Case: 20-11032 Document: 00516288126 Page: 1 Date Filed: 04/20/2022

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.
please
On Appeal from the United States District Court for the Northern
District of Texas, No. 19-cv-2933 (Hon. Barbara M.G. Lynn)
UNOPPOSED MOTION OF AMERICAN HONDA MOTOR CO., INC.,
TOYOTA MOTOR CORP., AND TESLA, INC. FOR LEAVE TO FILE
BRIEF 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
[email protected]
Counsel for Amici Curiae
Case: 20-11032 Document: 00516288126 Page: 2 Date Filed: 04/20/2022

CORPORATE DISCLOSURE STATEMENT AND

SUPPLEMENTAL STATEMENT OF INTERESTED PERSONS

No. 20-11032, Continental Automotive Sys., Inc. v. Avanci L.L.C. et al.

The undersigned counsel of record certifies that the following listed

persons and entities as described in the fourth sentence of Fifth Circuit Rule

28.2.1, in addition to those disclosed in the parties’ statements of interested

persons, have an interest in the outcome of this case. These representations

are made in order that the judges of this Court may evaluate possible dis-

qualification or recusal.

Amicus Curiae Counsel

American Honda Motor Co., 1. Mayer Brown LLP (Nicole A.
Inc. Saharsky; Minh Nguyen-Dang)
2. American Honda Motor Co., Inc. (Ja-
mes Oliva)
Toyota Motor Corp. 1. Mayer Brown LLP (Nicole A.
Saharsky; Minh Nguyen-Dang)
Tesla, Inc. 1. Mayer Brown LLP (Nicole A.
Saharsky; Minh Nguyen-Dang)
2. Tesla, Inc. (Emily Lough; Jim Sher-
wood)

Amicus curiae American Honda Motor Co., Inc., is a wholly owned

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.

Amicus curiae Toyota Motor Corp., is a publicly held company, and no

publicly held company owns 10% or more of it stock.

i
Case: 20-11032 Document: 00516288126 Page: 3 Date Filed: 04/20/2022

Amicus curiae Tesla, Inc., has no parent company, and no publicly

held company owns 10% or more of it stock.

Dated: April 20, 2022 /s/ Nicole A. Saharsky

Nicole A. Saharsky

ii
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UNOPPOSED MOTION FOR LEAVE

Pursuant to Federal Rule of Appellate Procedure 29(b)(2), American

Honda Motor Co., Inc., Toyota Motor Corp., and Tesla, Inc., move for leave

to file a brief as amici curiae in support of Plaintiff-Appellant Continental

Automotive Systems, Inc.’s petition for rehearing en banc. A copy of the

proposed amicus brief is attached to this motion. All parties have consented

to the motion.

1. Prospective amici are automobile manufacturers, known in the

industry as original equipment manufacturers or OEMs. OEMs purchase

automotive parts from companies like Continental and use them in manu-

facturing vehicles. Those parts practice standard essential patents, but De-

fendants refuse to provide Continental with the necessary licenses on fair,

reasonable, and non-discriminatory (FRAND) terms. That hurts Continen-

tal’s business, decreases competition in terms of the parts available to

OEMs, and ultimately hurts consumers.

2. The panel held that Continental did not have standing to chal-

lenge Defendants’ licensing practices. The panel’s reasoning was based in

part on its view that OEMs would have standing to bring suit. As OEMs,

prospective amici are uniquely situated to explain to the Court how the

panel was mistaken. Although OEMs are harmed by Defendants’ refusal to

1
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provide licenses to suppliers such as Continental, the suppliers are uniquely

harmed, and OEMs would not be able to bring suit to vindicate the harms

particular to suppliers. Prospective amici also are uniquely positioned to

explain how the panel’s decision, if left uncorrected, will create serious prob-

lems for the automotive industry and more broadly.

3. Counsel for prospective amici contacted the parties’ counsel for

their position on this motion. Counsel for all parties consent to the motion.

CONCLUSION

The Court should grant leave to file the attached amicus curiae brief.

Dated: April 20, 2022 Respectfully submitted,

/s/ Nicole A. Saharsky

Nicole A. Saharsky
Minh Nguyen-Dang
MAYER BROWN LLP
1999 K Street, N.W.
Washington, D.C. 20006
(202) 263-3000
[email protected]

Counsel for Amici Curiae

2
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CERTIFICATE OF COMPLIANCE

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

counsel certifies that this motion:

(i) complies with the type-volume limitation of Rule 27(d)(2) be-

cause it contains 284 words, including footnotes and excluding the parts of

the brief exempted by Rule 32(f ); and

(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

equivalent to 14 points or larger.

Pursuant to Paragraph A(6) of this Court’s ECF Filing Standards, un-

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

version of a commercial virus scanning program and is free of viruses.

Dated: April 20, 2022 /s/ Nicole A. Saharsky

Nicole A. Saharsky

3
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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

be accomplished by the appellate CM/ECF system.

/s/ Nicole A. Saharsky

Nicole A. Saharsky

4
Case: 20-11032 Document: 00516288127 Page: 1 Date Filed: 04/20/2022

No. 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; CONVERSANT WIRELESS LICENSING
SARL, A LUXEMBOURG CORPRATION; 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. 3:19-cv-02933
Hon. Barbara M.G. Lynn

BRIEF OF AMICUS CURIAE THALES IN

SUPPORT OF PLAINTIFF-APPELLANT’S PETITION
FOR REHEARING EN BANC

(Counsel Listed on Inside Cover)

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Craig M. Reiser Michael L. Keeley

Counsel of Record Paul Zeineddin
Denise Plunkett Michael O’Mara
Christopher Erickson AXINN, VELTROP &
AXINN, VELTROP & HARKRIDER LLP
HARKRIDER LLP 1901 L Street NW
114 West 47th Street Washington, DC 20036
New York, NY 10036
(212) 728-2218
[email protected]

Counsel for Thales DIS AIS Deutschland GmbH and

Thales DIS AIS USA LLC
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SUPPLEMENTAL CERTIFICATE OF INTERESTED PERSONS

No. 20-11032, Continental Automotive Systems v. Avanci

Pursuant to Fifth Circuit Rules 28.2.1 and 29.2, the undersigned

counsel of record for amicus curiae certifies that this supplemental

statement of interested parties discloses all those with an interest in

the amicus brief. These representations are made to permit the judges

of this Court to evaluate possible disqualification or recusal.

Amicus Curiae on this Brief

Thales DIS AIS Deutschland GmbH and Thales DIS AIS USA LLC,
amicus curiae. Thales DIS AIS USA, LLC is a wholly-owned subsidiary
of Thales DIS AIS Deutschland GmbH. Thales DIS AIS Deutschland
GmbH is a wholly-owned subsidiary of Gemalto B.V. Gemalto B.V. is a
wholly-owned subsidiary of Thales SA, a publicly traded company.

Counsel for Amicus Curiae

Craig M. Reiser, Denise Plunkett, Christopher Erickson, Michael L.

Keeley, Paul Zeineddin, Michael O’Mara of Axinn, Veltrop & Harkrider
on behalf of amicus curiae Thales DIS AIS Deutschland GmbH and
Thales DIS AIS USA LLC.

Dated: April 20, 2022 /s/ Craig M. Reiser

_________________________________________

Craig M. Reiser
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TABLE OF CONTENTS

INTEREST OF THE AMICUS CURIAE ................................................... 1

SUMMARY OF ARGUMENT .................................................................... 3

ARGUMENT ............................................................................................... 4

I. REHEARING EN BANC IS APPROPRIATE ......................... 4

The panel decision contravenes established law, which

does not categorically limit which implementers can
enforce SEP-holders’ obligations to SSOs ...................... 4

The panel decision upsets the balance of the

standardized technologies ecosystem, which is critical
to ensuring the development of innovative products .... 6

CONCLUSION ......................................................................................... 12

ii
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TABLE OF AUTHORITIES

Page(s)

Cases

Broadcom Corp. v. Qualcomm Inc.,

501 F.3d 297 (3d Cir. 2007) ................................................................... 8

Ericsson, Inc. v. D-Link Sys., Inc.,

773 F.3d 1201 (Fed. Cir. 2014) .......................................................... 8, 9

HTC Corp. v. Telefonaktiebolaget LM Ericsson,

12 F.4th 476 (5th Cir. 2021) .................................................................. 4

Huawei Techs. Co. v. T-Mobile US, Inc.,

No. 16-CV-00052, 2017 WL 3954108
(E.D. Tex. Aug. 29, 2017) ....................................................................... 8

Koninklijke Philips N.V. v. Thales DIS AIS USA, LLC,

No. 20-01713 (D. Del. filed Dec. 17, 2020) .......................................... 10

Microsoft Corp. v. Motorola, Inc.,

795 F.3d 1024 (9th Cir. 2015) ................................................................ 5

TCL Commc’n Tech. Holdings Ltd. v. Telefonaktiebolaget LM

Ericsson, 943 F.3d 1360 (Fed. Cir. 2019),
cert. denied, 141 S. Ct. 239 (2020) ......................................................... 5

Statutes

Fed. R. App. P. 29(a)(4)(E) ......................................................................... 1

Fed. R. App. P. 35(a) ................................................................................... 4

Other Authorities

Analysis of Proposed Consent to Aid Public Comment,

Motorola Mobility LLC and Google Inc., FTC File No. 121-
0120 (Jan 3, 2013) ................................................................................ 10

iii
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Certain UMTS and LTE Cellular Communications Modules

& Products Containing the Same, No. 337-TA-1240 (ITC
Apr. 1, 2022) (Initial Determination) .................................................. 10

ETSI, Rules of Procedure: Annex 6: ETSI Intellectual

Property Rights Policy § 12 (Dec. 1, 2021) .................................... 5-6, 7

Jacob Morgan, A Simple Explanation of ‘The Internet of

Things,’ Forbes (May 13, 2014) ............................................................. 1

Jorge Contreras, Much Ado About Holdup, 2019 U. Ill. L.

Rev. 875 (2019) ....................................................................................... 8

Knud Lasse Lueth, State of the IoT 2020: 12 billion IoT

connections, surpassing non-IoT for the first time, IoT
Analytics (Nov. 19, 2020) ....................................................................... 7

Singh, R. P., Javaid, M., Haleem, A., & Suman, R., Internet
of things (IoT) applications to fight against COVID-19
pandemic, Diabetes & metabolic syndrome, 14(4), 521–
524 (2020) ............................................................................................... 7

Third Party United States Federal Trade Commission’s

Statement on the Public Interest, Certain Gaming and
Entertainment Consoles, Related Software, and
Components Thereof, Inv. No. 337-TA-752, 2012 WL
7681645 (June 6, 2012) .......................................................................... 8

Unwired Planet v. Huawei [2017] EWHC 711 (Pat) (UK) ....................... 5

iv
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INTEREST OF THE AMICUS CURIAE 1

The field of machine-to-machine (“M2M”) communications has

enabled us to connect almost any device with an on-and-off switch to not

only the Internet, but to other devices, giving rise to the rapidly-

expanding “Internet of Things” (“IoT”). 2 IoT devices span a wide range

of industries, from cellphones and coffee makers, to home appliances

and wearable fitness devices, and even airplane engines and oil rig

drills.

Underlying this M2M connectivity are modern interoperability

standards, like 5G. Such standards not only allow products to be

designed that will be compatible with each other, but have enabled the

development of “smart cities”—helping us to reduce waste and use

energy efficiently. They facilitate the technologies that can link your

calendar, your car, traffic monitoring services, and your phone—so you

know what time to leave for a meeting and the best route to take. They

1 Pursuant to Fed. R. App. P. 29(a)(4)(E), amicus affirms that no counsel for a party
authored this brief in whole or in part and that no person other than amicus has
made any monetary contributions intended to fund the preparation or submission of
this brief. Amicus has requested leave of this Court to file this brief.
2 See Jacob Morgan, A Simple Explanation of ‘The Internet of Things,’ Forbes (May

13, 2014), https://tinyurl.com/yawb95ja.

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have helped to promote economic growth and development, and the

creation of products that improve our daily lives.

Amicus curiae Thales DIS AIS Deutschland GmbH and Thales

DIS AIS USA LLC (together, “Thales”) is an industry leader in the

M2M field. Thales produces wireless network access modules that

enable M2M communications. Thales’ modules are compatible with the

3G UMTS, 4G/LTE and 5G mobile communication standards

promulgated by the European Telecommunications Standards Institute

(“ETSI”), a Standard Setting Organization (“SSO”). SSOs like ETSI

bring together industry participants to create technical standards for

particular technologies that facilitate interoperability. Companies like

Thales that seek to implement one or more of these standards may need

to license tens of thousands of patents that are self-declared as

“essential” to the standard.

Thales has attempted in good faith to negotiate licenses for these

patents with the relevant SEP-holders, but has been rebuffed at times

with licensing offers that are not fair, reasonable, and non-

discriminatory (“FRAND”). In other cases, the SEP-holder has simply

refused to make an offer to Thales, in direct contravention of its

2
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FRAND obligations. One remedy for an implementer in this situation

is to bring a lawsuit against the relevant SEP-holder to enforce the

SEP-holder’s obligations under the relevant standard. The Fifth Circuit

panel’s decision, if left to stand, would remove this option for many

implementers and would also upend the balance between implementers

and SEP-holders established by the Intellectual Property Rights (“IPR”)

policies of various SSOs.

Thales therefore has a strong interest in this Court’s en banc

review, and reversal, of the Fifth Circuit panel’s decision.

SUMMARY OF ARGUMENT

In concluding that only certain implementers are third-party

beneficiaries to SEP-holders’ agreements with SSOs, the panel decision

created intra- and inter-circuit splits, which are appropriate to resolve

en banc. The panel decision thus departed from the prior decisions of

this Court and other courts, and did so based on a flawed analysis of the

SSO agreements at issue. En banc rehearing also is appropriate

because the balancing of interests between SEP-holders and licensees is

tremendously important for encouraging the development of 21st-

century technologies, such as those relying on M2M communications.

3
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The panel decision, if left to stand, would disrupt the carefully crafted

balance between SEP-holders and implementers prescribed by SSOs

and, consequently, is likely to harm consumers and innovation.

ARGUMENT

I. REHEARING EN BANC IS APPROPRIATE

En banc rehearing is appropriate where the rehearing is

“necessary to secure or maintain uniformity of the court's decisions” or

where there is a “question of exceptional importance.” Fed. R. App. P.

35(a). Both of these elements are present here.

The panel decision contravenes established law,

which does not categorically limit which
implementers can enforce SEP-holders’
obligations to SSOs

As Continental notes, this Circuit has unambiguously defined

which entities are third-party beneficiaries to agreements between

SEP-holders and SSOs. “Companies seeking to license under [FRAND]

terms become third-party beneficiaries of the contract between the

standard-essential patent holder and the standard setting

organization.” HTC Corp. v. Telefonaktiebolaget LM Ericsson, 12 F.4th

476 , 481 (5th Cir. 2021) (emphasis added). The Fifth Circuit panel

4
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therefore erred by concluding that only some would-be licensees are

third-party beneficiaries to those contracts. See Op. 10-11.

The panel decision cites no court decision that requires the panel’s

conclusion. This is not surprising, because other courts have

consistently described the agreements between SEP-holders and SSOs

as providing rights to implementers, without limitation. See, e.g., TCL

Commc’n Tech. Holdings Ltd. v. Telefonaktiebolaget LM Ericsson, 943

F.3d 1360, 1364 (Fed. Cir. 2019), cert. denied, 141 S. Ct. 239 (2020)

(concluding that “implementers of ETSI standards,” without limitation,

are third-party beneficiaries of the ETSI agreement, which is “intended

to benefit implementers of ETSI standards”); Microsoft Corp. v.

Motorola, Inc., 795 F.3d 1024, 1033 (9th Cir. 2015) (“Microsoft—as a

standard-user—can enforce these contracts as a third-party beneficiary”

(emphasis added)); see also Unwired Planet v. Huawei [2017] EWHC

711 (Pat) (UK), ¶¶ 98-146 (holding, under French law, that the ETSI

agreement is enforceable by “person[s] wishing to implement the

standard,” without limitation). 3

3The interpretation of the ETSI IPR Policy is governed by French law. See ETSI,
Rules of Procedure: Annex 6: ETSI Intellectual Property Rights Policy (hereinafter

5
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The Fifth Circuit panel’s decision is devoid of any analysis as to

why, based on the actual terms of ETSI’s IPR policy (or other SSOs’

polices), Continental is not an intended beneficiary. See Op. 11-12; see

also FAC ¶¶ 77-85. The Fifth Circuit panel did not address, much less

justify, the resulting inconsistency between the rule it announced and

the ETSI IPR policy at issue—which does not provide different rights to

implementers depending on whether the implementer competes with

the licensing SEP-holder. See Op. 11-12; ETSI IPR Policy.

The Fifth Circuit should grant rehearing en banc to reconcile

these intra- and inter-circuit splits and to correct the panel’s

unsupported interpretation of the ETSI IPR policy.

The panel decision upsets the balance of the

standardized technologies ecosystem, which is
critical to ensuring the development of
innovative products

The impact of the panel’s decision is not limited to the parties or

even the industries in this case. To the contrary, the panel decision, if

left to stand, would be a sea change for standardized technologies like

M2M communications, upending the deliberate balance reflected in

“ETSI IPR Policy”) § 12 (Dec. 1, 2021), https://www.etsi.org/images/files/IPR/etsi-

ipr-policy.pdf.

6
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many SSO policies, including ETSI’s. 4 This will harm consumers and

innovation.

The world economy has become dependent upon M2M

communication technology. The number of IoT connected devices (over

10 billion globally) recently exceeded the number of non-IoT-connected

devices. 5 Products using M2M communications are now ubiquitous in

myriad critical sectors of the economy. For example, Thales’ wireless

modules are components in respirators and other medical devices,

smart energy meters, autonomous vehicles, global positioning systems,

and more. 6 M2M communications also have been heralded in the fight

against COVID-19. 7 In short, M2M communications have become an

essential part of our society and economy globally.

4 See, e.g., ETSI IPR Policy § 3.1 (“[T]he ETSI IPR POLICY seeks a balance between
the needs of standardization for public use in the field of telecommunications and
the rights of the owners of IPRs.”).
5 Knud Lasse Lueth, State of the IoT 2020: 12 billion IoT connections, surpassing

non-IoT for the first time, IoT Analytics (Nov. 19, 2020), https://iot-
analytics.com/state-of-the-iot-2020-12-billion-iot-connections-surpassing-non-iot-for-
the-first-time.
6 See generally Thales Markets,

https://www.thalesgroup.com/en/worldwide/activities (last visited Apr. 20, 2022).

7 Singh, R. P., Javaid, M., Haleem, A., & Suman, R., Internet of things (IoT)

applications to fight against COVID-19 pandemic, Diabetes & Metabolic Syndrome,

14(4), 521–524 (2020), https://doi.org/10.1016/j.dsx.2020.04.041.

7
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The Fifth Circuit panel’s decision would impede innovation in

M2M technologies by increasing the likelihood of, and unfair leverage

resulting from, patent hold-up. Patent hold-up occurs when SEP-

holders negotiate excessive royalties or other one-sided terms based on

the market power resulting from the inclusion of their self-declared

SEPs in a technological standard. See Op. 3 (citing Ericsson, Inc. v. D-

Link Sys., Inc., 773 F.3d 1201, 1209 (Fed. Cir. 2014)); Broadcom Corp.

v. Qualcomm Inc., 501 F.3d 297, 310-314 (3d Cir. 2007). Patent hold-up

can result in higher prices for end consumers and reduce innovation. 8

The panel decision encourages hold-up because it releases SEP-

holders from any FRAND obligation to certain implementers (i.e., non-

SSO members that do not compete with the licensing SEP-holder) as

those implementers will no longer be able to enforce the SEP-holders’

FRAND obligations. See Huawei Techs. Co. v. T-Mobile US, Inc., No.

16-CV-00052, 2017 WL 3954108, at *4 (E.D. Tex. Aug. 29, 2017), report

and recommendation adopted, No. 16-CV-00052, 2017 WL 3927177

8See Jorge Contreras, Much Ado About Holdup, 2019 U. Ill. L. Rev. 875, 883 (2019);
Third Party United States Federal Trade Commission’s Statement on the Public
Interest, Certain Gaming and Entertainment Consoles, Related Software, and
Components Thereof, Inv. No. 337-TA-752, 2012 WL 7681645, at *1-2 (June 6,
2012).

8
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(E.D. Tex. Sept. 6, 2017) (crediting expert testimony that “there would

be little if any remedy for a[n] [SSO] member's noncompliance” if non-

members of an SSO could not enforce SSO obligations). In the M2M

communications space, this likely would lead to higher prices for

products on which consumers are increasingly reliant.

Moreover, the panel’s ruling stands to impede licensing

negotiations that allow implementers of standardized technologies, like

5G, to apply the technology in innovative settings, such as M2M

communications. The royalty rate is often a sticking point in these

licensing negotiations between SEP-holders and implementers, and

existing licenses can serve as an appropriate benchmark for

determining whether a royalty rate is FRAND. See D-Link, 773 F.3d at

1227-28. The panel decision, however, splits implementers into two

camps: those entitled to FRAND terms (i.e., SSO members and

implementers that compete with the licensing SEP-holder) and those

that are not. License negotiations would become more difficult as

implementers and SEP-holders would argue over, for example, whether

a prior licensing agreement involved an implementer who competed

with the licensing SEP-holder. There also would be an increased risk

9
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that a license with a supra-FRAND royalty rate would be proffered as

the benchmark for a subsequent license.

The panel decision creates particular confusion and uncertainty

for component manufactures like Thales that are in the middle of the

supply chain. The panel, in holding Continental had not suffered an

injury-in-fact, stated that Continental had not been denied property to

which it is entitled because it “does not need to personally own SEP

licenses to operate its business.” Op. 12.

But the panel decision fails to recognize that without a license,

mid-chain manufacturers like Thales are often subject to lawsuits by

SEP-holders (including Avanci members). In fact, an SEP-holder and

Avanci member recently brought parallel actions against Thales, in

federal court and in the International Trade Commission, 9 seeking an

exclusion order and other relief in an attempt to obtain supra-FRAND

royalties through a hold-up strategy. 10

9 Koninklijke Philips N.V. v. Thales DIS AIS USA, LLC, No. 20-01713 (D. Del. filed
Dec. 17, 2020); Certain UMTS and LTE Cellular Communications Modules &
Products Containing the Same, No. 337-TA-1240 (ITC Apr. 1, 2022) (Initial
Determination).
10 See Analysis of Proposed Consent to Aid Public Comment, at 3, Motorola Mobility

LLC and Google Inc., FTC File No. 121-0120 (Jan 3, 2013) (“[F]iling for an exclusion
order before the ITC on a FRAND-encumbered SEP significantly raises the risk of

10
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Furthermore, the panel decision fails to recognize that

downstream manufacturers’ customers require mid-level manufacturers

to warrant that the supplied components do not infringe any

intellectual property rights, as well as to indemnify them for any

licensing royalties (even if supra-FRAND). See FAC ¶ 105.

Mid-level manufacturers thus need a license to avoid

(1) potentially ruinous lawsuits from SEP-holders, (2) the likely loss of

business stemming from their inability to provide a contractual

warranty regarding infringement, and (3) having to pay supra-FRAND

royalties via the payments to downstream manufacturers. Without the

ability to enforce a SEP-holder’s FRAND obligations, a consequence of

the panel’s decision, many mid-level manufacturers will be unable to

obtain licenses and thus avoid these severe consequences. Moreover,

these significant costs will inevitably hamper innovation and lead to

higher costs for consumers.

patent hold-up in concurrent licensing negotiations because an exclusion order may

be entered by the ITC before a FRAND rate is reached.”).

11
Case: 20-11032 Document: 00516288127 Page: 18 Date Filed: 04/20/2022

CONCLUSION

For the foregoing reasons, rehearing en banc is necessary and

appropriate.

Dated: April 20, 2022 Respectfully submitted,

/s/ Craig M. Reiser

_________________________________________

Craig M. Reiser
Counsel of Record
Denise Plunkett
Christopher Erickson
AXINN, VELTROP &
HARKRIDER LLP
114 West 47th Street
New York, NY 10036
(212) 728-2218
[email protected]

Michael L. Keeley
Paul Zeineddin
Michael O’Mara
AXINN, VELTROP &
HARKRIDER LLP
1901 L Street NW
Washington, DC 20036

Counsel for Thales DIS AIS

Deutschland GmbH and Thales
DIS AIS USA LLC

12
Case: 20-11032 Document: 00516288127 Page: 19 Date Filed: 04/20/2022

CERTIFICATE OF COMPLIANCE

Pursuant to Federal Rules of Appellate Procedure 32(g),

undersigned counsel certifies that this brief:

(i) Complies with the type-volume limitation of Rule 29(b)(4)

because it contains 2,093 words, including footnotes and

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

(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 equivalent to 14 points or

larger.

Dated: April 20, 2022 /s/ Craig M. Reiser

_________________________________________

Craig M. Reiser
Case: 20-11032 Document: 00516288127 Page: 20 Date Filed: 04/20/2022

CERTIFICATE OF SERVICE

I hereby certify that on April 20, 2022, 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.

/s/ Craig M. Reiser

_________________________________________

Craig M. Reiser