Continental AG, which makes control units for Daimler AG cars, cannot pursue antitrust claims against a group of patent owners, including Qualcomm Inc, which are seeking royalties on telecommunications technology, a federal judge in Texas ruled.
Avanci LLC, a licensing pool formed by Qualcomm, Nokia Oyj, Sharp Corp and other owners of patents on technology standards, is not breaching antitrust laws when it negotiates license agreements with automakers rather than the component makers, Barbara Lynn, chief district judge for the Northern District of Texas, said in dismissing the suit in a decision posted on Friday.
The licensing group charges US$15 per vehicle for the use of patented technology that is key to an industry standard for 4G telecommunications, and is developing a price for 5G, the next generation of wireless technology that promises to alter everything from driverless vehicles to robotic surgery.
Companies that develop standardized technology so electronics can work together to license any relevant patents on fair, reasonable and non-discriminatory terms, known as Frand. It is a phrase that has never been defined, although Continental said that Avanci’s licensing plan is neither fair nor reasonable.
Automakers traditionally have their component makers handle any patent licensing issues and indemnify the automaker from infringement suits.
Continental, which makes the telematics control units for Daimler vehicles, said that the US$15 charge would more than wipe out any profit it makes from the US$100 part it sells Daimler.
In dismissing the lawsuit, Lynn relied in part on a US appeals court decision that threw out an antitrust lawsuit the US Federal Trade Commission had lodged against Qualcomm over its licensing practices.
In that ruling, the court said that Qualcomm was within its rights to demand royalties from the end product rather than a component part.
“A patent owner may use price discrimination to maximize the patent’s value without violating antitrust law,” Lynn wrote.
Avanci’s request to dismiss the lawsuit was bolstered by the US Department of Justice’s antitrust division, which wrote to the judge in February to say that any breach of the Frand obligation would be a contract dispute, not an antitrust case.
The case was part of a closely watched group of lawsuits in the US and Europe pitting Daimler and its parts makers against the telecom industry. Nokia has been winning court rulings in Germany.
“This decision further confirms that Avanci’s one-stop licensing solution for the auto industry is consistent with US antitrust law,” Avanci founder and chief executive Kasim Alfalahi said in a statement.
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