Context: Avanci’s 5G licensing program for the automotive industry was launched in August 2023 (Avanci press release), announcing a discounted rate ($29 per car instead of $32) for any “5G license signed before the later of February 16, 2024 or first sale of 5G connected vehicle, other conditions apply” (Avanci 5G website). A license agreement with General Motors was announced one week ago (February 13, 2024 ip fray article). At that point, the number of licensed brands was in the double-digit zone.
What’s new: Avanci has just announced a 5G license agreement with the Volkswagen Group’s 13 brands (February 20, 2024 Avanci 5G press release). Volkswagen was an early Avanci 3G licensee, initially took a 4G license only for its premium brands (Audi, Porsche etc.), but started to incorporate 4G connectivity into ever more cars of its volume brands, which triggered enforcement actions by cellular standard-essential patent (SEP) holders. That litigation was settled quickly, and that situation won’t reoccur with 5G now.
Direct impact: VW is one of the world’s market leaders by volume, and its brands (Audi, Bentley, CUPRA, Lamborghini, MAN, Navistar, Porsche, Scania, Scout Motors, SEAT, Škoda Auto, Volkswagen, and VW Truck & Bus) have now taken the number of Avanci 5G-licensed automotive brands above 25.
Wider ramifications: The timing of the GM and VW announcements around the February 16 early-bird deadline won’t have been a coincidence. Should any other companies have opted for the one-stop solution at the reduced $29 rate, one would likely find out soon, though there was a significant delay between the early-bird deadline for Avanci 4G (summer of 2022) and the last announcements. The rapid adoption of Avanci 5G by its peers weakens Tesla’s position in its pre-emtive strike-style UK litigation (January 4, 2024 ip fray article).
With the Volkswagen announcement, Avanci 5G has now licensed all three German automotive groups: Mercedes was first to sign, followed by BMW and now Volkswagen. All three signed up for Avanci 5G without any prior infringement action, as did the other licensees. Only BMW also took the Avanci 4G license without litigation, saving legal fees as well as license fees.
Tesla took its Avanci 4G license at a point where multiple enforcement actions were pending, and hasn’t made any 5G cars yet, but hopes to bring down licensing costs through litigation in the UK. The theories based on which some implementers of standards are presently attempting to gain leverage through proactive UK lawsuits become ever more diverse and, frankly, bizarre: Lenovo is now trying to obtain a UK preliminary injunction for the purpose of stopping the enforcement of preliminary injunctions in Latin America (February 13, 2024 ip fray article). Considering that a dispute isn’t over until all appeals have been exhausted or an appeal has been waived, the idea of the UK being the ideal place to reduce SEP licensing costs lacks proof of concept. A single decision by the Court of Appeal in London could change everything.
The litigationless (apart from Tesla’s peculiar tactic) market acceptance of Avanci 5G speaks to the fact that the industry actually considers those license fees advantageous as compared to entering into countless bilateral license agreements. It also validates the rate as being fair, reasonable and non-discriminatory (FRAND).
The success of Avanci 5G and the contribution it makes to the avoidance of litigation should not go unnoticed by EU lawmakers. The European Parliament’s plenary will vote on the proposed EU SEP Regulation next week. The bill that is on the table reflects ignorance of the benefits that fair and well-managed patent pools can bring, as Sisvel (a pool administrator that is also an Avanci licensors with patents assigned to Sisvel itself) explained in a recent opinion piece (February 17, 2024 ip fray LinkedIn post). The trajectory of Avanci 5G furthermore weighs strongly against any claims that urgent intervention is needed, though ip fray does believe that a more thoughtful approach to the topic of SEP enforcement (which wouldn’t necessarily have to take the shape of an EU regulation) could deliver significant value at a later stage.