With respect to the component-level licensing of standard-essential patents (SEPs), the Federal Trade Commission's petition for a Ninth Circuit rehearing en banc of the Qualcomm case is not going to make a difference either way, given that the FTC's theory is not an actual antitrust duty to deal but just an allegation of a violation that would (should the court agree) consist of a breach of contract. Any positive effects of the FTC's continuing efforts would be of an indirect nature in terms of preserving the ability of antitrust law to combat SEP abuse. But there's been meaningful progress toward exhaustive component-level SEP licenses on multiple other fronts this third calendar quarter:
In early July, court filings revealed an exhaustive component-level (even chipset-level) SEP license agreement between Sharp and Huawei. Later that month, Daimler told a German court that its exposure to an injunction Sharp was seeking, and which Sharp actually obtained, was reduced by 86% as a result of the Sharp-Huawei deal.
Earlier this month, Nokia faced a hostile court in Dusseldorf, which appeared determined to refer several component-level licensing questions of EU antitrust law to the Court of Justice of the EU. As I noted on Thursday, the outcome of that case will likely be favorable unless those advocating component-level licenses fail to counterbalance the pan-European lobbying onslaught of Nokia, Ericsson, and their usual allies.
On Thursday, IoT component maker u-blox announced a settlement and license agreement with Sisvel, an Italian patent troll, covering cellular (2G/3G/4G) products. According to its corporate website, Switzerland-based u-blox makes such modules "for the automotive, industrial, and consumer markets." The new agreement settles litigation u-blox had brought against Sisvel in the Southern District of California in March 2020 in order to demand a component-level license on FRAND terms.
Sisvel is already the third well-known Avanci member with which u-blox has announced such an agreement. In November 2019, u-blox settled with InterDigital ("InterDigitroll"), and two years ago struck a license deal with Philips.
When the Avanci pool gets bypassed like in the case of Sharp and Huawei as well as those u-blox deals, it benefits in only one way: the fact that such agreements are concluded makes it hard to allege that Avanci effectively prevents component-level license deals from happening. Continental's lawsuit was basically dismissed as a conspiracy theory. But the downside clearly outweighs the upside as Avanci's unwillingness to grant exhaustive component-level licenses on FRAND terms continues to be part of the problem, not part of the solution.
Every exhaustive component-level SEP license agreement that an Avanci member enters into makes Avanci's model more defensible, but less viable. If the majority of industry players continue to reject Avanci's abusive terms (license deals--such as with Volkswagen--that don't even cover 4G fail to validate Avanci), the time will come when Avanci will have to choose between meeting the demand for component-level licenses and dissolving itself dishonorably.
We're not there yet, though. Various Avanci members such as Nokia, Conversant, and the PanOptis/UnwiredPlanet troll group keep pressuring car makers such as Tesla through infringement litigation instead of simply licensing their suppliers.
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