August 14, 2022

Volume XII, Number 226

Advertisement
Advertisement

August 12, 2022

Subscribe to Latest Legal News and Analysis

August 11, 2022

Subscribe to Latest Legal News and Analysis

5th Circuit Confirms Avanci SEP Pool is Safe: No Antitrust Issue with Avanci’s Pool

Avanci’s pool retains its 5th Circuit win, in a slightly different way, after an unusual turn of events where the panel rescinded its prior opinion and issued a new one. The new opinion affirms the district court’s ruling that Continental failed to state a claim under the Sherman Act (antitrust laws) thereby dismissing the case.  The original opinion found that Continental lacked standing to pursue its claims because it was not a third party beneficiary of the standard setting organization contract. Although the new ruling leaves some questions unanswered in the long-running dispute between a would-be implementer (Continental) and holders of standard essential patents (SEPs), the opinion rejects applying the antitrust laws in the SEP/FRAND context.

Background

In May of 2019, Continental filed suit against Avanci and numerous entities that had granted Avanci the exclusive right to license SEPs essential to the 2G, 3G, and 4G cellular standards.  Continental alleged breach of FRAND commitments and antitrust violations, based on Avanci’s refusal to grant Continental a license to SEPs it deemed necessary for the production of its telematics control units (TCUs), which it sells to original equipment/car manufacturers (OEMs).  Avanci argued that it was contractually limited to only licensing to the downstream OEMs.      

In September of 2020, Chief Judge Barbara Lynn (N.D. Tex.) granted Avanci’s motion to dismiss Continental’s antitrust claims and, after dismissing the antitrust claims, declined “to exercise supplemental jurisdiction over Plaintiff’s remaining declaratory judgment, breach of contract, promissory estoppel, and unfair competition claims.”  The district court found that Continental failed to allege that it had suffered an antitrust injury because Continental was still able to produce and sell its TCUs, had not been accused of infringement, and that the downstream OEMs were able to obtain licenses.  Continental appealed this decision to the 5th Circuit.

On February 28, 2022, the 5th Circuit issued its original order, vacating the district court’s ruling and remanding the case with instructions to dismiss all of Continental’s claims for lack of standing.  When this original opinion issued, however, we noted that several of the court’s conclusions went against commonly held assumptions in the patent market place.

On April 13, 2022, Continental filed a petition for rehearing en banc, arguing that the 5th Circuit’s opinion had created novel rules that “would open the door for standard-essential patent holders to evade their commitments to license businesses whose products implement the standards” which could in turn “enable the patent holders to dictate which companies can and cannot obtain the licenses they need to comply with the law and run their businesses, potentially forcing certain companies out of the market altogether.”  (Petition at i-ii).  The Court received numerous amicus briefs from both sides of the debate and issued a 1-sentence opinion, on June 13, 2022, withdrawing its prior ruling.   

The 5th Circuit’s revised opinion, in a brief 3 page discussion, adopts the reasoning of the district court finding that Continental failed to state a claim under the Sherman Act §§ 1 and 2.

Conclusion

Despite the procedural abnormality, the 5th Circuit still handed Avanci a major win, even if narrower than the original decision. According to the panel, Avanci can choose its licensees rather than being forced to license every portion of a supply chain and such actions are not antitrust violations.  The revised, narrower opinion may have been the result of copious amici briefs, or a realization that the original opinion may have caused a circuit split on the question of third party beneficiary standing.  As mentioned in our earlier review of the now rescinded 5th Circuit decision, SEP owners can rest a little easier knowing that under US law they can choose their licensees in a supply chain without running afoul of the antitrust laws.  This new decision shows that U.S. courts are continuing the trend of recognizing that “hold up” on the part of SEP-holders is less of a concern than “hold out” by would-be implementers. 

©1994-2022 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.National Law Review, Volume XII, Number 187
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement
Advertisement

About this Author

Daniel B. Weinger Patent Litigation Attorney Mintz Law Firm
Member

Daniel's practice in intellectual property focuses on patent litigation, both at the International Trade Commission and the Federal District Courts. Daniel has participated in all phases of patent litigation, including active engagement in multiple evidentiary hearings at the International Trade Commission. He has done work in a variety of technology areas, including computer software, software architecture, GPS, network devices, semiconductors, converged devices, and LED lighting.

Prior to joining Mintz Levin, Daniel worked as a database...

617-348-1629
Michael Renaud IP Litgation Attorney Mintz Levin
Member / Chair, Intellectual Property Division

Michael is a highly regarded intellectual property litigator and patent strategist who helps clients protect and generate revenue from their patent holdings. Intellectual Asset Magazine has repeatedly recognized him in its select IAM Patent 1000 and IAM Patent Strategy 300 publications. Clients rely on his counsel regarding sensitive licensing agreement negotiations, acquisitions, and other technology transactions. He leads a team known for its ability to translate complex technology and its value to non-technical professionals — in court and business negotiations.

Michael is...

617-348-1870
Bruce Sokler, Mintz Levin Law Firm, Washington DC, Health Care, Antitrust and Litigation Attorney
Member

Bruce is Chair of the Antitrust Section and in his over 30 years in private practice, he has developed extensive experience in both antitrust and communications regulation, including associated First Amendment and copyright law matters

In the antitrust area, Bruce’s practice includes antitrust counseling and representation in connection with federal and state governmental matters, as well as private antitrust litigation. He counsels and has represented Fortune 100 companies, not-for-profits, start-up entities, and domestic and international joint ventures. Bruce has been involved in...

202-434-7303
James Thomson IP Litigation Lawyer Mintz Levin Cohn Ferris Glovsky and Popeo PC
Associate

James is an experienced intellectual property litigator with significant courtroom and trial experience in federal courts. He handles all aspects of litigation, including e-discovery, motion practice, taking and defending depositions, and trial preparation. He has particular experience handling damages assessments involving complex technologies.

James represents clients in patent and trademark infringement cases and in trade secrets matters, with a focus on high technology innovations. He also has experience representing clients in the biotechnology, pharmaceutical, and medical...

617-348-3098
Advertisement
Advertisement
Advertisement