Precisely four weeks after Avanci announced a 4G standard-essential patent (SEP) License agreement with General Motors, the patent pool firm has just announced a license deal with Ford. Both companies are “Motown” icons, and between the two of them make about 10 million cars (GM: 6 million; Ford: 4 million) per year. But the backdrop of those license agreements couldn’t be much more different. GM signed without any prior litigation. By finally taking a license, Ford Motor Company puts a number of patent infringement cases behind it: seven out of Avanci’s 49 licensors were asserting patents in the District of Delaware, the Eastern District of Texas, and in Munich.

As a result, Avanci has now licensed 41 automotive brands and 65 million vehicles. All well-known U.S. car makers with the sole remaining exception of Chrysler (a Stellantis brand) are Avanci-licensed. It’s never been officially confirmed for Tesla, but it would not just be a statistical anomaly–more like paranormal–if several Avanci licensors had withdrawn their U.S. and German cases against Tesla near-simultaneously as a result of bilateral agreements (and no other Avanci licensor has since filed suit against Tesla).

I’ll share my observations on two aspects of this announcement. First, on the role that the recent Munich injunction may have played. One should neither under- nor overrate it. Second, I’ll comment on the different schools of thought in the automotive industry with respect to Avanci’s one-stop licensing offer.

Munich court makes patent holders money–but Ford had any number of reasons to sign

Just last week, it turned out that Presiding Judge Dr. Matthias Zigann (Munich I Regional Court, Seventh Civil Chamber) had told a mobile device maker that implementers must “promptly” seek a SEP license upon receiving an infringement notice–lest they be enjoined. While Ford didn’t act quite as swiftly as Judge Dr. Zigann recommends, it is interesting to see today’s announcement less than two weeks after Judge Dr. Zigann and his panel had entered the aforementioned injunction in IP Bridge v. Ford (one of various recent SEP wins for the Wildanger firm).

As a result of Ford’s Avanci license, that injunction won’t ever have to be enforced. When the news broke (on this blog first), Ford’s stock price went down by about 3%–an overreaction in my view as it was always clear that Ford could–and at some point responsibly would–take an Avanci license. Chances are that this caught the attention of the company’s C-level execs.

Presumably the Munich injunction was a catalyst more than anything else. It would never have come down if Ford had decided at the outset to resolve this situation through licensing rather than to provoke litigation through continued infringement. At no point was there a clear endgame for Ford (other than taking the pool license). How was protracted litigation going to save the company money? Did they expect to get a better deal by negotiating bilaterally with roughly four dozen Avanci licensors? They faced dozens of patent assertions in the U.S. alone, and additional injunction were looming large in Germany.

GM’s decision to avoid such litigation altogether may also have been part of the consideration: that’s what they call benchmarking.

Munich will continue to be an automotive patent litigation hotspot. For patentees seeking leverage from injunctions, it’s a great venue. I guess a number of SEP holders will take note of IP Bridge v. Ford and how quickly the dispute got settled after the injunction. All of that makes sense, but let’s not forget about the broader picture, which is that continued infringement litigation simply wasn’t going to be profitable for Ford. A road to nowhere.

Two schools of thought: Daimler/Ford/Tesla v. General Motors/Volkswagen

To date, three car makers have taken Avanci licenses after initially appearing to be prepared to embark on multi-year litigation: Daimler, Tesla, and now Ford. By contrast, General Motors took a license without litigation (as did others, such as BMW, before it), and Volkswagen was an early adopter, but for its volume brands it had only licensed 3G despite actually implementing 4G–a problem it solved in March after a couple of lawsuits had been filed (but long before any trial, let alone decision).

There is no indication whatsoever that Daimler, Ford, and Tesla ended up saving money on the bottom line. Their litigation expenses must have been huge, with Daimler clearly having overspent. So, Ford is not alone, and at least it pulled the plug at a time when litigation costs could have exploded.

In light of the Daimler disaster I actually adjusted my views of what Avanci is all about. Also, I never subscribed to Continental’s conspiracy theories, and have been clear about that for almost three years.

At a recent Auto IP & Legal World Summit in Frankfurt, Avanci executive Laurie Fitzgerald explained Avanci’s role to the audience. She said that Avanci’s terms already represent a compromise: numerous patent holders agreed to a set of terms based on which Avanci can offer a pool license to automakers–and obviously a pool administrator always needs to work with licensors so the pool as a whole won’t price itself out of the market.

The result of that exercise is then not just a set of financial terms (in Avanci’s case, it’s totally transparent: they publish their rates on their website) but actually an entire license agreement that implementers can opt to sign. They don’t have to: they can–if they so choose–pursue bilateral licensing. They can risk infringement litigation, as Daimler, Tesla, and Ford have. The pool license is an option, not an obligation. But there is a pattern here: companies either don’t want to license at all, or they take the one-stop license. I’m not aware of any car maker that would have entered into numerous bilateral license agreements. Pools are all about efficiency gains (see also my recent post on the implications of Via Licensing’s exit from the wireless patent pool business).

Continental v. Avanci: GM, Ford license deals further weaken Conti’s position

Next week, Avanci’s response to Conti’s petition for rehearing en banc of a Fifth Circuit panel decision dismissing the automotive supplier’s antitrust complaint against Avanci is due. There was no shortage of reasons for the Fifth Circuit to reject that petition anyway, but now that GM, Ford, and Tesla have all taken an Avanci license, it’s going to be even harder for Conti to get a U.S. federal appeals court interested in a case that hasn’t gone anywhere in almost three years.

Conti’s case is another example of wasteful litigation–not as costly maybe as some of those infringement disputes, but Conti brought it proactively and has nothing to show.

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The post Ford Motor Company settles seven patent disputes in one go by taking Avanci license to 49 SEP portfolios: Munich injunction may have been major catalyst, but just one factor appeared first on Rocky Mountain Patent.