Context: In early December 2023, Tesla filed a patent action with the High Court of Justice in London, challenging the validity and essentiality of three InterDigital patents and seeking a FRAND determination with respect to the entire Avanci 5G pool, and only as a fallback with respect to only InterDigital’s contribution to the pool (case no. HP-2023-000042).
What’s new: Today ip fray has obtained the first four documents from the electronic court docket. The particulars of claim outline what Tesla is seeking and contain the first publicly accessible confirmation of what IP experts have assumed since the near-simultaneous withdrawal of multiple enforcement actions: Tesla has an Avanci 4G license.
Direct impact: It is unclear why (of all 60+ Avanci licensors) InterDigital was picked as Tesla’s primary target. For InterDigital it is presumably not an option to give up on the three challenged patents with respect to the UK. With respect to Avanci, it is questionable whether the UK court even has jurisdiction, given that Tesla would be free to take bilateral licenses from InterDigital as well as any other Avanci licensee.
Wider ramifications: Similarly to Lenovo’s current UK action against Ericsson, Tesla is seeking out the UK as a supposedly implementer-friendly jurisdiction. Decisions on certain pending FRAND appeals might reverse that trend, though. While there is nothing unusual about Tesla’s defensive claims against three InterDigital patents, the UK court does not even have FRAND jurisdiction over InterDigital’s portfolio unless the patentee brings infringement counterclaims, prevails on at least one standard-essential patent (SEP), and seeks an injunction. If the UK court exercised jurisdiction over Avanci in the present cirumstances, and even more so if it agreed with Tesla even to a limited extent, the entire SEP pool system would be in jeopardy, which wouldn’t even benefit Tesla on the bottom line. Furthermore, Tesla’s current course of action may lead various 5G SEP holders to bring infringement lawsuits in various jurisdictions, and Tesla would presumably not be able to neutralize those complaints through antisuit injunction requests.
As outlined in the fray4 summary above. the first legal question is jurisdiction, and there are distinct jurisdictional questions.
First, these are the claims:
(1) Declarations that the Challenged Patents are invalid.
(2) An order for revocation of the Challenged Patents.
(3) Declarations that the Challenged Patents are not essential to the 5G Standard.
(4) A declaration that Tesla is a beneficiary of the FRAND Commitment(s) of InterDigital and/or the Avanci 5G Pool Members in accordance with Clause 6.1 of the ETSI IPR Policy.
(5) A declaration that the terms of the SPLA in so far as they relate to any patents in the Avanci 5G Pool which designate the United Kingdom are not FRAND and therefore do not comply with the relevant FRAND commitments given under Clause 6.1 of the ETSI IPR Policy; alternatively, a declaration as to the terms which are FRAND for those patents (alternatively, such patents within that pool as are owned by InterDigital).
(6) A declaration that a FRAND licence covering the Challenged Patents, the InterDigital UK SEP Portfolio, the InterDigital International Portfolio or the portfolio(s) of any and each other Avanci 5G Pool Member (whether examining only United Kingdom patents or more broadly) is a licence (i) between Tesla and Avanci, (ii) that is worldwide in scope and (iii) covers the entirety of the Avanci 5G Pool.
(7) A declaration that InterDigital and all other Avanci 5G Pool Members may not prevent or interfere with the conclusion between Tesla and Avanci of a FRAND licence determined by the Court.
(8) A declaration that, by operation of the FRAND Commitment under French law and by virtue of the undertaking given by Tesla to the Court at paragraph 44 above, Avanci is required to enter into a licence with Tesla covering the Challenged Patents and/or the Avanci 5G Pool on such terms as are determined by the Court to be FRAND.
(9) A declaration that terms proposed by Avanci for a licence between Tesla and Avanci covering the Avanci 5G Pool (including the Challenged Patents) are not FRAND.
(10) A determination of what the FRAND terms would be for a licence between Tesla and Avanci covering the Avanci 5G Pool (including the Challenged Patents).
(11) Costs.
(12) Further or other relief including such further declarations as may be appropriate, together with any appropriate interim and protective relief and appropriate orders to require mediation resolution as the Court deems fit.
Jurisdiction is a given (unless and until InterDigital gives up on those patents, which is almost inconceivable) with respect to Tesla’s attempts to shoot down (declaration of inv alidity and order for revocation) the UK parts of three EPO-granted patents held by InterDigital: EP3718369 on “initial access and channel access in new radio/new radio-unlicensed (nr/nr-u)”, EP3566413 on “quality of service management for interworking between different communication architectures” and EP3455985 on a “new radio downlink control channel”.
It’s a well-trodden path. Potential and actual defendants to infringement lawsuits in the UK or other jurisdictions already went to UK courts many years ago with such claims, most of the time just seeking rulings they could use as persuasive authority in foreign fora, particularly for the purpose of getting German infringement cases stayed. The particulars of claim don’t explain (at least not convincingly) why of all 60+ Avanci licensors InterDigital was singled out. Most likely it had nothing to do with any particular interactions between InterDigital and Tesla, but the reason may be that Tesla was encouraged by the same UK court’s FRAND determination in an InterDigital v. Lenovo case.
But whether Tesla, prior to making its first 5G-compatible car, is entitled to declaratory judgment of non-essentiality of those patents ot the 5G standard is at least questionable.
Then come the FRAND claims, raising even more difficult jurisdictional questions. Take claim 4:
“A declaration that Tesla is a beneficiary of the FRAND Commitment(s) of InterDigital and/or the Avanci 5G Pool Members in accordance with Clause 6.1 of the ETSI IPR Policy.”
If the court so declared, 60+ Avanci licensors that are not named as defendants would be bound without having been given the opportunity to make their case. This is not to say that any of them necessarily would disagree that Tesla is a beneficiary, but theoretically any or all of them might.
With respect to Avanci, Tesla’s filing appears ambivalent: Tesla says in para. 42 that the availability of bilateral licenses from each Avanci licensor is not the answer because “it would be impractical and onerous for Tesla, or any other such third party, to negotiate and enter into bilateral licences with each Avanci 5G Pool Member.” In fact, Tesla even wants the UK court to hold that a bilateral license from InterDigital would not be FRAND: only an Avanci pool license would be (though some of its claims are, as a fallback, limited to the InterDigital-owned part of the Avanci pool). That means Avanci is recognized as part of the solution, yet Tesla treats Avanci–in and through this action–as part of the problem, and is putting Avanci and by extension the entire SEP pool system in jeopardy.
What makes this aspect even more perplexing is that if Tesla prevailed on this “only pool is FRAND” claim over InterDigital, it could go to any 5G patent holder (such as Apple) and force them to join the Avanci pool.
Tesla’s lawyers from Powell Gilbert are asking the court to order Avanci to grant a license on court-determined terms. That is a license that a pool administrator simply can’t grant without an agreement involving each and every one of its licensors, of which Tesla is suing only one in this case (InterDigital). In order to get there, Tesla wants the UK court to extend the Avanci licensors’ obligations resulting from their ETSI FRAND declarations to Avanci, the pool administrator, for which there is no legal precedent anywhere in the world.
The fact that claim 8 would impose an obligation on Avanci that it can’t fulfill without the cooperation of 60+ parties (as it doesn’t own the patents in question) brings one of the oldest legal concepts to mind. In Ancient Rome, it was a legal principle that ultra posse nemo obligatur (alternatively ad impossibilia nemo tenetur), which means no one is obligated (by a court of law) to do more than they can.
By contrast, Tesla’s position that dozens of bilateral license agreements aren’t possible is a non sequitur. If Avanci as a pool administrator managed to work out an agreement with and between those 60+ parties (while also talking to implementers in order to understand what license terms they would accept), why can’t Tesla with its vast resources compared to Avanci?
Tesla took its Avanci 4G license in 2021. Tesla’s logo never appeared on Avanci’s website, nor was there a press release or any other public confirmation. In the UK court filing, Tesla acknowledges that Avanci covers 80% of all cellular SEPs, but argues that it took the license in 2021 only because of pending litigation by three Avanci licensors (Sisvel, IP Bridge and PanOptis). A footnote furthermore mentions proceedings brought by Sharp and Conversant.
What the particulars of claim do not say is that no injunction was being enforced against Tesla at the time. Nor do they acknowledge that by now almost the entire car industry is licensed to Avanci’s 4G pool, with litigation having been brought against only a few automakers. The new 5G pool has already been accepted by seven brands (BMW, Mini, Rolls-Royce, Genesis, Hyundai, KIA, Mercedes) and not a single 5G infringement case has been brought by an Avanci licensor against a car maker. That fact alone makes it highly unlikely that InterDigital was threatening Tesla with litigation, much less at a time where Tesla’s cars are not even supporting 5G yet.
Tesla’s filing merely talks about the intended use of 5G. They downplay the added value of 5G, saying “the intended adoption by Tesla of 5G will serve only to futureproof its vehicles in anticipation of the eventual phase out of the 4G network,” and deny that they will make use of vehicle-to-everything (V2X) communications (which Tesla says is also supported by 4G, not only 5G). Tesla’s lawyers want to bring down the pool rate from the $32 standard rate ($29 “early-bird” rate), possibly to as little as $10 based on a reference to a paper written by a competition lawyer, though the particulars of claim do not specify the exact number Tesla has in mind.
Tesla downplays the value of 5G for automotive purposes. 5G’s advantages are manifold and not limited to bandwidth. Lower latency is key to safety features, to give just one example.
Tesla’s set of claims is unprecedented. The parts that Tesla is most interested in (i.e., the claims relating to a pool license and not just three random InterDigital patents) are at a high risk of dismissal on jurisdictional grounds, or at least of being narrowed or deemed in need of amendment, such as by adding all other Avanci licensors to the case. A court order that would effectively impose an obligation on 60+ licensors as well as the pool administrator to enter into agreements that would enable the pool administrator to comply with a court order to grant the desired license to Tesla on the latter’s preferred terms would not merely be unprecedented. It would be unbelievable and unthinkable given more than two millennia of European legal history going back to the times before Julius Caesar ruled Rome.
If we imagine the unimaginable for the sake of the argument, how would it benefit Tesla to disrupt the Avanci model? Would the world be a better place for car makers? Would SEP licensing for automotive use cases become cheaper on the bottom line?
As long as Tesla is seeking the impossible (forcing everyone into a pool and then forcing the pool to grant a license on the licensee’s preferred terms), there can’t even be a settlement. Avanci is not in a position to give Tesla what it wants or any part thereof. It took them years to work out the terms of the 5G pool. If Tesla pursues this case, Avanci will have no choice but to defend itself, especially not when some of Tesla’s claims are ambitious to say the least.
Despite those questions, let there be no doubt about the complaint being architected in a sophisticated manner. There is, however, a jurisdictional hurdle at the outset and the endgame is unclear, as litigation and licensing have different dynamics.
Justice Mellor will presumably struggle with some of this, starting with the case management question that Tesla wants to go straight to the FRAND part, skipping the invalidity and non-essentiality claims against three particular InterDigital patents.
ip fray will keep an eye on this dispute. Tesla is one of the most amazing companies of our times and it now has brought a legal action over SEP licensing that is astonishing. The history of legal attacks by automotive industry players on Avanci is that all of them failed. The European Commission never formally acted upon complaints brought by Daimler, Continental and others over Nokia’s refusal to license suppliers, which was an indirect attack on Avanci. Continental’s federal lawsuit in the U.S. was thrown out and the appeal failed. A Thales division brought a case in Munich that was dropped after an acquisition. In the meantime, Avanci’s 4G pool was adopted by almost the entire car industry, the 5G pool is off to a promising start, and other pools (such as the aftermarket and electric-vehicle charger pools) have been launched. It’s noteworthy that various automotive suppliers joined Avanci over time, as did companies advocating implementer-friendly positions. Some recent UK FRAND determinations may have been to implementers’ liking, but that doesn’t necessarily mean the UK judiciary desires to dictate global automotive SEP licensing terms in a dispute between American companies (Tesla, InterDigital, Avanci).