Ford Motor Company appears to have a history of standard-essential patent (SEP) hold-out. It was unwilling to take an actual long-term license from Nokia a few years ago, so the parties entered into what was more of a standstill than license agreement. Last week I found out about an IP Bridge v. Ford infringement action in Munich. An injunction looms large, and just today Germany's chief patent judge said that a recent amendment to the patent injunction statute was merely "a clarification and consolidation of the case law". One of his side judges told another audience that any proposals to soften patent enforcement should be directed to the legislature. Therefore, Ford can expect to be enjoined in Germany unless it agrees to take a FRAND license or is cleared of infringement of any valid SEP.
Three weeks ago, L2 Mobile Technologies, a subsidiary of a Texas-based non-practicing entity named Longhorn IP, sued Ford in the District of Delaware over a handful of 3G SEPs (this post continues below the document):
21-10-01 L2 Mobile Technolo... by Florian Mueller
L2 announced the complaint on its website, on which it also recently reported a favorable validity determination on one of its Chinese patents and, about six months earlier, an infringement lawsuit against Google. Against Ford, L2 is not seeking an injunction, at least not at this stage, but treble damages. In order for such willfulness enhancement to be awarded, L2 must prove an objective and a subjective prong. The latter is about whether Ford actually had knowledge of its infringements of these patents. It appears that the underlying theory is based on Ford's decision not to take an Avanci pool license:
ATTEMPTS TO LICENSE FORD
17. L2MT is a member of the Avanci LLC patent pool. On information and belief, Avanci LLC made Ford a FRAND offer to patents that are essential to the 3G wireless communications standard. On information and belief, Ford declined to take a license to the Avanci LLC patent pool.
The Avanci pool contains the cellular SEP portfolios of dozens of companies, a number of which are way bigger than L2. If L2 prevailed on this objective-willfulness theory, all car makers with significant U.S. sales would have to be extra cautious when rejecting an Avanci licensing offer as they might be liable for treble damages when any Avanci licensors sue them in the United States.
A willful infringer and an unwilling licensee are the same type of market actor, just from different angles. In Germany, courts increasingly deem implementers unwilling licensees if they decline to take a pool license. Therefore, I wouldn't be surprised if a U.S. court considered Ford a willful infringer of any patents in the Avanci pool that the iconic car maker hasn't licensed bilaterally either.
L2's infringement allegations involve Qualcomm chips. Qualcomm is an Avanci contributor as well, but apparently does not have a license from L2. The patents-in-suit were originally obtained by ASUSTeK, a subsidiary of Taiwanese device maker ASUS, and later assigned to a non-practicing entity named Innovative Sonic (also based in Taiwan). That one brought some infringement litigation many years ago, such as against BlackBerry, and in 2018 joined Via Licensing's LTE pool. Via welcomed Innovative Sonic as an innovative leader. Somewhere along the way, Innovative Sonic assigned a bunch of former ASUSTeK SEPs to L2. Maybe Qualcomm had a cross-license in place with ASUSTeK, but Innovative Sonic and L2 obviously never needed a license or chipsets (which wouldn't be available without taking a license first) from Qualcomm.
These are the patents-in-suit:
U.S. Patent No. 7,266,105 on a "method for determining triggering of a PDCP sequence number synchronization procedure" (PDCP means Packet Data Convergence Protocol)
U.S. Patent No. 8,179,913 on a "method and apparatus of handling variable of RLC reset procedure during receiver-side-only re-establishment in wireless communications system" (RLC means Radio Link Control)
U.S. Patent No. RE47,200 on "preventing shortened lifetimes of security keys in a wireless communications security system"
U.S. Patent No. 8,054,777 on a "method and apparatus for handling control PDUs during re-establishing receiving sides in a wireless communications system" (PDU means Protocol Data Unit)
U.S. Patent No. 8,064,460 on a "method and apparatus of delivering protocol data units for a user equipment in a wireless communications system"
The complaint correctly describes these patents as 3G-related. However, its third paragraph confuses 2G (GSM) and 3G--an unusual (but merely clerical) error in a wireless SEP complaint:
"The wireless communications devices in Ford's connected vehicles comply with the GSM wireless communications standard. This standard is also referred to as the '3G' wireless communications standard."
The costs of patent infringement litigation in the U.S. add up, and in the German IP Bridge case, Ford faces the threat of an injunction. It could take an Avanci pool license, but so far appears to have been opposed. It can also enter into bilateral license agreements.
Avanci itself doesn't hold patents and can't assert them, nor does it have the power to direct its licensors to enforce. Patent pools always have an obligation to inform their contributors (licensors) of any license agreements they conclude, and normally also keep them updated as to ongoing negotiations. For example, if Ford had been close to signing a deal with Avanci, L2 and IP Bridge would presumably have known and might then have waited instead of suing. But ultimately those companies are in the licensing business, and they can't let all car makers get away with unlicensed use forever. By suing Ford, they send out a clear message to others.
No coordination is needed for an independent patent holder to decide to sue the same entity after someone else decided to do so. Those companies do not mean to drive Ford out of business; they merely want to get paid. The more patent cases a given company has to defend against, the greater the incentive to settle at least some of them. A company like Apple or Samsung has to deal with numerous NPE cases in parallel, so one more wouldn't make a difference--but Ford is much smaller, and has much less expertise in the field of cellular SEP litigation. To me it just seems a logical choice that companies holding patents in the same field (regardless of whether they're even contributors to the same pool) would be more inclined to sue someone who is already embattled than pick another target.
For that reason alone, I would not attribute to malice (such as conspiracy) what can be adequately explained with natural litigation choices--and which Ford may have had coming because it apparently passed on licensing options of any kind, be it the Avanci pool or bilateral licenses such as with Nokia. Also, Qualcomm is a far bigger contributor to the Avanci pool than L2 (in fact, Qualcomm's portfolio dwarfs L2's), so the mere fact that L2's case against Ford accuses Qualcomm chips of infringement makes it impossible to imagine that Avanci would have orchestrated anything here.
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