realize that its "antitrust" complaint against the Avanci patent pool and some of its licensors (Nokia, Sharp, Optis) is not going to be revived. The court didn't even formally deny Conti's motion for an extension of time to file another petition for rehearing en banc. The deadline was yesterday. Conti's counsel--instead of giving up a strategically lost position--worked over a long weekend (Monday was Independence Day) and filed its second petition for rehearing in the same case, even at risk of being sanctioned for abuse of procedure.

So here's the new petition, on which I'll share a couple of observations further below:

https://www.documentcloud.org/documents/22080066-22-07-05-continentals-renewed-petition-for-rehearing-en-banc

The fundamental problem is still the same: Conti is wasting the judges' time as it won't win regardless of the "issues" the tireless, tiresome tire company purports to raise. While the panel didn't explicitly affirm the district court's holding that Conti lacked antitrust standing, it didn't reverse that part either. A lack of standing could also have been the basis--or part of the reason--for concluding that Conti had failed to state claims. All that the revised panel opinion said that was that "Continental failed to state claims under Sections 1 and 2 of the Sherman Act"--as opposed to saying there's no Article III standing (which is not specific to antitrust but broader) like in the first version. It's not definitively clear whether the district court was affirmed all the way or only with respect to the final part of its analysis. Therefore, Conti's interpretation is not necessarily right, and Conti would have to show in a hypothetical continuation of the process that it had antitrust standing.

Even the lack of Article III standing (the panel's original holding) could come up again, though it's less likely, given that the panel itself withdrew its original decision. At least antitrust standing continues to be a serious issue not addressed by Conti's petition. With a view to antitrust standing it's also important to keep in mind that Conti is simply not the right plaintiff.

The panel opinion 2.0 merely affirms the district court without further analysis, so the district court's decision (almost two years old by now) is all that Conti can attack. Just like after the first panel opinion, what Conti does is to take particular statements out of context--so they look really broad--and to suggest that if those statements were reversed or narrowed, Conti would all of a sudden have a case. Not so. For instance, Conti's petition ignores footnote 15 of the district court's judgment. The context is that Conti says the relevant patent holders defrauded the standard-setting process by making FRAND promises they never intended to keep in the first place, thereby excluding other technologies belonging to right holders who would have complied with FRAND. The district court found that a Section 2 monopolization claim requires an allegation of harm to the competitive process itself, not just to competitors. The district court indeed held that even if some other companies' technologies had not been included in the standard, that would not be anticompetitive unless the competitive process itself was harmed (which is simply settled antitrust law). But it also expressed doubts in a footnote about whether Conti--even if one applied a different legal standard or assumed that Conti had shown harm to the competitive process--had even made a sufficient pleading as to the exclusion of competitors:

"The Court is also skeptical that such exclusion has been properly alleged. Plaintiff only includes conclusory allegations that alternatives were presented and rejected by the SSOs for the 3G and 4G standards and that if there were no alternatives to a given technology, the SSOs would have been obligated to abandon those parts of the standard. [...]. There is no indication of what these potential alternatives were, that they were alternatives to any of Defendants’ SEPs, or that they were excluded because of Defendants’ allegedly fraudulent FRAND declarations. Even if the SSOs had known that the Licensor Defendants did not intend to comply with their FRAND obligations, the SSOs may nevertheless have adopted the Licensor Defendants’ SEPs and chosen to insure compliance based on the Licensor Defendants’ contractually binding FRAND commitments, which are enforceable regardless of any alleged deception by the Licensor Defendants."

So Conti's Section 2 claim is defective in more than one way. Conti makes it sound like the district court is fine with just any deception of an SSO, but in reality, the district court just explained that it takes more than Conti's pleadings to make it an antitrust issue. One major issue with the alleged "fraud" is that it's not about a violation of SSO rules (such as failing to disclose an essential patent): the accusation is that patent holders like Nokia never intended to comply with FRAND when they made a FRAND promise. That notion is absurd.

Conti points to three recent cases in which the Fifth Circuit granted rehearing en banc of unpublished decisions. Still, the fact that the decision was designated as unpublished and non-precedential makes it most likely that the petition will be rejected. Last time the court asked the defendants for a reply; that may not even happen this time around.

Conti's Section 1 argument is that despite the Avanci patent pool agreement explicitly allowing contributors to grant bilateral licenses (to car makers, suppliers, anybody), licenses at the component level were not "fully" and "realistically" available to Conti--and they blame Avanci for it. The petition misrepresents the situation: it's not just that the Avanci agreement doesn't preclude patent holders from engaging in bilateral licensing, but Avanci licensors have granted bilateral licenses on various occasions. Nokia granted one to Daimler last year, and shortly thereafter announced that a second (unnamed) car maker had taken a direct license, too. Sharp and Conversant granted component-level licenses to Huawei.

Those real-world bilateral licenses belie, inter alia, the following passage from Conti's renewed petition:

"Moreover, a provision in the Avanci agreement that merely pays lip service to the possibility of individual licenses cannot defeat a § 1 claim if the provision has no practical effect."

The fact that patent pools can increase efficiency in licensing doesn't make them or their contributors antitrust offenders. There may very well be patent holders who tell a licensee that they prefer to license their patents through the Avanci pool. But that doesn't amount to a conspiracy any more than some car makers' decision to conclude a pool license rather than negotiate with (and potentially face litigation from) approximately 50 different patent holders. Licensors and licensees alike just want to reduce transaction costs.

The most likely next step is that the Fifth Circuit will reject this petition (the worst-case scenario for Conti being that the court will additionally impose sanctions for abuse of procedure). It's pretty clear that Conti is hell-bent to exhaust all appeals, so we'll probably see them file a cert petition with the Supreme Court in a matter of months...

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Fifth Circuit treats Conti as nuisance, doesn't dignify motion for extension of time with prompt decision: Continental v. Avanci 'antitrust' case over automotive patent licensing is dead end

The reasonable and rational thing for automotive supplier Continental to do now would be to recognize that its meritless "antitrust" action against Avanci and some of its licensors (Nokia, Sharp, Optis) is--and always has been--an error. Conti has not convinced, and never will convince, a U.S. judge that it has standing and actionable claims under the Sherman Act. It's over (as the Fifth Circuit issued a revised panel opinion that throws out the case, just on a different, more case-specific basis). The sooner Conti comes to its senses, the better.

This here is a brief follow-up to a Thursday post, Continental and its counsel risk abuse-of-procedure sanctions from weary Fifth Circuit if they file another petition for rehearing. As I mentioned, the court gave flatly denied Conti's request for a 30-day extension to file another petition for rehearing en banc--and as I explained, the Fifth Circuit's published rules make it very clear that the number one problem of abuse of procedure faced by the court are all those en banc petitions, given that the fewest cases (less than 1%) are heard by the full court (and of the few that do make it there, a large percentage get there because of a judge, not a party, making the proposal). Conti and/or its counsel may get sanctioned, and in the present case there really would be a basis for that, as a decision designated as unpublished and non-precedential can hardly satisfy the criteria for a rehearing. Moreover, even if one disagreed with the district court and at least one of the panel judges (Circuit Judge Ho) on the question of antitrust standing for lack of injury, it is fair to say, at a minimum, that Conti cannot point to a pressing problem such as on the infringement litigation front.

The denial of Conti's motion for an extension of time was already a clear sign that the appeals court has had enough of this. Unfazed, Conti just brought another motion for an extension: as counsel for Avanci and its codefendants had told Conti's counsel they wouldn't oppose a 14-day extension, Conti thought the Fifth Circuit might grant a new motion.

But there's just radio silence from the court.

The judges left for a long weekend, right after which (as Monday is Independence Day) there is the statutory deadline for a rehearing petition. Unless there was just a logistical reason and the court informed Conti by telephone that the two-week extension would be granted (whic hI doubt), this leaves Conti and its lawyers with only two choices:

1. Act like grown-ups, enjoy the weekend, and give up a strategically lost position. If all else fails, find a good psychotherapist to help you overcome the trauma.

   Or:

2. Go into crunch mode and produce another rehearing petition, which won't have any effect other than, potentially, sanctions and the embarrassment that goes with them.

There are strong reasons in favor of the first option. One of them is that former Chief Judge Stewart, who denied the first motion for an extension, doesn't have reading-comprehension problems, unlike Conti, which didn't even observe the court's clear instructions when filing its first rehearing petition (they had to refile in order to add some missing--but mandatory--elements). Judge Stewart saw that Avanci and its co-defendants wouldn't have opposed a 14-day extension. He could have granted a 14-day extension right away had he been so inclined.

Conti must know when it is not wanted. This here is such a case. The court is already treating Conti as a nuisance. Can't blame the judges, really.

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Continental and its counsel risk abuse-of-procedure sanctions from weary Fifth Circuit if they file another petition for rehearing: Continental v. Avanci et al.

Automotive supplier Continental's unreasonableness is getting worse by the day.

I started the headline of yesterday's Continental v. Avanci et al. post by describing Conti as impervious to reason. Meanwhile, Circuit Judge Stewart--a member of the panel that has already twice determined that Conti has no case--has denied Conti's motion for a 30-day extension for its second petition for rehearing. The court announced that the mandate would issue on July 13. So what did Conti do? They brought a new unopposed motion seeking a 14-day extension. The previous motion had already said that Avanci and its co-defendants (Nokia, Sharp, Optis) wouldn't oppose a two-week extension.

While Judge Stewart's order ("[Conti's] opposed motion for an extension of 30 days, or, to and including August 4, 2022, to file its petition for rehearing/petition for rehearing en banc is DENIED.") didn't specifically address the possibility of a 14-day extension, Conti should finally see the writing on the wall: the appeals court is tired of the tire maker.

It's worth recalling that Conti didn't even manage to file its original petition for rehearing in accordance with the Fifth Circuit's published rules. Some elements, such as a statement of facts, were missing, and Conti had to refile.

People at Conti have to pull the plug on this. While Conti apparently didn't care to read the Fifth Circuit Rules (PDF) before filing the first (and failed) petition, I have taken a look at those rules. What I found shows that Conti and its counsel are taking a risk. They should accept the panel decision 2.0 as the final resolution of the case by the Fifth Circuit. Otherwise they may be sanctioned for manifest abuse of procedure:

"35.1 Caution. Counsel are reminded that in every case the duty of counsel is fully discharged without filing a petition for rehearing en banc unless the case meets the rigid standards of FED. R. APP. P. 35(a). As is noted in FED. R. APP. P. 35, en banc hearing or rehearing is not favored. Among the reasons is that each request for en banc consideration must be studied by every active judge of the court and is a serious call on limited judicial resources. Counsel have a duty to the court commensurate with that owed their clients to read with attention and observe with restraint the standards of FED. R. APP. P. 35(b)(1). The court takes the view that, given the extraordinary nature of petitions for en banc consideration, it is fully justified in imposing sanctions on its own initiative under, inter alia, FED. R. APP. P. 38 and 28 U.S.C. § 1927, upon the person who signed the petitions, the represented party, or both, for manifest abuse of the procedure." (original in italics; emphases added)

Let's start with "the rigid standards" of Fed. R. App. P. 35(a), which envisions only two circumstances under which an en banc may be appropriate:

1. en banc consideration is necessary to secure or maintain uniformity of the court's decisions; or

2. the proceeding involves a question of exceptional importance.

If Conti and its counsel know that their petition doesn't meet at least one of those criteria, they have to refrain from bringing yet another rehearing petition lest they be potentially sanctioned.

The first criterion cannot possibly be fulfilled: an unpublished and non-precedential decision is inherently not capable of endangering the uniformity of the Fifth Circuit's decisions. Also, the panel opinion 2.0 is limited to only the Sherman Act Section 1 and 2 claims, i.e., couldn't be more narrowly case-specific at this stage.

Whatever Conti may say in its petition can't reasonably meet the second criterion either. Yes, to those Conti guys and their counsel the case may be of exceptional importance. But at this stage we're talking about an unpublished and non-precedential decision, which weighs against its importance--and a narrow decision on the specific defects of Conti's complaint. Furthermore, while the panel withdrew its holdings on Article III standing and didn't take a position on the district court's conclusion that Conti lacked antitrust standing, this here is still a case of no injury. Conti is not being sued over cellular standard-essential patents by any Avanci licensors (Avanci itself couldn't sue for lack of owning those patents). Conti is not being sued by a customer for indemnification. There is simply no harm that Conti has established, other than that it was denied a license it never really needed.

In light of all of that, this case falls far short of the exceptional and important case that warrants a rehearing en banc. Conti is not going to get that rehearing. There's no realistic upside, but a potential downside of being sanctioned.

If Conti and/or its lawyers signing the petition get sanctioned, they can't blame the Fifth Circuit for not having made it clear beforehand that this could happen. Here's another passage from the Fifth Circuit Rules:

"THE MOST ABUSED PREROGATIVE - PETITIONS FOR REHEARING EN BANC ARE THE MOST ABUSED PREROGATIVE OF APPELLATE ADVOCATES IN THE FIFTH CIRCUIT. FEWER THAN 1% OF THE CASES DECIDED BY THE COURT ON THE MERITS ARE REHEARD EN BANC; AND FREQUENTLY THOSE REHEARINGS GRANTED RESULT FROM A REQUEST FOR EN BANC RECONSIDERATION BY A JUDGE OF THE COURT RATHER THAN A PETITION BY THE PARTIES." (emphasis in original)

"The most abused prerogative"--for which we may now see one of the clearest cases ever of a manifest abuse of procedure. Conti and its counsel must finally understand that the Fifth Circuit also has other appeals, motions, and petitions to decide. It's utterly unreasonable and disrespectful for Conti to seek the attention of every active judge--all 26 of whom are listed on the appeals court's website--for a second time.

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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):

https://www.documentcloud.org/documents/22074061-22-06-28-conti-m4eot-next-petition4rehearing

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.

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BREAKING: Fifth Circuit panel modifies Continental v. Avanci et al. decision but once again dismisses Conti's patent-related antitrust claims

BREAKING NEWS

At the beginning of last week, the Fifth Circuit panel that threw out Continental's appeal of the dismissal of its antitrust complaint against Avanci and some of its licensors (Nokia, Sharp, Optis) reacted to Conti's petition for rehearing en banc by taking charge of the case again, and announced a revised opinion. The new version of the decision just appeared on the docket, and the basic outcome is the same--Conti's case is still thrown out, just on a different basis as I'll discuss further below:

The original (February 2022) panel opinion held that Conti lacked basic Article III standing for lack of injury (as its customers--the automakers--have access to an Avanci license). That line of reasoning was supported by two of the three panel judges (former Chief Judge Stewart, and Judge Engelhardt), while Judge Ho would have affirmed the district court ruling, according to which Conti had Article III standing, but no antitrust standing and no Sherman Act claims (neither under Section 1 nor Section 2). However, Judge Ho didn't "dissent-dissent" but contented himself with a footnote voicing his different preference.

The new consensus--and now it's a truly unanimous panel decision--is that Conti fails at the third hurdle: it failed to state Section 1 or Section 2 Sherman Act claims. In that regard, the panel now affirms the district court. The revised opinion doesn't explain this further, so the district court's reasons are affirmed as they stand.

What the panel decision 2.0 does not address specifically is whether the district court rightly found that Conti lacked antitrust standing. It would have been better to have not only a castle, but a castle with a moat around it, by explicitly affirming both parts of the district court's judgment.

The panel has designated the opinion as unpublished and non-precedential, meaning that this particular litigation has been resolved (again), but others won't be able to really get mileage out of it. This ups the ante for any attempt by Conti--which I guess the automotive supplier is going to make nonetheless--to have the decision reviewed by the full court or by the Supreme Court. It's a means of minimizing the decision's impact on the development of SEP case law. Conti's amici would find it extremely hard to argue that an unpublished, non-precedential decision is of transcendental importance and absolutely needs to be reviewed by ever more judges, all the way up to the Supreme Court.

Fifth Circuit rule 47.5.4 says that unpublished opinions such as this one "are not precedent, except under the doctrine of res judicata, collateral estoppel or law of the case (or similarly to show double jeopardy, notice, sanctionable conduct, entitlement to attorney’s fees, or the like)." In other words, only under narrow circumstances--all of which are closely related to the case, or to any attempt to relitigate the issues between the same parties--is the decision of any relevance.

While it may be cited, the revised opinion itself doesn't contain anything worth citing: all of the substance is now in the judgment by Judge Barbara M. Lynn of the United States District Court for the Northern District of Texas.

Given that the Fifth Circuit has downgraded the importance of the decision, it's conceivable that the panel just agreed on whatever it was able to build a quick unanimous consensus around. The finding of no Article III standing was a 2-1 decision even though there was no formal dissent. Knowing from Judge Ho's footnote that he'd have affirmed the district court's finding of no antitrust standing, it appears more likely than not that one of the other two panel judges would have joined him, but they didn't have to address that part.

The problem with Conti's case is that there are multiple bases on which it can be tossed even prior to any discovery--and if discovery had been conducted, I can't imagine the case would have survived summary judgment. The Fifth Circuit panel had three grounds of pre-discovery dismissal to choose from: Article III standing (the basis of the original panel opinion), antitrust standing (not explicitly addressed today, but clearly doubtful), and Sherman Act claims (it would have been enough for Conti to have either a Section 1 or a Section 2 claim, but according to the affirmed part of the district court's judgment, it has neither).

While I suspect Conti of being hell-bent to keep pushing until all appeals have been exhausted, I would encourage Conti to think really hard about the risk-opportunity ratio. The chances of getting any further review are unbelievably slim, while the risk of annoying one of the most important appeals courts in the United States and potentially the Supreme Court--by seeking a review of an unpublished, non-precedential opinion--is real. This isn't the first U.S. case to which Conti is party, and it won't be the last. Seeking review after review after review when a case has such glaring deficencies is disrespectful to the judiciary.

Psychologists say there are five stages of grief: denial, anger, bargaining, depression, acceptance. It seems Conti never got past the first three stages. It should leapfrog the fourth stage and finally reach the point of acceptance. Those legal fees are a sunk cost.

As a litigation watcher with a focus on U.S. cases, I can sense that all judges so far have been underwhelmed. Judge Lucy H. Koh (then in the Northern District of California, now on the Ninth Circuit) denied Conti a temporary restraining order and granted a motion to transfer the case to Texas. Judge Lynn in the Northern District of Texas disposed of the case at the earliest possible stage and on two independent grounds, though either one of them would have been enough. And now the Fifth Circuit panel has issued a revised opinion of the lowest profile (unpublished and non-precedential). Conti should face a simple fact: no judge really thinks this case deserves to go forward. Different judges may have different perspectives on the legal basis of a dismissal, but they all concur that Conti's complaint isn't deserving of discovery, much less of proceeding to trial.

Conti is still suing Nokia in the Delaware Chancery court, a state court of equity. That case hasn't made any progress. It was removed from the state court to federal court, and then remanded to the state court. It's another Conti case that isn't going to make an impact, and the only question is how--not whether--it will be tossed.

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Fifth Circuit panel will straighten out its Continental v. Avanci opinion: Conti is still going to lose--this much is certain

In its litigation with Avanci and some of its licensors (most notably Nokia) over the availability of component-level licenses to standard-essential patents (SEPs), Continental keeps going in circles, just like its rubber tires--the key difference being that the circular motion of its wheels makes a car move forward, while Conti's litigation tactics are unproductive, tireless but tiresome, and just clog up the court system.

In Delaware, Conti's case against Nokia (which it brought after the dismissal--and after filing that Fifth Circuit appeal--of its Texas case) was removed from the Chancery Court (a state court of equity) to a federal district court, and then remanded to the state court. As far as I've been able to find out, nothing substantive has happened there. Now Conti is going in circles before the United States Court of Appeals for the Fifth Circuit:

After denying Conti's motion to file--outside the procedural framework established by the Fifth Circuit--a reply brief in support of its petition for rehearing en banc, but still yesterday, the appeals court has determined how to deal with Conti's petition: instead of Conti getting a rehearing in front of the full court, which would be a total waste of time, the same three-judge panel that issued the original appellate opinion a few months ago will simply straighten it out in a way that moots Conti's petition.

Here's the court order, which withdraws the original opinion, explains that Conti's petition for rehearing en banc is simply treated as a petition for a rehearing by the original merits panel, and announces that a revised opinion is forthcoming (apparently without further briefing or another hearing--the panel judges will simply create a "Version 2.0" of their decision):

I think this is a very wise procedural decision. As I noted yesterday, it's not that one can't (almost always) ask questions or raise issues. Version 1.0 of the panel opinion contained an unfortunate, oblique reference to Microsoft v. Motorola (noting that Microsoft was a member of the same standard-setting organizations as Motorola, which is true but wasn't relevant) and Broadcom v. Qualcomm (a case pitting two direct competitors). Conti and its amici--simply other organizations pursuing the devaluation of SEPs--way overstated the relevance of that passage as if it meant that only those who are members of the same SSOs or direct competitors of SEP holders were contractually entitled to a FRAND license.

Avanci, Nokia, Sharp, and Optis (a licensing firm whose UK FRAND trial against Apple just started yesterday) have made it clear that their reading of the panel opinion is reasonable, and the FRAND sky wasn't falling. But apparently all that amicus activity had at least some of Fifth Circuit judges concerned that the ruling could have unintended consequences.

The thing is that Conti is still not going to win this. Theoretically, Panel Opinion 2.0 could have a different outcome and--for instance--remand the case to the United States District Court for the Northern District of Texas with the instruction to allow Conti to amend its complaint again. Circuit Judge Carl Stewart (a former Chief Circuit Judge) asked questions at last year's appellate hearing that suggest he at least wanted to know for sure that leave to amend wasn't warranted.

But an about-face is not realistically going to happen. Instead, these are the options for the Fifth Circuit panel to up the ante for a renewed petition for rehearing en banc in a way that the next petition would most likely be rejected in no time:

1. They could just edit a few parts, such as those Microsoft and Broadcom references, which were unnecessary to reach the (right) conclusion. But Judges Stewart and Engelhardt would still hold that Conti lacked basic standing (Article III standing), with no need to reach the question of antitrust standing, much less of antitrust pleading standards (Conti's Sherman Act Sec. 1 & 2 claims). Judge Ho didn't "dissent-dissent"--but he did express, in a footnote, his preference for simply affirming the district court's judgment that Conti lacked antitrust standing and that its Sec. 1 & 2 claims weren't actionable.

   This would be doable. It wouldn't involve much effort. And all three judges could just stand by their February conclusions.

   It would, however, foreseeably lead to a renewed petition for rehearing en banc, with Conti and its amici still arguing that someone who believes to be a third-party beneficiary of a FRAND pledge by a patent holder to a standard-setting organization should at least have Article III standing. And Conti being Conti, they'd try to get the Supreme Court interested in that question. But the revised panel opinion might make it even clearer that implementers may have Article III standing, just that in Conti's case there was simply no injury as its customers (the automakers) had access to licenses that also enabled Conti to go about its business.

2. V2 of the panel opinion could be like an "extended mix": after determining with a 2-1 majority, and after some optimization of the reasons, that Conti lacked basic Art. III standing, the new version could go on to explain that, in any event, the district court was (as Judge Ho already made clear last time) right that Conti lacked antitrust standing and that its antitrust claims were deficient (Twiqbal standard etc.).

   In that case, the panel would strengthen the argument made by Avanci and its licensors that Conti was going to lose one way or the other. A renewed petition for rehearing would then have to tackle all three hurdles (or maybe two, if the panel just addressed antitrust standing, but not the antitrust claims). It's doubtful that Conti could present a compelling petition, also in light of formal and de facto page limits, in that scenario. With multiple hurdles in place, Conti would also find it much harder to get the Supreme Court interested (for the same reasons).

3. The panel could simply drop the Art. III part and unanimously affirm the district court (ideally with respect to antitrust standing and the Sherman Act Sec. 1 & 2 claims, or maybe just one of those parts), with a strong opinion that Conti would find very hard to challenge.

   In that case, Conti would still try a cert petition, but it would find it much harder to portray the proposed question for review as being fundamentally important. It could no longer make it sound like this was about the essence of the FRAND licensing commitment and stuff like that.

The amount of work for the court would be minimal in the first case, while there wouldn't be much of a difference between the second and third options. The second option would be the most comprehensive one, though I personally believe the third option--and then based on both antitrust standing and the pleading standard for the Sec. 1 & 2 claims--would be the safest choice, with four judges (the district judge--who is a very well-respected one--and all three circuit judges) converging on the very same reasons for dismissal. There would be nothing bold about it, but that could be a virtue, especially when you see all those amici obsessed with the devaluation of SEPs just waiting for some opportunity to get the Supreme Court interested in a SEP matter.

Given that I find it inconceivable that Conti's complaint would not be dismissed one way or the other, I can only repeat what I wrote at the end of my previous post on this matter: It's a dead lawsuit walking.

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Fifth Circuit gives short shrift to Continental's request for permission to file reply brief calling for rehearing of Avanci, Nokia antitrust case

On Thursday, Continental had the chuzpe to file a proposed reply brief in support of its petition for rehearing en banc (full-court review) of the dismissal of its "antitrust" case against the Avanci patent pool and some of its licensors, most notably Nokia. The procedural rules of the United States Court of Appeal for the Fifth Circuit do not envision reply briefs in connection with a petition for rehearing, as Avanci, Nokia, Sharp, and Optis pointed out in their prompt opposition to Conti's motion for leave (request for permission) to file a reply brief.

Conti's reply brief has been rejected. Circuit Judge Carl E. Stewart, a member of the panel who held that Conti didn't even have basic Article III standing (thus never had to address antitrust standing, much less antitrust pleading standards), just entered the following order:

IT IS ORDERED that Appellant’s opposed motion for leave to file a reply to the petition for rehearing en banc is DENIED.

It's too early to tell what this means for the petition itself. I don't think the petition is a whole lot better than the motion for leave to file a reply brief was. But the appeals court will certainly give the petition more thought, while Conti's desire to file a reply brief was just ridiculous.

Conti may have expected the denial of its motion to file a reply brief. In that case, Conti would have decided to bring a long-shot motion anyway. But such behavior comes across as desperate, and doesn't generate goodwill. Conti has to just sit back, relax, and wait for the Fifth Circuit's decision on the actual petition. If the appellate judges and their clerks quickly realize that Conti's amici are notoriously interested in the devaluation of standard-essential patents (SEPs), the focus will be on the merits of the petition, and in that regard it falls far short, not because one couldn't ask questions or raise issues (that's almost always possible), but because Conti's case is doomed one way or the other. It's a dead lawsuit walking.

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Continental's reply brief in support of petition for rehearing of SEP antitrust case not contemplated by Fifth Circuit rules, and wrong at any rate, Avanci and licensors tell appeals court

Continental continues to keep U.S. courts busy with its attempts to force companies like Nokia to extend them an exhaustive component-level license to standard-essential patents (SEPs). It would have been as reasonable as it would have been realistic for Conti to recognize that its U.S. antitrust case against Avanci and its licensors is lightyears from making the slightest commercial impact after a Fifth Circuit panel identified a third independent reason for dimissing Conti's complaint. And even if--which goes beyond stretching the imagination--Conti overcame all three reasons for dismissal at this stage, I strongly doubt it could prove its conspiracy theories even if permitted to conduct discovery. So the rational and respectful thing would be to give up. Instead, Conti filed a petition for a rehearing and then, toward the end of last week, even a motion for leave to file a proposed reply to the recent response by Avanci, Nokia, Sharp, and Optis to the rehearing petition.

But appeals courts don't consider rehearing petitions a motion that requires or warrants extensive briefing: many such petitions are resolved just based on the petition alone. By asking Avanci and its licensors to respond to Conti's petition (which I attribute to all the brouhaha by Conti's amici rather than the actual issues), the Fifth Circuit has apparently emboldened Conti to try something the appeals court's rule don't even provide for: a reply in support of a rehearing petition.

A few days ago I explained two reasons for which Conti's proposed reply brief makes no sense: Conti is trying to revive a federal antitrust case through an argument that is solely about (state) contract law, even though the district court declined to exercise supplemental jurisdiction over those claims after the federal claims had been dismissed; and the Fifth Circuit panel opinion said that even if Conti had contractual rights (which it failed to show), it wouldn't make a difference in the end.

The second one of those points is also made by Avanci, Nokia, Optis, and Sharp, who on Friday filed an opposition to Conti's motion:

https://www.documentcloud.org/documents/22058588-22-06-10-avanci-opposition-to-conti-motion-to-reply-iso-rehearing-petition

Avanci and its co-defendants point out that the Fifth Circuit rule governing rehearing petitions doesn't even contemplate a reply brief. The above filing then explains that the appeals court simply doesn't need a reply to understand the scope of the petition on the one hand and the points made in the defendants' response on the other hand.

This case is a waste of time anyway, but at least I have hope that Conti can resist the urge to make yet another filing with the Fifth Circuit at this procedural stage, such as a reply brief in support of its motion for leave to file a reply in support of its rehearing petition...

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Continental again calls on Fifth Circuit to revive federal antitrust claims against Avanci, Nokia, others over contract claims under state law that Judge Lynn declined to entertain: waste of time

Automotive supplier Continental should finally come to terms with the strategic mistakes it has made all throughout its antitrust campaign against Avanci and several of its licensors (Nokia, which is Conti's primary target, but also Sharp and Optis). It pursued U.S. litigation that has underwhelmed all five federal judges who have looked at it so far (Judge Koh, then in the Northern District of California, now on the Ninth Circuit; Chief Judge Lynn in the Northern District of Texas; and a panel of three Fifth Circuit judges). It urged the European Commission to investigate Nokia's licensing policy--in vain. If anything might have yielded a result, it would have been a Huawei-style private antitrust lawsuit in Dusseldorf, but the window of opportunity for that seems closed by now.

Conti is digging itself an ever deeper and bigger hole. It keeps throwing good money after bad, presumably due to a lack of in-house expertise. The latest specimen of Conti's desperate tilting at windmills was filed on Thursday--three days after Avanci, Nokia, and their co-defendants filed a strong reply to Conti's petition for a rehearing en banc by the Fifth Circuit that simply explains Conti can't win the case even if a review were to result in the requested modification of the panel decision.

Conti should be grateful to the Fifth Circuit that the court had asked Avanci to respond to Conti's petition. But the idea is not that there is extensive back-and-forth briefing. Conti, however, has requested permission to file the following reply brief in support of its petition:

https://www.documentcloud.org/documents/22057423-22-06-09-continentals-proposed-reply-iso-petition-for-rehearing

Conti accuses Avanci and its co-defendants of "misstat[ing] the contents of Continental's petition," a petition that Conti says "demonstrates that the panel decision conflicts with Supreme Court precedent holding that a party has standing to sue when its rights under a contract have been violated." (emphasis added)

There are two reasons--any single one of which is sufficient--why that argument doesn't warrant a rehearing:

• The panel opinion said that "even if Continental has rights under FRAND contracts, the contracts have not been breached because the SEP holders have fulfilled their obligations to the SSOs with respect to Continental." In other words, it's irrelevant whether or not Conti is the victim (it certainly has a propensity for victimization) of a breach of contract, because its customers (such as Daimler and Ford, in whose infringement cases in Germany Conti intervened without being able to prevent them from taking an Avanci license) have not been affected by a breach of contract.

• Another way to look at it is that the contract law claims are not in the case at this stage. The Fifth Circuit panel only had Conti's federal antitrust claims before it, and that's yet another reason why it doesn't matter whether the Supreme Court sets a low bar for the standing of those claiming to have contractual rights.

  Let's recall the final sentence of Judge Lynn's dismissal of Conti's complaint:

  "Given that all of Plaintiff’s federal question claims have been dismissed, the Court declines to exercise supplemental jurisdiction over Plaintiff’s remaining declaratory judgment, breach of contract, promissory estoppel, and unfair competition claims [all previous emphases added], and it is FURTHER ORDERED [emphasis in original] that these claims are DISMISSED [emphasis in original] for lack of subject matter jurisdiction."

  Conti didn't--as it couldn't--appeal Judge Lynn's decision to exercise her discretion to the effect of not entertaining Conti's breach-of-contract and various other claims under state law. The Supreme Court precedent Conti cites doesn't deprive the district court of its discretion to decline to hear orphan claims under state law that would only have played a role if Conti's federal antitrust claims had survived.

  Put another way, Conti wants to bring back an "antitrust" case to life by relying on contract law, when its contract claims are clearly and indisputably dead as a result of the dismissal of Conti's federal claims.

  By the way, Conti--during the pendency of this appeal-brought some state law claims against Nokia in Delaware state court...

Given how easy it just was for me to identify the deficiencies of Conti's latest argument, I'm not sure that Conti increased the likelihood of its petition being granted. Conti's only chance here is that some circuit judges may be impressed by those amicus briefs, which are simply part of a broadbased SEP devaluation effort that involves astroturfing and other deceptive advocacy tactics. If the question is whether Conti's petition for a rehearing has the potential to change anything about the dismissal of a fatally and fundamentally deficient case, the answer is no. That is separate from the noise made by automotive companies and "Apploturfers." Noise is not a substitute for logic.

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Avanci, Nokia explain why Fifth Circuit would waste its time granting Continental's petition for rehearing: issue raised by Conti can't change outcome

The United States Court of Appeals for the Fifth Circuit is one of the nation's busiest federal appeals courts. If every appellant seeking to revive a fatally flawed complaint were to get a full-court review of a well-considered panel decision, the resolution of numerous other cases would also be delayed. At some point there must be closure. Continental's "antitrust" action against the Avanci patent pool and several of its licensors (Nokia, Sharp, Optis) is just a waste of time. Presumably owing to an entire echo chamber of amicus briefs orchestrated by those constantly advancing a notorious agenda of devaluing standard-essential patents (SEPs), the Fifth Circuit invited Avanci to reply to Conti's petition.

I'll keep this post brief because I already explained the logic of the Fifth Circuit decision--and the various other grounds on which Conti's complaint is never going to succeed--three months ago. Let me show you Avanci's reply, and then I'll share a couple of quick observations:

https://www.documentcloud.org/documents/22053999-22-06-06-avanci-et-al-response-to-conti-petition

Conti's petition and the amicus briefs supporting it make a fuss about the Fifth Circuit panel allegedly having held that most implementers of standards aren't intended third-party beneficiaries under the FRAND pledges of standard-setting organizations. Not only do Conti's petition and the amicus briefs blow things out of proportion but the truth is that it doesn't even matter:

Avanci and its licensors explain in their reply that Conti's petition "is academic; resolution of the issue that it presents could not alter the outcome in this case." Starting near the bottom of page 11 of the panel opinion at issue, there is a passage that makes it clear the dismissal of Conti's case is independent of whether or not it's an intended third-party beneficiary:

"But assuming Continental is contractually entitled to a license on FRAND terms as a third-party beneficiary, the pleadings reflect that it has suffered no cognizable injury. Put another way, even if Continental has rights under FRAND contracts, the contracts have not been breached because the SEP holders have fulfilled their obligations to the SSOs with respect to Continental."

Simply put, Conti's petition for rehearing tells the Fifth Circuit that it may be able to get over the first hurdle, but (now quoting Avanci's reply) "pleaded no facts plausibly suggesting that"

• "[Conti] needs to conclude direct licenses to manufacture and sell its components to OEMs"

• "a patent owner has ever sued, threatened to sue, or is likely to sue Continental for infringement of the relevant patents"

• "[Conti's] failure to conclude direct licenses from Avanci or its members impeded sales of its components to any OEM"

• "[Conti's] lack of direct licenses has prevented it from pursuing any other business opportunity"

All that is left then is the hypothetical scenario of indemnification, but speculative injury doesn't count.

The above deficiencies have been understood by the district court and by all three judges on the Fifth Circuit panel. This may be slightly oversimplified, but essentially all judges who have looked at Conti's complaint so far have identified the same shortcomings, and the only question is whether the fact that Conti can sell its telematics control units (TCUs) to car makers, many of whom already have an Avanci license, means that Conti has no antitrust standing or no standing whatsoever (Article III standing).

Conti refuses to face certain realities. In late April, Conti's SEP exec Michael Schloegl ("Schlögl" in German) spoke at a Frankfurt conference and asserted that Ford was not going to take an Avanci license anytime soon. That prediction didn't age well: a few weeks later, Ford did take that license. Conti was a third-party intervenor in certain cases brought by Avanci licensors against Ford. But to date no Avanci licensor has sued Conti itself over the alleged infringement of SEPs by its TCUs. Conti may not be grateful to Avanci for what it's doing, but it has no reason to complain.

In their reply, Avanci and its licensors state in no uncertain terms that the Fifth Circuit panel opinion cannot be interpreted as "a bright-line rule automatically denying third-party beneficiary status to all component suppliers." That should give Conti and especially its amici comfort. The sky isn't falling.

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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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Tesla, Toyota, Honda finally file correct amicus brief--which doesn't say that Tesla is presumptive Avanci licensee

Just a quick follow-up to my previous post, which was about Tesla, Toyota, and Honda's failure to file their own amicus curiae brief (in support of Continental's petition for rehearing en banc of the dismissal of its "antitrust" case against Avanci, Nokia, and others), and also addressed the fundamental shortcomings of some other filings.

Tesla, Toyota, and Honda have meanwhile been allowed to submit a brief, and they finally uploaded their own brief as opposed to Thales's (this post continues below the document):

22-04-20 Tesla Et Al. ACTUA... by Florian Mueller

What the brief doesn't say is that Tesla is an Avanci licensee. Now, I don't have definitive knowledge of that. But IAM deduced from the near-simultaneous voluntary dismissal of multiple U.S. patent infringement lawsuits by Avanci licensors against Tesla that those cases were all settled in one fell swoop by taking a car-level 4G license from Avanci. The parallel German cases were also dismissed. And since then, no infringement action by any of Avanci's licensors (a total of 49 companies) against Tesla has become known. As an Apple lawyer once famously said, "I'm old enough not to believe in coincidences anymore." It's not impossible, but practically inconceivable, that Tesla wouldn't have taken an Avanci 4G license--that just hasn't been publicly announced, and all 49 Avanci licensors have apparently honored the NDA that is presumably in place.

It's somewhat strange that Tesla files an amicus brief against a patent pool from which it has a license--a license that bailed it out of multiple infringement actions. Tesla would have been free to pursue bilateral licensing instead.

The arguments in the brief add nothing to what the other amici had said before.

That's not the only mystery related to the amicus briefs filed in that case. A group of professors--including some I actually respect a great deal--made a filing one day ahead of the deadline, but should actually have taken that time to correct some typos and other mistakes that come across as hasty, if not sloppy, making me wonder whether the academics even knew what they were signing (this post continues below the document):

22-04-19 Professors' Ac... by Florian Mueller

The heading of the first section is... well... creative:

"ALL IMPLEMENTERS OF STANDARDS THAT THE RELEVANT SSOs PROMOLGUATE ARE INTENDED THIRD PARTY BENEFICIARIES OF THE SSO MEMBERS' FRAND COMMITMENTS" (emphasis added)

There's also a redundancy between the first two footnotes:

"1 Undersigned counsel for amici curiae certify that this brief was not authored in whole or in part by counsel for any of the parties. No party or party’s counsel contributed money for the brief. No other person contributed money that was intended to fund preparing or submitting the brief." (emphasis added)

"2 This brief is submitted under Federal Rule of Appellate Procedure 29(a). This brief was not authored in whole or in part by counsel for any of the parties. No party or party’s counsel contributed money that was intended to fund preparing or submitting the brief. No other person contributed money that was intended to fund preparing or submitting the brief." (emphasis added)

They also say the brief was "opposed" without stating who opposed it (there are multiple appellees here) and why...

The professors' brief does Conti the favor of elaborating on something that footnote 1 of its petition already stated briefly. The professors seek to reinforce Conti's point with the following passage:

"Moreover, based on a review of ETSI public records, Continental Automotive GmbH (CAG), the parent company of Plaintiff-Appellant, is a full member of ETSI and a CAG representative currently serves on ETSI’s Board of Directors. While CAG is not the named Plaintiff-Appellant in this case, Plaintiff-Appellant is ultimately owned by CAG. Thus, for all practical purposes, Plaintiff-Appellant is a member of at least one relevant SSO."

In antitrust cases it's key to pick the best plaintiff from the start. Footnotes in en banc petitions and amicus briefs don't make a party a plaintiff at this stage of proceeding.

I was wondering from the start how Conti seriously thought (and I'm also saying this with a view to its Delaware case against Nokia) that a U.S. subsidiary could somehow secure a global license for a Hungarian Conti subsidiary. Conti's corporate structure is a jungle of nth-degree subsidiaries. If they think that's cool or smart (as opposed to just unnecessary bureaucracy), that's their choice. But they have to streamline things in antitrust enforcement or they'll run into standing issues like here.

The professors' footnote 15 also makes a point that doesn't withstand scrutiny: with respect to the panel's mentioning of Broadcom being a Qualcomm competitor when those two companies had their seminal FRAND dispute, they say "at least one licensor member of Avanci (LG Electronics) is a direct competitor of Continental in the market for TCUs." But LG joined Avanci only a couple of months ago, making it an irrelevant fact in this case, which they conveniently (euphemism intended) omit.

Even if one took that fact into consideration now, it actually serves to show that even automotive suppliers believe that car-level licensing is workable and that Avanci's terms aren't an issue. Chances are that Conti itself would be an Avanci licensor if it had invested in the kind of research and development that is required to build a SEP portfolio. But Conti's management lacked the competence and foresight to make that investment while there was a window of opportunity with a view to (for instance) 4G. Instead, they wanted to free-ride on other companies' R&D spend. LG has the benefit of being not only a licensee but also a licensor of SEPs. Avanci itself is not a cross-licensing club, but LG can sometimes cross-license directly with other companies, and for the purposes of its internal financial planning LG can offset some of its automotive division's inbound licensing costs with revenues from outbound licensing. But that's not the result of foul play. It's because LG invested in that area, unlike Conti, a company that is more than 150 years old and better at making tires than at contributing to telecommunications standards, so it's trying to devalue other companies' SEPs instead of respecting them.

The Fifth Circuit will almost certainly figure out what's going on. The question is just whether those alarmist amicus briefs by automotive companies and "Apploturfers" will result in the waste of time that a rehearing en banc of that fatally-deficient "antitrust" case would represent.

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