Context: Avanci’s 5G standard-essential patent (SEP) licensing program was launched about a year ago and has steadily added licensors as well as licensees (see, e.g., May 8, 2024 ip fray article). After the success of Avanci 4G, which wasn’t fully foreseeable in the early years (September 28, 2024 ip fray article), many automakers apparently preferred to secure the earlybird rate ($29 instead of $32) over litigation.
What’s new: Today, Avanci announced on LinkedIn that they “are excited to welcome Toyota to the Avanci 5G Vehicle program, for their next generation of connected vehicles” and that “the program has grown to span almost 40 automotive brands and more than 65 licensors.”
Direct impact: After three lower-volume Japanese vehicle makers, Toyota is the first high-volume Japanese automaker to sign up to Avanci 5G. Major U.S. and European automakers have already taken that license.
Wider ramifications: Interestingly, it turned out a few months ago that Toyota acquired some 5G SEPs from Chinese smartphone maker OPPO (July 29, 2024 ip fray article). Avanci is not a cross-licensing program, but companies can contribute their SEPs, subject to a vetting process, and receive their regular share of Avanci’s royalty income.
While there are anti-patent-pool lobbying activities, particularly in the EU, Avanci’s collective licensing program for connected vehicles continues to grow, while litigation by Avanci licensors has become extremely rare. Thus far, the only lawsuit relating to Avanci’s 5G licensing program has, in fact, been brought by a car maker preparing to launch 5G-connected vehicles: Tesla would like a FRAND determination by the UK judiciary. The High Court of Justice for England & Wales (EWHC) dismissed the claim, and meanwhile Tesla’s appeal has become discoverable. Xiaomi’s spectacular appellate win over Panasonic (October 3, 2024 ip fray article) involved the right to a FRAND license, but in a bilateral situation where the SEP holder itself had originally committed to grant a license on terms to be determined by the UK judiciary. Avanci is not a SEP holder; its licensors are.
When Toyota’s acquisition of 5G SEPs from OPPO became known, it was unclear what the car maker intended to do with them. It could have wanted to prepare for infringement litigation by SEP holders who are implementers themselves, a number of which are Avanci licensors. Now that Toyota has joined Avanci’s 5G program, it is extremely unlikely that it will need 5G SEPs to bring countersuits and counterclaims anytime soon.
What Toyota could do is seek royalty payments from Avanci licensors that are not car makers, such as device makers and telecommunication carriers. Whether Toyota intends to build such a licensing program is not known.
One of the groups engaging in anti-Avanci advocacy is ACT | The App Association, an astroturfing operation that claims to represent small and medium-sized enterprises (SMEs) but is actually funded by Apple and other large companies. It’s not just hard to find, but even hard to conceive of a small app developer that would face any SEP licensing issues, let alone SEP infringement lawsuits. And those companies certainly have no interest in automotive SEP licensing. The fact that ACT has recently fired cheap shots at Avanci must be attributable to the fact that Continental has become a financial backer of the organization (September 12, 2024 ip fray article).
ip fray understands that implementers in different industries hope to bring down royalties. There is no reason why car makers and their suppliers (though suppliers rarely eve face a royalty demand from cellular SEP holders) shouldn’t have the right to save costs if they can. But it’s hard to argue with success. Announcements like the one today, with a company that makes approximately 10 million cars a year (even if presumably not all of them come with 5G at the moment) taking an Avanci 5G license without any litigation, up the ante for Continental and other Avanci critics. In the end, it’s actual deals that make all the difference. That’s the essence of licensing.