Case: 20-11032 Document: 00516288126 Page: 1 Date Filed: 04/20/2022
20-11032
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
CONTINENTAL AUTOMOTIVE SYSTEMS, INCORPORATED,
a Delaware corporation,
Plaintiff-Appellant,
v.
AVANCI, L.L.C., a Delaware corporation; AVANCI PLATFORM
INTERNATIONAL LIMITED, an Irish company; NOKIA
CORPORATION, a Finnish corporation; NOKIA OF AMERICA
CORPORATION, a Delaware corporation; NOKIA SOLUTIONS AND
NETWORKS U.S. L.L.C., a Delaware corporation; NOKIA SOLUTIONS
AND NETWORKS OY, a Finnish corporation; NOKIA TECHNOLOGIES
OY, a Finnish corporation; OPTIS UP HOLDINGS, L.L.C., a Delaware
corporation; OPTIS CELLULAR TECHNOLOGY, L.L.C., a Delaware
corporation; OPTIS WIRELESS TECHNOLOGY, L.L.C., a Delaware
corporation; SHARP CORPORATION, a Japanese corporation,
Defendants-Appellees.
please
On Appeal from the United States District Court for the Northern
District of Texas, No. 19-cv-2933 (Hon. Barbara M.G. Lynn)
UNOPPOSED MOTION OF AMERICAN HONDA MOTOR CO., INC.,
TOYOTA MOTOR CORP., AND TESLA, INC. FOR LEAVE TO FILE
BRIEF AS AMICI CURIAE IN SUPPORT OF PLAINTIFF-
APPELLANT’S PETITION FOR REHEARING EN BANC
Nicole A. Saharsky
Minh Nguyen-Dang
MAYER BROWN LLP
1999 K Street, N.W.
Washington, DC 20006
(202) 263-3000
[email protected]
Counsel for Amici Curiae
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CORPORATE DISCLOSURE STATEMENT AND
SUPPLEMENTAL STATEMENT OF INTERESTED PERSONS
No. 20-11032, Continental Automotive Sys., Inc. v. Avanci L.L.C. et al.
The undersigned counsel of record certifies that the following listed
persons and entities as described in the fourth sentence of Fifth Circuit Rule
28.2.1, in addition to those disclosed in the parties’ statements of interested
persons, have an interest in the outcome of this case. These representations
are made in order that the judges of this Court may evaluate possible dis-
qualification or recusal.
Amicus Curiae Counsel
American Honda Motor Co., 1. Mayer Brown LLP (Nicole A.
Inc. Saharsky; Minh Nguyen-Dang)
2. American Honda Motor Co., Inc. (Ja-
mes Oliva)
Toyota Motor Corp. 1. Mayer Brown LLP (Nicole A.
Saharsky; Minh Nguyen-Dang)
Tesla, Inc. 1. Mayer Brown LLP (Nicole A.
Saharsky; Minh Nguyen-Dang)
2. Tesla, Inc. (Emily Lough; Jim Sher-
wood)
Amicus curiae American Honda Motor Co., Inc., is a wholly owned
subsidiary of Honda Motor Co., Ltd. Honda Motor Co., Ltd. is a publicly
held company, and no publicly held company owns 10% or more of its stock.
Amicus curiae Toyota Motor Corp., is a publicly held company, and no
publicly held company owns 10% or more of it stock.
i
Case: 20-11032 Document: 00516288126 Page: 3 Date Filed: 04/20/2022
Amicus curiae Tesla, Inc., has no parent company, and no publicly
held company owns 10% or more of it stock.
Dated: April 20, 2022 /s/ Nicole A. Saharsky
Nicole A. Saharsky
ii
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UNOPPOSED MOTION FOR LEAVE
Pursuant to Federal Rule of Appellate Procedure 29(b)(2), American
Honda Motor Co., Inc., Toyota Motor Corp., and Tesla, Inc., move for leave
to file a brief as amici curiae in support of Plaintiff-Appellant Continental
Automotive Systems, Inc.’s petition for rehearing en banc. A copy of the
proposed amicus brief is attached to this motion. All parties have consented
to the motion.
1. Prospective amici are automobile manufacturers, known in the
industry as original equipment manufacturers or OEMs. OEMs purchase
automotive parts from companies like Continental and use them in manu-
facturing vehicles. Those parts practice standard essential patents, but De-
fendants refuse to provide Continental with the necessary licenses on fair,
reasonable, and non-discriminatory (FRAND) terms. That hurts Continen-
tal’s business, decreases competition in terms of the parts available to
OEMs, and ultimately hurts consumers.
2. The panel held that Continental did not have standing to chal-
lenge Defendants’ licensing practices. The panel’s reasoning was based in
part on its view that OEMs would have standing to bring suit. As OEMs,
prospective amici are uniquely situated to explain to the Court how the
panel was mistaken. Although OEMs are harmed by Defendants’ refusal to
1
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provide licenses to suppliers such as Continental, the suppliers are uniquely
harmed, and OEMs would not be able to bring suit to vindicate the harms
particular to suppliers. Prospective amici also are uniquely positioned to
explain how the panel’s decision, if left uncorrected, will create serious prob-
lems for the automotive industry and more broadly.
3. Counsel for prospective amici contacted the parties’ counsel for
their position on this motion. Counsel for all parties consent to the motion.
CONCLUSION
The Court should grant leave to file the attached amicus curiae brief.
Dated: April 20, 2022 Respectfully submitted,
/s/ Nicole A. Saharsky
Nicole A. Saharsky
Minh Nguyen-Dang
MAYER BROWN LLP
1999 K Street, N.W.
Washington, D.C. 20006
(202) 263-3000
[email protected] Counsel for Amici Curiae
2
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CERTIFICATE OF COMPLIANCE
Pursuant to Federal Rule of Appellate Procedure 32(g), undersigned
counsel certifies that this motion:
(i) complies with the type-volume limitation of Rule 27(d)(2) be-
cause it contains 284 words, including footnotes and excluding the parts of
the brief exempted by Rule 32(f ); and
(ii) complies with the typeface requirements of Rule 32(a)(5) and the
type style requirements of Rule 32(a)(6) because it has been prepared using
Microsoft Office Word 2016 and is set in Century Schoolbook font in a size
equivalent to 14 points or larger.
Pursuant to Paragraph A(6) of this Court’s ECF Filing Standards, un-
dersigned counsel certifies that (1) required privacy redactions have been
made in compliance with 5th Cir. R. 25.2.13; (2) the electronic submission is
an exact copy of the paper document, in compliance with 5th Cir. R. 25.2.1;
and (3) the document has been scanned for viruses with the most recent
version of a commercial virus scanning program and is free of viruses.
Dated: April 20, 2022 /s/ Nicole A. Saharsky
Nicole A. Saharsky
3
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CERTIFICATE OF SERVICE
I hereby certify that I electronically filed the foregoing with the Clerk
of the Court for the United States Court of Appeals for the Fifth Circuit by
using the appellate CM/ECF system on April 20, 2022. I certify that all
participants in the case are registered CM/ECF users and that service will
be accomplished by the appellate CM/ECF system.
/s/ Nicole A. Saharsky
Nicole A. Saharsky
4
Case: 20-11032 Document: 00516288127 Page: 1 Date Filed: 04/20/2022
No. 20-11032
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
CONTINENTAL AUTOMOTIVE SYSTEMS, INCORPORATED, A
DELAWARE CORPORATION,
Plaintiff-Appellant,
v.
AVANCI, L.L.C., A DELAWARE CORPORATION; AVANCI
PLATFORM INTERNATIONAL LIMITED, AN IRISH COMPANY;
NOKIA CORPORATION, A FINNISH CORPORATION; NOKIA OF
AMERICA CORPORATION, A DELAWARE CORPORATION; NOKIA
SOLUTIONS AND NETWORKS U.S., L.L.C., A DELAWARE
CORPORATION; NOKIA SOLUTIONS AND NETWORKS OY, A
FINNISH CORPORATION; CONVERSANT WIRELESS LICENSING
SARL, A LUXEMBOURG CORPRATION; OPTIS UP HOLDINGS,
L.L.C., A DELAWARE CORPORATION; OPTIS CELLULAR
TECHNOLOGY, L.L.C., A DELAWARE CORPORATION; OPTIS
WIRELESS TECHNOLOGY, L.L.C., A DELAWARE CORPORATION;
SHARP CORPORATION, A JAPANESE CORPORATION,
Defendants-Appellees.
On Appeal from the United States District Court for the
Northern District of Texas, No. 3:19-cv-02933
Hon. Barbara M.G. Lynn
BRIEF OF AMICUS CURIAE THALES IN
SUPPORT OF PLAINTIFF-APPELLANT’S PETITION
FOR REHEARING EN BANC
(Counsel Listed on Inside Cover)
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Craig M. Reiser Michael L. Keeley
Counsel of Record Paul Zeineddin
Denise Plunkett Michael O’Mara
Christopher Erickson AXINN, VELTROP &
AXINN, VELTROP & HARKRIDER LLP
HARKRIDER LLP 1901 L Street NW
114 West 47th Street Washington, DC 20036
New York, NY 10036
(212) 728-2218
[email protected] Counsel for Thales DIS AIS Deutschland GmbH and
Thales DIS AIS USA LLC
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SUPPLEMENTAL CERTIFICATE OF INTERESTED PERSONS
No. 20-11032, Continental Automotive Systems v. Avanci
Pursuant to Fifth Circuit Rules 28.2.1 and 29.2, the undersigned
counsel of record for amicus curiae certifies that this supplemental
statement of interested parties discloses all those with an interest in
the amicus brief. These representations are made to permit the judges
of this Court to evaluate possible disqualification or recusal.
Amicus Curiae on this Brief
Thales DIS AIS Deutschland GmbH and Thales DIS AIS USA LLC,
amicus curiae. Thales DIS AIS USA, LLC is a wholly-owned subsidiary
of Thales DIS AIS Deutschland GmbH. Thales DIS AIS Deutschland
GmbH is a wholly-owned subsidiary of Gemalto B.V. Gemalto B.V. is a
wholly-owned subsidiary of Thales SA, a publicly traded company.
Counsel for Amicus Curiae
Craig M. Reiser, Denise Plunkett, Christopher Erickson, Michael L.
Keeley, Paul Zeineddin, Michael O’Mara of Axinn, Veltrop & Harkrider
on behalf of amicus curiae Thales DIS AIS Deutschland GmbH and
Thales DIS AIS USA LLC.
Dated: April 20, 2022 /s/ Craig M. Reiser
_________________________________________
Craig M. Reiser
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TABLE OF CONTENTS
INTEREST OF THE AMICUS CURIAE ................................................... 1
SUMMARY OF ARGUMENT .................................................................... 3
ARGUMENT ............................................................................................... 4
I. REHEARING EN BANC IS APPROPRIATE ......................... 4
The panel decision contravenes established law, which
does not categorically limit which implementers can
enforce SEP-holders’ obligations to SSOs ...................... 4
The panel decision upsets the balance of the
standardized technologies ecosystem, which is critical
to ensuring the development of innovative products .... 6
CONCLUSION ......................................................................................... 12
ii
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TABLE OF AUTHORITIES
Page(s)
Cases
Broadcom Corp. v. Qualcomm Inc.,
501 F.3d 297 (3d Cir. 2007) ................................................................... 8
Ericsson, Inc. v. D-Link Sys., Inc.,
773 F.3d 1201 (Fed. Cir. 2014) .......................................................... 8, 9
HTC Corp. v. Telefonaktiebolaget LM Ericsson,
12 F.4th 476 (5th Cir. 2021) .................................................................. 4
Huawei Techs. Co. v. T-Mobile US, Inc.,
No. 16-CV-00052, 2017 WL 3954108
(E.D. Tex. Aug. 29, 2017) ....................................................................... 8
Koninklijke Philips N.V. v. Thales DIS AIS USA, LLC,
No. 20-01713 (D. Del. filed Dec. 17, 2020) .......................................... 10
Microsoft Corp. v. Motorola, Inc.,
795 F.3d 1024 (9th Cir. 2015) ................................................................ 5
TCL Commc’n Tech. Holdings Ltd. v. Telefonaktiebolaget LM
Ericsson, 943 F.3d 1360 (Fed. Cir. 2019),
cert. denied, 141 S. Ct. 239 (2020) ......................................................... 5
Statutes
Fed. R. App. P. 29(a)(4)(E) ......................................................................... 1
Fed. R. App. P. 35(a) ................................................................................... 4
Other Authorities
Analysis of Proposed Consent to Aid Public Comment,
Motorola Mobility LLC and Google Inc., FTC File No. 121-
0120 (Jan 3, 2013) ................................................................................ 10
iii
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Certain UMTS and LTE Cellular Communications Modules
& Products Containing the Same, No. 337-TA-1240 (ITC
Apr. 1, 2022) (Initial Determination) .................................................. 10
ETSI, Rules of Procedure: Annex 6: ETSI Intellectual
Property Rights Policy § 12 (Dec. 1, 2021) .................................... 5-6, 7
Jacob Morgan, A Simple Explanation of ‘The Internet of
Things,’ Forbes (May 13, 2014) ............................................................. 1
Jorge Contreras, Much Ado About Holdup, 2019 U. Ill. L.
Rev. 875 (2019) ....................................................................................... 8
Knud Lasse Lueth, State of the IoT 2020: 12 billion IoT
connections, surpassing non-IoT for the first time, IoT
Analytics (Nov. 19, 2020) ....................................................................... 7
Singh, R. P., Javaid, M., Haleem, A., & Suman, R., Internet
of things (IoT) applications to fight against COVID-19
pandemic, Diabetes & metabolic syndrome, 14(4), 521–
524 (2020) ............................................................................................... 7
Third Party United States Federal Trade Commission’s
Statement on the Public Interest, Certain Gaming and
Entertainment Consoles, Related Software, and
Components Thereof, Inv. No. 337-TA-752, 2012 WL
7681645 (June 6, 2012) .......................................................................... 8
Unwired Planet v. Huawei [2017] EWHC 711 (Pat) (UK) ....................... 5
iv
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INTEREST OF THE AMICUS CURIAE 1
The field of machine-to-machine (“M2M”) communications has
enabled us to connect almost any device with an on-and-off switch to not
only the Internet, but to other devices, giving rise to the rapidly-
expanding “Internet of Things” (“IoT”). 2 IoT devices span a wide range
of industries, from cellphones and coffee makers, to home appliances
and wearable fitness devices, and even airplane engines and oil rig
drills.
Underlying this M2M connectivity are modern interoperability
standards, like 5G. Such standards not only allow products to be
designed that will be compatible with each other, but have enabled the
development of “smart cities”—helping us to reduce waste and use
energy efficiently. They facilitate the technologies that can link your
calendar, your car, traffic monitoring services, and your phone—so you
know what time to leave for a meeting and the best route to take. They
1 Pursuant to Fed. R. App. P. 29(a)(4)(E), amicus affirms that no counsel for a party
authored this brief in whole or in part and that no person other than amicus has
made any monetary contributions intended to fund the preparation or submission of
this brief. Amicus has requested leave of this Court to file this brief.
2 See Jacob Morgan, A Simple Explanation of ‘The Internet of Things,’ Forbes (May
13, 2014), https://tinyurl.com/yawb95ja.
Case: 20-11032 Document: 00516288127 Page: 8 Date Filed: 04/20/2022
have helped to promote economic growth and development, and the
creation of products that improve our daily lives.
Amicus curiae Thales DIS AIS Deutschland GmbH and Thales
DIS AIS USA LLC (together, “Thales”) is an industry leader in the
M2M field. Thales produces wireless network access modules that
enable M2M communications. Thales’ modules are compatible with the
3G UMTS, 4G/LTE and 5G mobile communication standards
promulgated by the European Telecommunications Standards Institute
(“ETSI”), a Standard Setting Organization (“SSO”). SSOs like ETSI
bring together industry participants to create technical standards for
particular technologies that facilitate interoperability. Companies like
Thales that seek to implement one or more of these standards may need
to license tens of thousands of patents that are self-declared as
“essential” to the standard.
Thales has attempted in good faith to negotiate licenses for these
patents with the relevant SEP-holders, but has been rebuffed at times
with licensing offers that are not fair, reasonable, and non-
discriminatory (“FRAND”). In other cases, the SEP-holder has simply
refused to make an offer to Thales, in direct contravention of its
2
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FRAND obligations. One remedy for an implementer in this situation
is to bring a lawsuit against the relevant SEP-holder to enforce the
SEP-holder’s obligations under the relevant standard. The Fifth Circuit
panel’s decision, if left to stand, would remove this option for many
implementers and would also upend the balance between implementers
and SEP-holders established by the Intellectual Property Rights (“IPR”)
policies of various SSOs.
Thales therefore has a strong interest in this Court’s en banc
review, and reversal, of the Fifth Circuit panel’s decision.
SUMMARY OF ARGUMENT
In concluding that only certain implementers are third-party
beneficiaries to SEP-holders’ agreements with SSOs, the panel decision
created intra- and inter-circuit splits, which are appropriate to resolve
en banc. The panel decision thus departed from the prior decisions of
this Court and other courts, and did so based on a flawed analysis of the
SSO agreements at issue. En banc rehearing also is appropriate
because the balancing of interests between SEP-holders and licensees is
tremendously important for encouraging the development of 21st-
century technologies, such as those relying on M2M communications.
3
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The panel decision, if left to stand, would disrupt the carefully crafted
balance between SEP-holders and implementers prescribed by SSOs
and, consequently, is likely to harm consumers and innovation.
ARGUMENT
I. REHEARING EN BANC IS APPROPRIATE
En banc rehearing is appropriate where the rehearing is
“necessary to secure or maintain uniformity of the court's decisions” or
where there is a “question of exceptional importance.” Fed. R. App. P.
35(a). Both of these elements are present here.
The panel decision contravenes established law,
which does not categorically limit which
implementers can enforce SEP-holders’
obligations to SSOs
As Continental notes, this Circuit has unambiguously defined
which entities are third-party beneficiaries to agreements between
SEP-holders and SSOs. “Companies seeking to license under [FRAND]
terms become third-party beneficiaries of the contract between the
standard-essential patent holder and the standard setting
organization.” HTC Corp. v. Telefonaktiebolaget LM Ericsson, 12 F.4th
476 , 481 (5th Cir. 2021) (emphasis added). The Fifth Circuit panel
4
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therefore erred by concluding that only some would-be licensees are
third-party beneficiaries to those contracts. See Op. 10-11.
The panel decision cites no court decision that requires the panel’s
conclusion. This is not surprising, because other courts have
consistently described the agreements between SEP-holders and SSOs
as providing rights to implementers, without limitation. See, e.g., TCL
Commc’n Tech. Holdings Ltd. v. Telefonaktiebolaget LM Ericsson, 943
F.3d 1360, 1364 (Fed. Cir. 2019), cert. denied, 141 S. Ct. 239 (2020)
(concluding that “implementers of ETSI standards,” without limitation,
are third-party beneficiaries of the ETSI agreement, which is “intended
to benefit implementers of ETSI standards”); Microsoft Corp. v.
Motorola, Inc., 795 F.3d 1024, 1033 (9th Cir. 2015) (“Microsoft—as a
standard-user—can enforce these contracts as a third-party beneficiary”
(emphasis added)); see also Unwired Planet v. Huawei [2017] EWHC
711 (Pat) (UK), ¶¶ 98-146 (holding, under French law, that the ETSI
agreement is enforceable by “person[s] wishing to implement the
standard,” without limitation). 3
3The interpretation of the ETSI IPR Policy is governed by French law. See ETSI,
Rules of Procedure: Annex 6: ETSI Intellectual Property Rights Policy (hereinafter
5
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The Fifth Circuit panel’s decision is devoid of any analysis as to
why, based on the actual terms of ETSI’s IPR policy (or other SSOs’
polices), Continental is not an intended beneficiary. See Op. 11-12; see
also FAC ¶¶ 77-85. The Fifth Circuit panel did not address, much less
justify, the resulting inconsistency between the rule it announced and
the ETSI IPR policy at issue—which does not provide different rights to
implementers depending on whether the implementer competes with
the licensing SEP-holder. See Op. 11-12; ETSI IPR Policy.
The Fifth Circuit should grant rehearing en banc to reconcile
these intra- and inter-circuit splits and to correct the panel’s
unsupported interpretation of the ETSI IPR policy.
The panel decision upsets the balance of the
standardized technologies ecosystem, which is
critical to ensuring the development of
innovative products
The impact of the panel’s decision is not limited to the parties or
even the industries in this case. To the contrary, the panel decision, if
left to stand, would be a sea change for standardized technologies like
M2M communications, upending the deliberate balance reflected in
“ETSI IPR Policy”) § 12 (Dec. 1, 2021), https://www.etsi.org/images/files/IPR/etsi-
ipr-policy.pdf.
6
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many SSO policies, including ETSI’s. 4 This will harm consumers and
innovation.
The world economy has become dependent upon M2M
communication technology. The number of IoT connected devices (over
10 billion globally) recently exceeded the number of non-IoT-connected
devices. 5 Products using M2M communications are now ubiquitous in
myriad critical sectors of the economy. For example, Thales’ wireless
modules are components in respirators and other medical devices,
smart energy meters, autonomous vehicles, global positioning systems,
and more. 6 M2M communications also have been heralded in the fight
against COVID-19. 7 In short, M2M communications have become an
essential part of our society and economy globally.
4 See, e.g., ETSI IPR Policy § 3.1 (“[T]he ETSI IPR POLICY seeks a balance between
the needs of standardization for public use in the field of telecommunications and
the rights of the owners of IPRs.”).
5 Knud Lasse Lueth, State of the IoT 2020: 12 billion IoT connections, surpassing
non-IoT for the first time, IoT Analytics (Nov. 19, 2020), https://iot-
analytics.com/state-of-the-iot-2020-12-billion-iot-connections-surpassing-non-iot-for-
the-first-time.
6 See generally Thales Markets,
https://www.thalesgroup.com/en/worldwide/activities (last visited Apr. 20, 2022).
7 Singh, R. P., Javaid, M., Haleem, A., & Suman, R., Internet of things (IoT)
applications to fight against COVID-19 pandemic, Diabetes & Metabolic Syndrome,
14(4), 521–524 (2020), https://doi.org/10.1016/j.dsx.2020.04.041.
7
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The Fifth Circuit panel’s decision would impede innovation in
M2M technologies by increasing the likelihood of, and unfair leverage
resulting from, patent hold-up. Patent hold-up occurs when SEP-
holders negotiate excessive royalties or other one-sided terms based on
the market power resulting from the inclusion of their self-declared
SEPs in a technological standard. See Op. 3 (citing Ericsson, Inc. v. D-
Link Sys., Inc., 773 F.3d 1201, 1209 (Fed. Cir. 2014)); Broadcom Corp.
v. Qualcomm Inc., 501 F.3d 297, 310-314 (3d Cir. 2007). Patent hold-up
can result in higher prices for end consumers and reduce innovation. 8
The panel decision encourages hold-up because it releases SEP-
holders from any FRAND obligation to certain implementers (i.e., non-
SSO members that do not compete with the licensing SEP-holder) as
those implementers will no longer be able to enforce the SEP-holders’
FRAND obligations. See Huawei Techs. Co. v. T-Mobile US, Inc., No.
16-CV-00052, 2017 WL 3954108, at *4 (E.D. Tex. Aug. 29, 2017), report
and recommendation adopted, No. 16-CV-00052, 2017 WL 3927177
8See Jorge Contreras, Much Ado About Holdup, 2019 U. Ill. L. Rev. 875, 883 (2019);
Third Party United States Federal Trade Commission’s Statement on the Public
Interest, Certain Gaming and Entertainment Consoles, Related Software, and
Components Thereof, Inv. No. 337-TA-752, 2012 WL 7681645, at *1-2 (June 6,
2012).
8
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(E.D. Tex. Sept. 6, 2017) (crediting expert testimony that “there would
be little if any remedy for a[n] [SSO] member's noncompliance” if non-
members of an SSO could not enforce SSO obligations). In the M2M
communications space, this likely would lead to higher prices for
products on which consumers are increasingly reliant.
Moreover, the panel’s ruling stands to impede licensing
negotiations that allow implementers of standardized technologies, like
5G, to apply the technology in innovative settings, such as M2M
communications. The royalty rate is often a sticking point in these
licensing negotiations between SEP-holders and implementers, and
existing licenses can serve as an appropriate benchmark for
determining whether a royalty rate is FRAND. See D-Link, 773 F.3d at
1227-28. The panel decision, however, splits implementers into two
camps: those entitled to FRAND terms (i.e., SSO members and
implementers that compete with the licensing SEP-holder) and those
that are not. License negotiations would become more difficult as
implementers and SEP-holders would argue over, for example, whether
a prior licensing agreement involved an implementer who competed
with the licensing SEP-holder. There also would be an increased risk
9
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that a license with a supra-FRAND royalty rate would be proffered as
the benchmark for a subsequent license.
The panel decision creates particular confusion and uncertainty
for component manufactures like Thales that are in the middle of the
supply chain. The panel, in holding Continental had not suffered an
injury-in-fact, stated that Continental had not been denied property to
which it is entitled because it “does not need to personally own SEP
licenses to operate its business.” Op. 12.
But the panel decision fails to recognize that without a license,
mid-chain manufacturers like Thales are often subject to lawsuits by
SEP-holders (including Avanci members). In fact, an SEP-holder and
Avanci member recently brought parallel actions against Thales, in
federal court and in the International Trade Commission, 9 seeking an
exclusion order and other relief in an attempt to obtain supra-FRAND
royalties through a hold-up strategy. 10
9 Koninklijke Philips N.V. v. Thales DIS AIS USA, LLC, No. 20-01713 (D. Del. filed
Dec. 17, 2020); Certain UMTS and LTE Cellular Communications Modules &
Products Containing the Same, No. 337-TA-1240 (ITC Apr. 1, 2022) (Initial
Determination).
10 See Analysis of Proposed Consent to Aid Public Comment, at 3, Motorola Mobility
LLC and Google Inc., FTC File No. 121-0120 (Jan 3, 2013) (“[F]iling for an exclusion
order before the ITC on a FRAND-encumbered SEP significantly raises the risk of
10
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Furthermore, the panel decision fails to recognize that
downstream manufacturers’ customers require mid-level manufacturers
to warrant that the supplied components do not infringe any
intellectual property rights, as well as to indemnify them for any
licensing royalties (even if supra-FRAND). See FAC ¶ 105.
Mid-level manufacturers thus need a license to avoid
(1) potentially ruinous lawsuits from SEP-holders, (2) the likely loss of
business stemming from their inability to provide a contractual
warranty regarding infringement, and (3) having to pay supra-FRAND
royalties via the payments to downstream manufacturers. Without the
ability to enforce a SEP-holder’s FRAND obligations, a consequence of
the panel’s decision, many mid-level manufacturers will be unable to
obtain licenses and thus avoid these severe consequences. Moreover,
these significant costs will inevitably hamper innovation and lead to
higher costs for consumers.
patent hold-up in concurrent licensing negotiations because an exclusion order may
be entered by the ITC before a FRAND rate is reached.”).
11
Case: 20-11032 Document: 00516288127 Page: 18 Date Filed: 04/20/2022
CONCLUSION
For the foregoing reasons, rehearing en banc is necessary and
appropriate.
Dated: April 20, 2022 Respectfully submitted,
/s/ Craig M. Reiser
_________________________________________
Craig M. Reiser
Counsel of Record
Denise Plunkett
Christopher Erickson
AXINN, VELTROP &
HARKRIDER LLP
114 West 47th Street
New York, NY 10036
(212) 728-2218
[email protected]
Michael L. Keeley
Paul Zeineddin
Michael O’Mara
AXINN, VELTROP &
HARKRIDER LLP
1901 L Street NW
Washington, DC 20036
Counsel for Thales DIS AIS
Deutschland GmbH and Thales
DIS AIS USA LLC
12
Case: 20-11032 Document: 00516288127 Page: 19 Date Filed: 04/20/2022
CERTIFICATE OF COMPLIANCE
Pursuant to Federal Rules of Appellate Procedure 32(g),
undersigned counsel certifies that this brief:
(i) Complies with the type-volume limitation of Rule 29(b)(4)
because it contains 2,093 words, including footnotes and
excluding the parts of the brief exempted by Rule 32(f); and
(ii) complies with the typeface requirements of Rule 32(a)(5) and
the type style requirements of Rule 32(a)(6) because it has
been prepared using Microsoft Office Word 2016 and is set in
Century Schoolbook font in a size equivalent to 14 points or
larger.
Dated: April 20, 2022 /s/ Craig M. Reiser
_________________________________________
Craig M. Reiser
Case: 20-11032 Document: 00516288127 Page: 20 Date Filed: 04/20/2022
CERTIFICATE OF SERVICE
I hereby certify that on April 20, 2022, I electronically filed the
foregoing with the Clerk of the Court for the United States Court of
Appeals for the Fifth Circuit by using the appellate CM/ECF system on
April 20, 2022.
/s/ Craig M. Reiser
_________________________________________
Craig M. Reiser
