Just to avoid any misunderstanding, I must clarify that Qualcomm Senior VP Fabian Gonnell didn't demand the immediate incarceration of automotive industry executives seeking an exemption from cartel law for the purpose of operating standard-essential patent (SEP) licensing negotiation groups (LNGs). Speaking at yesterday's IAM Auto IP Conference in Munich, Mr. Gonnell was saying that "there is nothing innovative" about LNGs, as the proposal comes down to what's been known--and deemed illegal--for over a century as a buyers' cartel if the net effect was collective hold out. If--in the alternative--LNGs didn't impede bilateral license agreements, they wouldn't make any impact. Therefore, LNGs should remain illegal, and should some fail to abide by the law as it stands, "everyone involved should go to jail."
This blog doesn't always agree with Qualcomm. Prior to that conference, the last time I saw Mr. Gonnell was when he testified at the FTC v. Qualcomm trial in San Jose, and I disagreed with much of it. But on the subject of LNGs I believe one cannot reasonably disagree that they are, and should remain, illegal. I'm not talking about a couple of small IoT startups joining forces to negotiate a SEP license, but about large corporations (with all the resources to engage in good-faith licensing negotiations) orchestrating collective holdout.
In a recent speech, EU competition chief Margrethe Vestager outlined her plans and priorities for a new era of cartel enforcement. While automotive LNGs weren't explicitly mentioned, they share some of the key characteristics of cartel problems Mrs. Vestager touched on. In my post on the commissioner's speech you can also find links to my three July 2021 posts on LNGs. If I had to sum up those three posts in one sentence, I would not just point to Mr. Gonnell's "everyone involved should go to jail" remark.
LNGs were mentioned on a few different occasions during yesterday's conference, though I got the impression that the idea has already lost steam. If the proposal to legalize LNGs had momentum, there would have been a dedicated panel on the subject. But as long as some--such as Volkswagen, whose outside counsel on LNGs was in the audience--continue to lobby regulatory authorities about it, others--such as Qualcomm--will voice their fundamental concerns.
"Defensive patent aggregator" RPX touted its model, and would apparently like to organize automotive LNGs if it could, but what the RPX speaker said was rather vague, unclear, and not really thrilling.
Nokia patent licensing director Teemu Soininen is clearly not a fan of LNGs either, though he didn't go rhetorically as far in their condemnation as Qualcomm. Mr. Soininen came across as the typical "nice guy next door" with whom willing licensees can work out a deal, and who wants to get along with everybody. He mentioned that after years of discussing patent licensing with automotive companies, he's now on friendly terms with many of them and it's good to see those people again at conferences like IAM Auto IP. Still, Nokia's position is that car makers should take a license either through Avanci (which announced three new licensees--Jaguar, Land Rover, Aston Martin--at the conference) or bilateral agreements, such as the one Nokia announced in late July with an unnamed company.
In my next post I'll discuss some of the other things that were said yesterday. The automotive industry got a reality check in multiple ways, one of which was that anyone pushing for LNGs has now been told very clearly that it wouldn't make sense for regulators to allow in the 21st century what was already illegal in the 19th century.
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