Continental loses automotive patent pool suit
Car parts maker Continental has lost an appeal in its long-running dispute with the Nokia-backed patent pool Avanci.
In a judgment handed down on Monday, February 28, the US Court of Appeal for the Fifth Circuit dismissed Continental’s appeal for lacking Article III standing, claiming that it did not have the right to challenge several of Avanci’s patents that are essential to the wireless standard.
This is the latest development in Continental’s battle with Avanci, which includes licensors Nokia, Sharp and Conversant Wireless as members. Continental claims that Avanci and its members had violated antitrust and state laws in negotiations for patent licenses.
The circuit’s opinion held that Continental had failed to demonstrate standing for either its claims that it had been refused a FRAND licence from the defendants and its indemnity arguments and vacated the lawsuit, ordering a lower court to dismiss the case for lack of standing.
Continental sought SEP licences from both Avanci and the other members at fair, reasonable, and non-discriminatory (FRAND) rates but failed to secure a deal.
According to the defendants, licences were available to Continental on FRAND terms from the individual SEP-holders and Continental did not need SEP licences since it licenses the OEMs that incorporate their products.
Continental said that Avanci’s refusal to sell a licence on FRAND terms constituted both a contractual and an anticompetitive breach under the Sherman Antitrust Act and sued Avanci and the members in the US District Court for the Northern District of Califonia.
It sought declaratory relief that the deal was not FRAND as well as injunctive relief barring further “unlawful conduct”.
The case was later transferred to the Northern District of Texas. While the transition was pending, Avanci and the members moved to dismiss Continental’s complaint, for failure to state a claim upon which relief could be granted.
The Texas court accepted Continental’s claims that it had been refused a licence but dismissed with prejudice Continental’s Sherman Act’s claims for lack of antitrust standing, leading it to appeal to the Fifth Circuit.
However, on appeal, the Fifth Circuit dismissed both of Continental’s claims, vacating the Texas court’s judgment and remanding the case with instructions to dismiss Continental’s case for lack of standing.
Tech support
The circuit ruled against Continental despite several bids from fellow tech companies, including Apple, asking for a favourable ruling on the appeal.
In February last year, Apple challenged the “misguided view” of the US Department of justice that antitrust law should be kept out of patent cases and urged the Fifth Circuit to uphold Continental’s antitrust claims.
The tech company argued that antitrust enforcement played an “important role” in addressing patent holdup—when a patent holder makes an intentionally false promise to licence the technology on FRAND terms and then breaches that promise.
Car manufacturer Tesla also submitted an amicus brief backing Continental’s appeal.
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