20-11032
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
CONTINENTAL AUTOMOTIVE SYSTEMS, INCORPORATED,
a Delaware corporation,
Plaintiff-Appellant,
v.
AVANCI, L.L.C., a Delaware corporation; AVANCI PLATFORM
INTERNATIONAL LIMITED, an Irish company; NOKIA
CORPORATION, a Finnish corporation; NOKIA OF AMERICA
CORPORATION, a Delaware corporation; NOKIA SOLUTIONS AND
NETWORKS U.S. L.L.C., a Delaware corporation; NOKIA SOLUTIONS
AND NETWORKS OY, a Finnish corporation; NOKIA TECHNOLOGIES
OY, a Finnish corporation; OPTIS UP HOLDINGS, L.L.C., a Delaware
corporation; OPTIS CELLULAR TECHNOLOGY, L.L.C., a Delaware
corporation; OPTIS WIRELESS TECHNOLOGY, L.L.C., a Delaware
corporation; SHARP CORPORATION, a Japanese corporation,
Defendants-Appellees.
On Appeal from the United States District Court for the Northern
District of Texas, No. 19-cv-2933 (Hon. Barbara M.G. Lynn)
PROPOSED BRIEF OF AMERICAN HONDA MOTOR CO., INC.,
TOYOTA MOTOR CORP., AND TESLA, INC. AS AMICI CURIAE
IN SUPPORT OF PLAINTIFF-APPELLANT’S
PETITION FOR REHEARING EN BANC
Nicole A. Saharsky
Minh Nguyen-Dang
MAYER BROWN LLP
1999 K Street, N.W.
Washington, DC 20006
(202) 263-3000
nsaharsky@mayerbrown.com
Counsel for Amici Curiae
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persons and entities as described in the fourth sentence of Fifth Circuit Rule
are made in order that the judges of this Court may evaluate possible dis-
qualification or recusal.
subsidiary of Honda Motor Co., Ltd. Honda Motor Co., Ltd. is a publicly
held company, and no publicly held company owns 10% or more of its stock.
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ii
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TABLE OF CONTENTS
Page
INTEREST OF THE AMICI CURIAE ........................................................... 1
INTRODUCTION AND SUMMARY OF ARGUMENT ................................ 1
ARGUMENT .................................................................................................... 3
I. The Issue Presented Is Exceptionally Important To The
Automotive Industry ................................................................................ 3
II. The Panel’s Decision Is Wrong And Irreconcilable With
Decisions From This And Other Circuits ............................................... 7
III. The Panel’s Decision, If Left Uncorrected, Will Significantly
Harm The Automotive Industry And Other Industries ...................... 11
CONCLUSION .............................................................................................. 13
iii
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TABLE OF AUTHORITIES
Cases Page(s)
Pagan v. Calderon,
448 F.3d 16 (1st Cir. 2006) ........................................................................ 10
Perry v. Thomas,
482 U.S. 483 (1987) ..................................................................................... 9
Spokeo v. Robins,
578 U.S. 330 (2016) ................................................................................... 10
Uzuegbunam v. Preczewski,
141 S. Ct. 792 (2021) ...............................................................................3, 9
iv
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TABLE OF AUTHORITIES
(continued)
Rule Page(s)
Other Authorities
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nies like Continental and use them in manufacturing vehicles. Those parts
able to OEMs, and ultimately hurts consumers. Yet a panel of this Court
held that Continental lacks standing to challenge the denial of the patent
licenses on FRAND terms. Amici submit this brief to explain how Defend-
ants’ actions harmed Continental, and how the panel’s decision, if left un-
corrected, will create serious problems for the automotive industry and
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FRAND terms – lacks Article III standing to sue when Defendants denied
it that right. The denial of the licenses obviously hurts Continental’s busi-
ness, because it means that Continental must limit its sales to only the
OEMs that already have licenses, or risk being sued for patent infringe-
ment. Yet the panel concluded that Continental has no recourse in the fed-
eral courts.
of this Court, other federal courts of appeals, and the Supreme Court. The
panel’s first theory was that Continental was not an intended beneficiary of
Court previously recognized that all potential licensees are intended bene-
Ericsson, 12 F.4th 476 (5th Cir. 2021). The Ninth Circuit and the Federal
Circuit have agreed. The panel’s second theory was that even if Continental
had a contractual right to obtain a FRAND license, it was not injured when
Defendants denied it that right. That is not only factually wrong (Conti-
sions from this Court and the Supreme Court holding that a denial of a con-
2
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See Uzuegbunam v. Preczewski, 141 S. Ct. 792, 798 (2021); Servicios Az-
ucareros de Venezuela, C.A. v. John Deere Thibodeaux, Inc., 702 F.3d 794,
If left uncorrected, the decision below could severely harm the auto-
It would allow holders of widely used and essential patents to ignore their
tory terms. Instead, the patent holders would be able to abuse their monop-
oly power to extract extortionate royalties and to control who can and cannot
ARGUMENT
This case involves licensing for standard essential patents for motor
Int’l, Inc., 137 S. Ct. 1523, 1532 (2017). Those include the telematics control
units (TCUs) at issue, which connect vehicles to cloud services through cel-
3
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like Continental make TCUs and then sell them to the manufacturers (i.e.,
fore require licenses. The supplier of a component (not the OEM) typically
plier is the one researching, designing, and developing the product that
practices the patents. Once a supplier obtains the licenses, it can freely sell
the product that practices the patents to any customer unencumbered (i.e.,
tents at issue in this case, are SEPs. SEPs are patents that are incorporated
5G. HTC, 12 F.4th at 481. A product has to practice the SEPs to be com-
vices to all work together. HTC, 12 F.4th at 481. For example, using the
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standards at issue, any OEM’s vehicle can connect to any cell provider’s net-
work. See id. Standards also promote innovation, because companies can
tice the SEPs, SEP holders are “in a powerful position to extract as much
power, the standard setting organizations (SSOs) that develop the stand-
ards require SEP holders to make licenses available to all potential licen-
HTC, 12 F.4th at 481. Companies outside the SSOs rely on those FRAND
standards expecting that they will be able to acquire the necessary licenses
on FRAND terms.
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petitive Harms).
are the owners and licensor of SEPs required to connect to cellular net-
standards that they would provide FRAND licenses to any applicant. See
ants would not provide it with any. Defendants refuse to provide licenses
ble royalties based on the prices of vehicles, rather than the prices of the
components, which unfairly inflates the royalty rates beyond the values of
facturing sectors in the Nation, accounting for 3% of GDP. Kim Hill et al.,
Contribution of the Auto Industry to the Economies of All Fifty States and
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and the parts practice thousands of patents. The panel’s decision that sup-
pliers have no recourse when SEP holders fail to abide by their FRAND
ing. To establish Article III standing, a plaintiff must show that it has a
concrete and actual injury, fairly traceable to the defendant, that a court
can redress. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). Con-
tinental easily satisfies that standard: Because Defendants will not provide
it with FRAND licenses, it cannot make TCUs that it can freely sell to any
customer. ROA.1728-1729. Instead, it must limit its sales to only the OEMs
that have licenses, or risk being sued (or having its customers sued) for pa-
injury. See, e.g., TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2204 (2021)
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And a court could redress that injury by finding Defendants’ licensing prac-
tices unlawful.
The panel nonetheless held that Continental did not suffer a cogniza-
Op. 10-13. It gave two reasons, both of which are mistaken. First, it stated
of FRAND obligations. One of the core obligations is that the patent holders
Standards Alliance, Competitive Harms 3-4. Indeed, the SSOs that devel-
third parties, whether or not they are” members of the SSO, 3GPP, What Is
phasis added).
Court accordingly held – in direct conflict with the panel’s decision here –
that everyone “seeking to license under [FRAND] terms become[s] [a] third-
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795 F.3d 1030, 1031 (9th Cir. 2015); see Microsoft Corp. v. Motorola, Inc.,
696 F.3d 872, 885 (9th Cir. 2012) (SEP holders “promise” to provide licenses
“to all comers”); Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1209 (Fed.
Cir. 2014) (SEP holders “pledge that they will grant licenses to an unre-
those decisions.
The panel’s second reason was that even if Continental was a third-
party beneficiary to the FRAND agreements, it was not injured when De-
fendants denied it licenses because it could use OEMs’ licenses. Op. 11-13.
That holding is irreconcilable with decisions from the Supreme Court and
this Court holding that injuries to contract rights “have always been suffi-
cient for standing.” Servicios Azucareros, 702 F.3d at 800; see, e.g., Uzueg-
it was denied a contractual right, then it has standing to bring suit; whether
it is entitled to relief goes to the merits, not standing. See Perry v. Thomas,
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effect, held that Continental’s ability to use OEMs’ licenses was just as good
as having its own license. See Op. 12. But if Continental must rely on OEMs
licenses, it can only sell TCUs to those OEMs that have licenses, on the
will acquire licenses in the future, or on what terms. If Continental had its
own licenses, obtained on terms that are reasonable for its business, it could
sell its TCUs to any customer, free of further patent encumbrances. See
Impression Prods., 137 S. Ct. at 1532. Not having its own licenses thus
Finally, the majority reasoned that it is enough that OEMs could sue
fact that one person has standing does not preclude the other from also hav-
ing standing. See Pagan v. Calderon, 448 F.3d 16, 26 (1st Cir. 2006) (“stand-
ing inquiry” is “plaintiff-specific”). OEMs can bring suit to seek redress for
the harms that they suffer, but they cannot seek redress for separate harms
ers. See Spokeo v. Robins, 578 U.S. 330, 338 n.6 (2016). Suppliers are the
ones who are targeted by that boycott, so they should be able to bring suit.
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try. The result of the decision is that if companies in one part of an industry
(here, OEMs) are able to get licenses, then companies in other parts of the
industry (here, suppliers like Continental) are not entitled to FRAND li-
censes. Op. 12. That massively weakens FRAND obligations. The FRAND
agreements do not give OEMs special status among potential licensees; they
say that SEP holders must provide licenses to anyone. See ROA.1699-1700.
Allowing SEP holders to pick and choose which licensees they will deal with
fectively allows SEP holders to pick winners and losers in each industry.
See HTC, 12 F.4th at 481. The reason FRAND agreements exist is to pre-
vent SEP holders from abusing their monopoly control over the standards.
tial and unjustified costs on the automotive industry. First, it hurts suppli-
ers’ business, as they must either restrict their sales or face the risk of them
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cause they can seek to charge royalty rates for each vehicle made by OEMs,
ance, Competitive Harms 9-10; see Avanci, Enabling the IoT: Wireless Con-
Apr. 20, 2022) (explaining that Defendants base their royalty rates on the
fendants then coerce OEMs into accepting those unfair rates by threatening
Third, it adds to the OEMs’ transaction costs and thus the overall
ments with Defendants, for parts that the OEM does not develop and man-
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tomobiles and reducing the resources available for research and develop-
ment into new performance and safety features. Further, the panel’s deci-
practices in any of the thousands of other industries that use cellular tech-
CONCLUSION
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CERTIFICATE OF COMPLIANCE
cause it contains 2,597 words, including footnotes and excluding the parts
(ii) complies with the typeface requirements of Rule 32(a)(5) and the
type style requirements of Rule 32(a)(6) because it has been prepared using
Microsoft Office Word 2016 and is set in Century Schoolbook font in a size
dersigned counsel certifies that (1) required privacy redactions have been
made in compliance with 5th Cir. R. 25.2.13; (2) the electronic submission is
an exact copy of the paper document, in compliance with 5th Cir. R. 25.2.1;
and (3) the document has been scanned for viruses with the most recent
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CERTIFICATE OF SERVICE
I hereby certify that I electronically filed the foregoing with the Clerk
of the Court for the United States Court of Appeals for the Fifth Circuit by
using the appellate CM/ECF system on April 20, 2022. I certify that all
participants in the case are registered CM/ECF users and that service will
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