Today the Auto IP & Legal World Summit started in Munich. In a preview, I wrote that Continental and the Fair Standards Alliance (FSA) were going to "argue with success (Avanci, Huawei)" at that event: both Avanci's and Huawei's licensing programs have the majority of connected vehicles in the world under license now.
One other thing that Huawei and Avanci have in common is that their policy positions are actually in the middle between pure licensors and mere implementers. The head of Huawei's European IP department, Xiaowu (Emil) Zhang, pointed out that his company still finds itself on the receiving end of standard-essential patent (SEP) assertions more often than on the enforcing side. Mr. Zhang took rather centrist positions. Avanci's Senior Vice President Laurie Fitzgerald expressed the pool management firm's satisfaction with having created a licensing solution that has brought two industries (telecommunications innovators and car makers) together. It is an unprecedented success story. Car makers could have negotiated bilateral licenses with all those patent holders. They didn't. Daimler struck a few bilateral deals when it settled litigation with Nokia and others--but ultimately opted for the pool license.
Regardless, the FSA's Secretary General Evelina Kurgonaite--pointing to the many automotive industry players among her organization's membership--and Continental's Michael Schloegl ("Schlögl" in German) criticized Avanci and Huawei. They did not propose a better alternative, though. In the end, it all comes down to license fees. If Avanci charged $1.50 instead of $15 (now $20, but most car makers still benefit from the old $15 deal), there wouldn't be any debate over the licensing level or access to injunctions.
Conti's Mr. Schloegl argued that other car parts than the telematics control unit (TCU) are also essential, and the price of a car would increase massively if those patent holders collected royalties relative to the value of those parts to the consumer. Huawei's Mr. Zhang, however, noted that a few years after the purchase, car makers want customers to pay for a renewal of their subscription to connectivity services and that such revenues are also enabled by cellular SEPs. All of us know those letters and emails from automakers.
I can't imagine that any other automotive patent holder (than those owning cellular SEPs) leaves money on the table. Why would someone owning patents on traditional car parts not seek fair compensation and, if necessary, injunctions? Case in point, the defendant in the seminal German case for the (dis)proportionality of patent injunctions, the Heat Exchanger decision by the Federal Court of Justice, was Daimler (now called Mercedes-Benz).
It was a lively debate. The weakest link of the chain, however, was the moderator: Benno Buehler ("Bühler" in German) of Charles River Associates. I saw people in the audience shaking their heads when he said that "around half" of all cellular SEPs are in the Avanci pool. The actual percentage is closer to 100% than to 50%. But in the SEP context, Charles River cannot be trusted. Their primary client in connection with SEPs is Apple--both directly as well as through its astroturfers.
