Continental Automotive v. Avanci: Wireless SEP Licensing Presents Challenges for Automotive Industry

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As new devices become wirelessly connected, the importance of fairly licensing cellular standard essential patents (SEPs) has become increasingly important. This addition of wireless connectivity into new types of products, however, has created conflicts, as new market participants face unfamiliar licensing demands rooted in historical wireless licensing practices. The complexity of this situation is highlighted by a complaint filed recently in the Northern District of California (Case No. 5:19-cv-02520), in which Continental Automotive Systems, a supplier of cellular components to car manufacturers, sued both Avanci, LLC—a company that pools and licenses cellular SEPs on behalf of member companies—along with some of Avanci’s member companies. In its complaint, Continental alleged that Avanci, when acting on behalf of its member companies, breached FRAND commitments for the SEPs that it was offering to license. Interestingly, some of Continental’s complaints relate to the issues decided in the FTC v. Qualcomm case, which was recently tried before Judge Koh in the Northern District of California.