In the latest development in the ‘connected car wars’, IP Bridge (a member of the Avanci pool) has obtained an injunction against Ford in the Munich Court of Germany. The order amounts to a sales ban with a recall requirement for Fords with certain LTE functionality (isn‘t that likely most of them?). This ruling is interesting for a number of reasons.
First, whilst this is obviously significant news and no doubt IP Bridge gains some leverage from the finding, it was probably expected and therefore one must question where it fits in Ford's strategy. The patent in question is battle tested against multiple opponents and has been found valid previously by the German Federal Court of Justice. Presumably the chances of Ford escaping were slim, and Ford knew that.
What may be responsible for what appears a less than commensurate lack of concern (though that could change) is the requirement of a bond to enforce a German injunction. In this case the bond is some $240m. It is questionable whether any patent holder has that money lying around and would be ready to pay it into court even if it did. We therefore have a scenario slightly unusual to an English lawyer - an in theory powerful injunction but with ostensibly little risk of actual enforcement. Contrast this with an English injunction, which is enforceable once obtained without the need to hand over any money (let alone $0.25bn). Like a German injunction, it can be stayed pending an appeal, but it is far from certain that an English injunction would be stayed pending an appeal (it is fact dependent). (For completeness sometimes a court might require a cross-undertaking to pay compensation to a defendant if the injunction is later overturned. But given in these cases it’s the act of enforcement that gets a FRAND licence signed, or at least committed to, it is questionable whether one would ever be taking much of a risk even if there was a cross-undertaking.)
Second, it is clear that the proceedings concerned an Avanci pool licence and it’s not clear if a bilateral licence was also in the mix. The case actually fell down due to Ford’s failure to make any counteroffer at all, so unfortunately some of the more detailed arguments may not need to have been considered in this regard. But the fact this was a pool matter is interesting nonetheless.
Third, though related, is the question of why Ford did not make a counteroffer at all. Perhaps it did not wish to give credence to the obvious strategy being pursued by Avanci of seeking to establish a commercial norm of end-user (i.e., car) level licensing in this new arena. However, Ford could have taken the licence, modified it so the royalty base was the TCU instead of the car (and made any other modifications it wanted) then sent it back to Avanci. Plainly it would have been rejected, but whether such an offer is FRAND is more nuanced. The absence of any questions being referred to the CJEU on component level licensing is also curious, though perhaps a symptom of the German court simply stopping its consideration after finding Ford had not made any counteroffer.
It will be interesting to see how this develops in the near term.