Case: 20-11032 Document: 00516287567 Page: 1 Date Filed: 04/20/2022

United States Court of Appeals

for the

Fifth Circuit
Case No. 20-11032

CONTINENTAL AUTOMOTIVE SYSTEMS, INC., a Delaware corporation,

Plaintiff-Appellant,
v.
AVANCI, L.L.C., a Delaware corporation; AVANCI PLATFORM
INTERNATIONAL LTD., an Irish company; NOKIA CORPORATION,
a Finnish corporation; NOKIA OF AMERICA CORP., 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 CORP., a Japanese corporation,
Defendants-Appellees.
_____________________________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS IN CASE NO. 3:19-CV-02933-M
HONORABLE BARBARA J. G. LYNN, DISTRICT JUDGE

Unopposed Motion of the German Association of the Automotive

Industry and the Alliance for Automotive Innovation for Leave to File
Brief of Amici Curiae in Support of Plaintiff-Appellant’s Petition for
Rehearing En Banc

DEBORAH POLLACK-MILGATE
Counsel of Record
BARNES & THORNBURG LLP
11 South Meridian Street
Indianapolis, Indiana 46204
(317) 236-1313
Counsel for Amici Curiae
(Additional Counsel Listed on Signature Block)
 Case: 20-11032 Document: 00516287567 Page: 2 Date Filed: 04/20/2022

In accordance with Federal Rule of Appellate Procedure 29(b) and

Fifth Circuit Rule 29, the German Association of the Automotive

Industry (Verband der Automobilindustrie, eingetragener Verein, or

“VDA”) and the Alliance for Automotive Innovation (“AAI”) respectfully

move this Court for leave to file the accompanying brief as amici curiae

in support of the petition for rehearing en banc filed by Plaintiff-

Appellant Continental Automotive Systems, Inc. (“Continental”).

Counsel for Plaintiff-Appellant and counsel for the Defendants-Appellees

do not oppose this motion.

INTEREST OF THE AMICI CURIAE AND

REASONS FOR GRANTING THE MOTION

VDA consists of more than 650 companies involved in the

automotive industry in the Federal Republic of Germany—the birthplace

of the automobile. VDA’s members include automobile manufacturers as

well as the automotive suppliers that develop and create the software,

parts, bodies, trailers, and accessories used to produce and outfit cars and

trucks. VDA exists to serve the interests of the German automotive

industry, which is active worldwide and manufactures even more

vehicles abroad than it does in Germany itself.

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AAI consists of over 30 member companies including

manufacturers of nearly 98% of new cars and light trucks sold in the U.S.,

automotive suppliers, and mobility companies. AAI works with

policymakers to support cleaner, safer, and smarter personal

transportation that transforms the U.S. economy and sustains American

ingenuity and freedom of movement. Automakers and their suppliers

invest billions each year in new technologies, including fuel-saving

technologies, such as electrification, to transition to a low-carbon

transportation future, and communications technologies that enable

vehicles to assess and interact with the environment around them.

This Court should grant leave to file the accompanying brief of

amici curiae because the industry knowledge and legal perspectives of

VDA and AAI will provide this Court with valuable insights regarding

the automotive industry and the need for en banc rehearing here. The

wide range of membership in these organizations—including original

equipment manufacturers (“OEMs”), component suppliers, mobility

companies, and entities up and down the automobile supply chain—gives

them unparalleled expertise concerning the extraordinarily complex

economic system used to create the technological marvel that is the

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modern car. It is in light of this expertise that VDA and AAI are

convinced that the Panel’s decision not only misapplies binding Supreme

Court and Fifth Circuit precedent, but also threatens dire consequences

for the automotive industry throughout the world. This case therefore

plainly presents a “question of exceptional importance” that justifies

rehearing en banc. Fed. R. App. P. 35(a)(2).

Continental’s standing theory in this case is simple—that is, it

cannot operate its business the way it wants to because it has been the

victim of an unlawful coordinated refusal to deal. It claims several

holders of standard-essential patents (“SEPs”) have refused its requests

to license their SEPs, even though the SEP holders’ agreements with the

governing standard-setting organizations (“SSOs”) require them to do so.

Continental claims that by thwarting its chosen business activity, the

Defendants have directly and concretely injured it. The Panel disagreed,

however, and held that Continental had not even alleged an injury

cognizable under Article III of the U.S. Constitution. Op. 10–13.

For at least the four reasons explained by amici curiae, the Panel’s

underlying assumptions about the automobile industry and the impact of

SEP holders’ collective refusal to license are erroneous. First, there is no

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support for the Panel’s belief that willing licensees such as Continental

do not “need” an SEP license. Suppliers cannot be expected to devote the

time, energy, and funding necessary to develop new and innovative

products in the face of a genuine risk of exclusion from the marketplace

at some undetermined point in the future. Nor should suppliers be forced

to weather the anticompetitive results of being unlicensed in a market

demanding otherwise.

Second, the Panel’s assumption that all participants in the

automotive supply chain can make use of a single downstream OEM

license is misplaced. The doctrine of patent exhaustion does not run

upstream in the supply chain. Therefore, the Panel is mistaken in

concluding that downstream licenses to OEMs will protect suppliers such

as Continental that are seeking to avoid patent infringement lawsuits.

Third, the Panel ignores the business reality that suppliers of

component products, rather than the OEMs that purchase them, are

best-suited to negotiate licenses and evaluate whether their products

infringe upon the intellectual property rights of others. Indeed, given the

extraordinary complexity of modern automobiles, it is practically

impossible for OEMs to effectively perform these tasks.

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Fourth, and relatedly, the Panel misapprehends the legal landscape

facing OEMs and suppliers across the globe. It is the case today that SEP

holders can and do bring lawsuits against OEMs, and the threat of

extraordinary damage claims, crippling injunctions, and (in some

countries) even the imprisonment of corporate executives may lead to

license terms other than those which are fair, reasonable, and non-

discriminatory. It is unsurprising that OEMs regularly seek

indemnification from their component suppliers, such as Continental.

At bottom, the Panel’s decision appears to “confuse two distinct

concepts—standing and the merits—as explained in cases too numerous

to cite.” Pierre v. Vasquez, No. 20-51032, 2022 WL 68970, at *4 (5th Cir.

Jan. 6, 2022) (Oldham, J., concurring in part) (unpublished). It also

endorsed a two-tier system that at once recognizes anticompetitive

injuries suffered by SSO members, while simultaneously ignoring

injuries suffered by the countless others that implement technological

standards but are not SSO members. And it allows SEP holders to refuse

to license to anyone in an industry so long as they are willing to license

someone in the supply chain—a rule that prevents the automotive

industry’s myriad participants from responding to technological and

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economic developments with the flexibility and creativity for which the

industry has long been admired.

The arguments of amici curiae will assist the Court in resolving

Plaintiff-Appellant Continental’s petition. Accordingly, the VDA and AAI

respectfully request this Court to grant leave to file the accompanying

brief of amici curiae in support of rehearing en banc.

Respectfully submitted,

Dated: April 20, 2022 /s/ Deborah Pollack-Milgate

Deborah Pollack-Milgate
Counsel of Record
Barnes & Thornburg LLP
11 South Meridian St.
Indianapolis, IN 46204

Stephen Smith
Barnes & Thornburg LLP
1 North Wacker Dr., Suite 4400
Chicago, IL 60606-2833

Eric J. Beste
Barnes & Thornburg LLP
655 West Broadway, Suite 1300
San Diego, CA 92101

Kian Hudson
Barnes & Thornburg LLP
11 South Meridian St.
Indianapolis, IN 46204

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Counsel for Amici Curiae

German Association of the
Automotive Industry and the
Alliance for Automotive
Innovation

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CERTIFICATE OF SERVICE

I hereby certify that on April 20, 2022, I electronically filed the

foregoing Motion for Leave to File Amici Curiae Brief and the

accompanying Amici Curiae Brief with the Clerk of the Court for the

United States Court of Appeals for the Fifth Circuit using the Court’s

CM/ECF system, which will send notice of such filing to all registered

CM/ECF users.

Dated: April 20, 2022 /s/ Deborah Pollack-Milgate

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CERTIFICATE OF COMPLIANCE

1. This motion complies with the type-volume limitations of Fed. R.

App. P. 27(d)(2)(A) because it contains 995 words.

2. This motion complies with the typeface and type style

requirements of Fed. R. of App. P. 27(d)(1)(E), 32(a)(5), and 32(a)(6)

because it has been prepared in proportionally spaced typeface using

Microsoft Word 2022 in 14-point Century Schoolbook font.

Dated: April 20, 2022 /s/ Deborah Pollack-Milgate

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United States Court of Appeals

for the

Fifth Circuit
Case No. 20-11032

CONTINENTAL AUTOMOTIVE SYSTEMS, INC., a Delaware corporation,

Plaintiff-Appellant,
v.
AVANCI, L.L.C., a Delaware corporation; AVANCI PLATFORM
INTERNATIONAL LTD., an Irish company; NOKIA CORPORATION,
a Finnish corporation; NOKIA OF AMERICA CORP., 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 CORP., a Japanese corporation,
Defendants-Appellees.
_____________________________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS IN CASE NO. 3:19-CV-02933-M
HONORABLE BARBARA J. G. LYNN, DISTRICT JUDGE

BRIEF OF AMICI CURIAE GERMAN ASSOCIATION OF THE

AUTOMOTIVE INDUSTRY AND THE ALLIANCE FOR
AUTOMOTIVE INNOVATION IN SUPPORT OF PLAINTIFF-
APPELLANT’S PETITION FOR REHEARING EN BANC

DEBORAH POLLACK-MILGATE
Counsel of Record
BARNES & THORNBURG LLP
11 South Meridian Street
Indianapolis, Indiana 46204
(317) 236-1313
Counsel for Amici Curiae
(Additional Counsel Listed on Signature Block)
 Case: 20-11032 Document: 00516287568 Page: 2 Date Filed: 04/20/2022

SUPPLEMENTAL STATEMENT OF INTERESTED PERSONS

In addition to the persons and entities previously identified by the

parties, undersigned counsel certifies that the following persons and

entities have an interest in the outcome of this litigation. These

representations are made in order that the judges of this court may

evaluate possible disqualification or recusal:

A. The German Association of the Automotive Industry;

B. The Alliance for Automotive Innovation; and

C. Deborah Pollack-Milgate, Stephen Smith, Eric Beste, and Kian

Hudson of Barnes & Thornburg LLP, counsel for Amici Curiae.

Undersigned counsel further certifies that the German Association

of the Automotive Industry and the Alliance for Automotive Innovation

are not publicly held corporations, do not have parent corporations, and

no publicly held corporation owns 10 percent or more of their stock.

Dated: April 20, 2022 /s/ Deborah Pollack-Milgate

Counsel for Amici Curiae German
Association of the Automotive
Industry and the Alliance for
Automotive Innovation

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TABLE OF CONTENTS

Page

SUPPLEMENTAL STATEMENT OF INTERESTED PERSONS ............ i

TABLE OF AUTHORITIES .....................................................................iii
INTEREST OF THE AMICI CURIAE ...................................................... 1
INTRODUCTION AND SUMMARY OF ARGUMENT ........................... 2
ARGUMENT ............................................................................................. 5
I. The Panel’s Decision Undermines Innovation in the
Automotive Industry ............................................................... 5
II. The Panel’s Decision Contravenes Patent Law...................... 6
III. The Panel’s Decision Ignores the Complexity of the
Automotive Supply Chain ....................................................... 9
IV. The Panel’s Decision Will Lead to More Hold-Ups,
Litigation, and an Increase in the Cost of Doing
Business ................................................................................ 11
V. Continental Has Articulated Article III Standing,
as Well as an Antitrust Injury .............................................. 13
CONCLUSION ........................................................................................ 15

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TABLE OF AUTHORITIES
Page(s)
Cases:
AXTS, Inc. v. F-1 Firearms, LLC,
No. 4:19-CV-2379, 2020 U.S. Dist. LEXIS 196506
(S.D. Tex. Sept. 9, 2020) ........................................................................ 7
Blue Shield of Va. v. McCready,
457 U.S. 465 (1982) .............................................................................. 13
Bowman v. Monsanto Co.,
569 U.S. 278 (2013) ................................................................................ 8
Doctor’s Hosp. v. SE. Med. All.,
123 F.3d 301 (5th Cir. 1997) ................................................................ 13
eBay Inc. v. MercExchange, L.L.C.,
547 U.S. 388 (2006) ........................................................................ 12−13
Helferich Patent Licensing, LLC v. New York Times Co.,
778 F.3d 1293 (Fed. Cir. 2015) .............................................................. 8
Sprint Nextel Corp. v. Middle Man, Inc.,
822 F.3d 524 (10th Cir. 2016) .............................................................. 13

Statutes and Other Authorities:

35 U.S.C. § 271(a) ...................................................................................... 8
35 U.S.C. § 284 .......................................................................................... 6
Fed. R. App. P. 29(a)(4)(E) ........................................................................ 1
Fed. R. App. P. 29(b)(2) ............................................................................. 1
Fed. R. App. P. 35(a)(2) ............................................................................. 2
Deutsches Patent- und Markenamt, Curent Statistics : Patents ............ 6
Florian Mueller, Great news for standard-essential patent holders
(Apr. 4, 2022).................................................................................. 11−12

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Statutes and Other Authorities [cont'd]

Matthias Schneider, SEP Licensing for the Internet of Things –
Challenges for Patent Owners and Implementers,
CPI Antitrust Chronical (Mar. 2020) ............................................ 10−11
Patentgesetz [PatG] [Patent Act], Dec. 16, 1980, Bundesgesetzblatt
[BGBl.] 1981 I, as amended by Art. 1 of the Law dated
Aug. 30, 2021, BGBl............................................................................... 7
Prof. Dr. Stefan Bratzel, Impact of telecommunications patents on
the automotive industry’s ability to innovate (Feb. 22, 2021) ......... 9, 12

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INTEREST OF THE AMICI CURIAE

The German Association of the Automotive Industry (Verband der

Automobilindustrie, eingetragener Verein or “VDA”) consists of more

than 650 companies belonging to the automotive industry in the Federal

Republic of Germany, including manufacturers (also known as original

equipment manufacturers or “OEMs”) and their suppliers. The Alliance

for Automotive Innovation (“AAI”) is composed of over 30 member

companies, including manufacturers of nearly 98% of new cars and light

trucks sold in the U.S., suppliers, and mobility companies.

Amici file this brief by leave of Court, Fed. R. App. P. 29(b)(2), and

affirm that no party’s counsel authored this brief in whole or in part and

that no party, party’s counsel, or other person—other than Amici, their

members, or their counsel—contributed money intended to fund the

brief’s preparation or submission, Fed. R. App. P. 29(a)(4)(E).

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INTRODUCTION AND SUMMARY OF ARGUMENT

As representatives of the automotive industry, Amici know first-

hand that this proceeding presents issues of exceptional importance to

the automotive industry, for both suppliers and OEMs. Fed. R. App. P.

35(a)(2). The Panel’s conclusion that automotive suppliers such as

Continental Automotive Systems, Inc. (“Continental”) are not harmed by

the collective refusal of standard-essential patent (“SEP”) holders to deal

misunderstands the facts and threatens dire consequences to the

automotive market up and down the supply chain.

First, the Panel’s determination that suppliers such as Continental

do not need SEP licenses is mistaken. Without SEP licenses, innovation

is at risk. Suppliers cannot be expected to develop new products only to

risk exclusion from the market down the road. Nor can suppliers weather

the anticompetitive impact that results from being unlicensed in a

market demanding otherwise. Under the Panel’s construct, SEP holders

will influence who is and who is not a preferred supplier in the market.

Competition will depend on who has a license, rather the suppliers’

product offerings.

Second, suppliers also need licenses to avoid being accused of willful

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infringement. Patent laws should discourage, rather than encourage,

willful infringement; yet the Panel’s decision turns this framework on its

head. More fundamentally, the doctrine of patent exhaustion does not run

upstream to protect suppliers. The Panel’s assumption that all

participants in the automotive supply chain can make use of a single

downstream OEM license is superficially attractive, but legally

erroneous.

Third, the Panel’s related assumption that an OEM can easily

supplant the supplier in a license negotiation is equally flawed. Suppliers

of component products, rather than the OEMs who purchase them, are

best-suited to negotiate licenses. Not only is it impractical for OEMs to

negotiate individual licenses for the thousands of products and

components that are ultimately assembled into vehicles, but OEMs often

do not have sufficient access to knowledge regarding the operation of

sourced products. Moreover, to protect their trade secrets, suppliers

frequently provide OEMs with only a “black box,” guaranteeing that a

product will work, but not revealing how. This is why suppliers, not

OEMs, typically evaluate whether their products infringe intellectual

property rights (“IPRs”).

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Fourth, the Panel erroneously characterizes the threat to suppliers

and OEMs as speculative. Op. 8–9. In the experience of Amici, this is not

so; suppliers are currently being injured by SEP holders’ collective

refusal to deal. These anticompetitive actions, which are contrary to SEP

holders' obligations, are playing out in the worldwide automotive

marketplace. Furthermore, OEMs in Germany face patent “hold ups”

against the backdrop of crippling injunctions, which are a mainstay of

German patent law. OEMs have (and will continue to) seek

indemnification from their suppliers.

Finally, all of the above amply establishes Article III standing. It is

also sufficient to establish an antitrust injury, particularly at the

pleading stage. Continental’s allegation of an antitrust injury could

hardly be clearer: Defendants refused to deal with an implementer to

whom they guaranteed a fair, reasonable, and non-discriminatory

(“FRAND”) license. In reasoning that Continental did not suffer an

“injury in fact” because it does not belong to a standard setting

organization (“SSO”), Op. 11, the Panel effectively enables anti-

competitive behavior directed toward those suppliers and OEMs who are

outsiders to the SSOs and yet equally harmed by Defendants’ conduct.

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ARGUMENT

I. The Panel’s Decision Undermines Innovation in the

Automotive Industry

The Panel concluded that, “Continental does not need SEP licenses

since Avanci licenses the OEMs that incorporate their products.” Op. 5;

see also id. at 11 (“[C]rucially [Continental] does not need SEP licenses

from Defendants-Appellees to operate; [Defendants] license the OEMs

that incorporate Continental’s products.”). Amici can assure this Court

that, at least with respect to suppliers to the automotive industry,

nothing could be farther from the truth.

The logic of the Panel may have been that the supplier of a

component provides a fungible part of an end-product, e.g., a filament for

a light-bulb. But suppliers such as Continental are not mere contract

manufacturers of simple parts made to OEM specifications. Rather, they

are innovators of value-laden products that retail automotive customers

assess in making their purchasing decisions. For example, the German

Patent Office reported that of the top ten patent filers in 2021, three were

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automotive suppliers.1 If a supplier such as Continental cannot contest

Defendants’ refusal to deal with it, its innovative product portfolio will

necessarily be compromised, along with its revenue stream. Precluding

willing licensees from receiving necessary IPRs discourages them from

innovating, lest their innovations be deemed unsaleable down the road.

In sum, when SEP holders refuse to even negotiate (let alone grant)

FRAND licenses, innovation and competition are the casualties. The

Panel’s decision effectively puts a thumb on the SEP holders’ side of the

scale, at the expense of OEMs and suppliers.

II. The Panel’s Decision Contravenes Patent Law

The Panel’s conclusion that suppliers do not “need” a license from

SEP holders also contradicts principles of patent law. While it may be

theoretically possible for automotive suppliers to make products without

obtaining necessary licenses, it is not a sound business practice.

Critically, suppliers conducting business without obtaining the

necessary licenses do so under the threat of liability for willful

infringement. 35 U.S.C. § 284. In addition to reputational harm and

1 See Deutsches Patent- und Markenamt, Curent Statistics : Patents,

https://www.dpma.de/dpma/veroeffentlichungen/statistiken/patente/index.html
(including suppliers Robert Bosch GmbH, Schaeffler Technologies AG & Co. KG, and
ZF Friedrichshafen AG).

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threat of injunctive relief, willful infringement carries a financial penalty

of up to three times the damages for patent infringement. Id. Of course,

Defendants could eliminate the risk to suppliers by providing a covenant

not to sue,2 but they have not done so. Other countries impose even more

serious penalties, including imprisonment.3

In addition, suppliers develop products for a variety of applications,

across various vehicle models. Allowing suppliers to negotiate licenses to

cover all applications simultaneously would result in obvious market

efficiencies. Instead, SEP holders seek to push licensing downstream to

OEMs, necessarily requiring separate negotiations for each application.

In addition to being wildly inefficient, negotiations at the end-product

level often lead to inflated license prices relative to the patented

technology, benefiting SEP holders to the detriment of suppliers, OEMs,

and automotive customers at the dealership.

Nor does the outcome the Panel contemplates—a license to an OEM

2 See, e.g., AXTS, Inc. v. F-1 Firearms, LLC, No. 4:19-CV-2379, 2020 U.S. Dist. LEXIS
196506, at *6-7 (S.D. Tex. Sept. 9, 2020) (dismissing patent infringement suit after
issuance of covenant not to sue).
3See e.g., Patentgesetz [PatG] [Patent Act], Dec. 16, 1980, Bundesgesetzblatt [BGBl.]
at 1 1981 I, as amended by Art. 1 of the Law dated Aug. 30, 2021, BGBl. at 4074
(German law authorizing imprisonment for willful patent infringement).

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for use of a supplier’s products—remove the risk to market participants.

Fundamentally, patent liability exists at every level in a supply chain:

“whoever without authority makes, uses, offers to sell, or sells any

patented invention, . . . infringes the patent.” 35 U.S.C. § 271(a)

(emphasis added). Accordingly, even if the OEMs were licensed for their

end use, suppliers are not licensed for any making, using, offering to sell,

or selling of patented technology.

The Panel’s rationale might have some limited appeal if Defendants

had chosen to license at the supplier level, and the dispute centered on

whether OEMs were also entitled to licenses. In such a scenario, the

doctrine of patent exhaustion might provide some protection to

downstream OEMs by removing “the legal restrictions on what

authorized acquirers ‘can do with an article embodying or containing an

invention’ whose initial sale (or comparable transfer) the patentee

authorized.” Helferich Patent Licensing, LLC v. New York Times Co., 778

F.3d 1293, 1301 (Fed. Cir. 2015) (quoting Bowman v. Monsanto Co., 569

U.S. 278, 283 (2013)). Theoretically, if suppliers were licensed then

OEMs could do as they please with the suppliers’ products. Id. But patent

exhaustion rights, like water, flow only downstream. Thus, only a direct

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license to the suppliers can prevent SEP holders from bringing patent

infringement lawsuits against suppliers. The Panel’s conclusion that

licenses to OEMs are the answer to the SEP conundrum is wishful

thinking.

III. The Panel’s Decision Ignores the Complexity of the

Automotive Supply Chain

By permitting Defendants to control where in the supply chain they

choose to negotiate, the Panel is sanctioning SEP holders’ strategy of

targeting parties in the supply chain less able to determine if the license

rate is FRAND, or whether a license is needed at all.

To manufacture an automobile, OEMs must account for thousands

of components from hundreds of suppliers to produce scores of different

configurations of automobiles every single day.4 Even if OEMs could

determine the IPRs associated with thousands of components from

hundreds of suppliers—all with different technical capabilities—such a

4
An insightful analysis of the realities facing the automotive market—particularly in
Germany—is available from the Center for Automotive Management. See Prof. Dr.
Stefan Bratzel, Impact of telecommunications patents on the automotive industry’s
ability to innovate (Feb. 22, 2021), https://auto-institut.de/en/automotiveinnovations/
auswirkungen-von-patenten-der-telekommunikation-auf-die-innovationsfaehigkeit-
der-automobilindustrie/ (“Bratzel”). Particularly germane to Continental’s Petition is
Bratzel’s discussion of the complexity of the automotive supply chain, the danger of
interference from SEP holders in the supplier/OEM contractual relationship, the
negative impact of permitting licensors to only provide licenses to OEMs, high
licensing costs, compelled settlements, and the ongoing threat of injunctions.

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process is wholly impractical and undermines the division of labor that

is essential to economic growth.

In view of the complexities of the automotive marketplace, the

OEMs’ product clearance processes are critical to ensuring that their

vehicles do not infringe on IPRs. With regard to its own technology, an

OEM may review the relevant patent literature to ensure that its

innovations do not infringe upon IPRs. To avoid risks, it may design

around problems or seek licenses from third parties.

In contrast, OEMs are not well-positioned to vet their suppliers’

component products. Due to legal and technical barriers, they often lack

in-depth familiarity with the components they purchase. Indeed, a

supplier frequently provides its technology in the form of a “black box” to

its customer, either because the supplier chose to protect its technical

innovations as trade secrets, or to prevent its customer (or a third party)

from reverse engineering its products. Thus, it is often impossible for an

OEM to engage in a clearance process for certain of the components it

purchases, especially in the area of mobile communications and the

telematics control units (“TCUs”) at issue here. See Matthias Schneider,

SEP Licensing for the Internet of Things – Challenges for Patent Owners

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and Implementers, CPI Antitrust Chronical (Mar. 2020), at 2,

https://www.competitionpolicyinternational.com/sep-licensing-for-the-

internet-of-things-challenges-for-patent-owners-and-implementers/

(“[Manufacturers] will have little or no detailed knowledge of the

standardized technologies implemented in their products since they will

integrate components implementing these standardized technologies

from third party suppliers.”). In sum, the Panel’s view does not comport

with the reality of the automotive industry.

IV. The Panel’s Decision Will Lead to More Hold-Ups,

Litigation, and an Increase in the Cost of Doing Business

The Panel accepted the argument that Continental’s harm was

“doubly speculative” because Continental “would not be harmed unless

OEMs first accepted non-FRAND licenses and then invoked their

indemnification rights against Continental.” Op. 8. But the harm to

Continental and the industry as a result of other suppliers’ inability to

obtain licenses is far from theoretical.

For several years now, there has been active litigation in Europe

concerning SEPs, including litigation between members of Amici and

Defendants. See, e.g., Florian Mueller, Great news for standard-essential

patent holders (Apr. 4, 2022), http://www.fosspatents.com/2022/04/great-

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news-for-standard-essential.html. OEMs routinely seek indemnification

from their suppliers when faced with potential infringement issues for

the suppliers’ products. In other words, indemnity risks are not

speculative; they are the norm.

Moreover, because the automotive market is a global one, battles

over IPRs are played out on the international stage, with litigants

seeking to obtain whatever advantage they can in the most favorable

forum possible. This predicament was concisely summarized by Bratzel:

In recent years, legal disputes concerning infringements of

patents have arisen between the automotive and
telecommunications industries, which have a significant
impact on the established value creation structure of the
automotive industry. In Germany, disputes pose particular
challenges due to the automatic injunctive relief in the Patent
Act. Settlement is the only practical option for automotive
manufacturers to avoid severe disruption to their complex
supply chain and business processes. In doing so,
manufacturers settle for disproportionately high amounts of
compensation, detached from the actual economic value of the
patented invention.

See Brazel, supra note 4 (emphasis added). While the Panel might have

taken comfort from U.S. safeguards protecting against the threat of the

SEP holder seeking an injunction, see eBay Inc. v. MercExchange, L.L.C.,

547 U.S. 388 (2006) (highlighting factors to be weighed in determining

whether an injunction should issue), an eBay-type analysis is not the law

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in Germany or in many other countries. Thus, an OEM operating

internationally without a license can find itself under the very real threat

of a shutdown. Facing this risk, OEMs may decide to take a license,

regardless of the rate.

V. Continental Has Articulated Article III Standing, as Well as

an Antitrust Injury

The Panel accepted as true Continental’s allegation that

Defendants had refused to license Continental. Op. 9–13. This refusal to

deal is sufficient to establish Article III standing. See, e.g., Sprint Nextel

Corp. v. Middle Man, Inc., 822 F.3d 524, 529 (10th Cir. 2016) (holding

interference with “alleged business model” established Article III

standing). It would also represent a quintessential antitrust injury. See

Blue Shield of Va. v. McCready, 457 U.S. 465, 479, 484 (1982) (concluding

that concerted refusal to deal sufficiently alleged antitrust injury);

Doctor’s Hosp. v. SE. Med. All., 123 F.3d 301, 305–06 (5th Cir. 1997)

(finding concerted refusal to deal fell within the “conceptual bounds of

antitrust injury”).

Instead of analyzing the sufficiency of the injury the Panel

recognized as such, it inexplicably shifted its analysis to principles of

contract law. In doing so, it created a two-tier system outside the reach

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of antitrust constraints that at once recognizes injuries suffered by SSO

members and yet denies injuries suffered by countless companies who

actually implement the standards. In essence, the Panel created a

loophole to duck antitrust liability.

As the Panel noted, “FRAND obligations exist to protect the parties

that must adopt a standard in order to conduct their business.” Op. 10. If

this is true, then Continental must have standing to pursue such

protection when it is denied. When the threat of patent infringement

liability looms, FRAND licensing commitments are anything but

“redundant.” Op. 11. They are necessary for Continental, just as they are

for other willing licensees in the automotive industry.

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CONCLUSION

Continental’s Petition for Rehearing En Banc should be granted.

Respectfully submitted,

Dated: April 20, 2022 /s/ Deborah Pollack-Milgate

Deborah Pollack-Milgate
Counsel of Record
Barnes & Thornburg LLP
11 South Meridian St.
Indianapolis, IN 46204

Stephen Smith
Barnes & Thornburg LLP
1 North Wacker Dr., Suite 4400
Chicago, IL 60606-2833

Eric J. Beste
Barnes & Thornburg LLP
655 West Broadway, Suite 1300
San Diego, CA 92101

Kian Hudson
Barnes & Thornburg LLP
11 South Meridian St.
Indianapolis, IN 46204

Counsel for Amici Curiae German

Association of the Automotive
Industry and the Alliance for
Automotive Innovation

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CERTIFICATE OF SERVICE

I 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. I further certify that all participants

in the case are registered cm/ecf users and that service will be

accomplished by the appellate cm/ecf system.

/s/ Deborah Pollack-Milgate

Deborah Pollack-Milgate

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 Case: 20-11032 Document: 00516287568 Page: 22 Date Filed: 04/20/2022

CERTIFICATE OF COMPLIANCE

Pursuant to Federal Rule of Appellate Procedure 32(g) undersigned

counsel certifies that this brief:

(i) complies with the type-volume limitation of Rule 29(a)(5)

because it contains fewer than 2,600 words, including footnotes and

excluding the parts of the brief exempted by Rule 32(f) and Fifth Circuit

Rule 32.2; and

(ii) complies with the typeface requirements of Rule 32(a)(5) and

Fifth Circuit Rule 32.1, 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 equivalent to 14 points or larger.

Dated: April 20, 2022 /s/ Deborah Pollack-Milgate

Deborah Pollack-Milgate

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