InterDigital Inc (IDCC)

[Gamco]

Tesla Loses Bid To Sue Over 5G License Rate In UK
By Hanna Vioque

Law360, London (July 16, 2024, 6:49 PM BST) -- A London court ruled Monday that Tesla can't sue InterDigital for a worldwide license covering 5G technology, throwing a wrench in the automaker's plans to launch 5G-equipped vehicles in the U.K.

The High Court held that Tesla doesn't have a serious licensing claim against InterDigital because its dispute over fair, reasonable and nondiscriminatory — or FRAND — terms depends on a failed claim against another defendant, Avanci, the agent providing licenses on behalf of InterDigital and 65 other patent holders.

But the automaker can still seek to invalidate three InterDigital patents that it argues aren't new or essential to 5G standards, the court ruled.

"I am unpersuaded that using [InterDigital Holdings] as a representative defendant to this licensing claim will work satisfactorily in the absence of Avanci as a defendant to the claim, owing to the difficulty for InterDigital in defending the global rate-setting claim without all the information and documents that it needs in order to do that," Judge Timothy Fancourt wrote.

Tesla previously purchased a worldwide license from Avanci to use 2G, 3G and 4G standard essential patents and sought a 5G SEP license to equip its electric cars with more advanced gear. But the automaker accused Avanci of offering terms that weren't FRAND, set at a fixed rate of $32 per car, the judgment says.

But Judge Fancourt concluded that the case against Avanci is contingent on Tesla being able to stand up an independent case against InterDigital, saying it is "too remote" to prop up a stand-alone claim. At the same time, the High Court held that Tesla can't force InterDigital to represent all the other patent holders, meaning that the automaker doesn't have a viable case to join Avanci to.

The court found a number of issues with letting Tesla pursue the challenge as a representative action with InterDigital standing in for all the other patent holders in the 5G pool.

For one, even though the patent holders appear to have the same interest in defending Tesla's claim, the court concluded there could be conflict of interest between the companies in the future. It would also be unfair to make InterDigital take on all the cost of defending the case, the court found.

Tesla also failed to convince the judge that the High Court is clearly the better forum to settle the case, even though it is far from certain that Delaware's Chancery Court — where the defendants have agreed to litigate the issue — would agree to set a worldwide licensing rate.

"This is a dispute about a license where the patentees and Avanci have agreed to license the 5G platform portfolio on the basis of a single global rate … and Tesla wishes to take a global license," Judge Fancourt wrote. "It would be surprising if, on the facts of this case, having determined that $32 was not FRAND, the court would not go a step further and say what rate was FRAND."

The judge also pointed out that even though the courts of England and Wales have agreed to set worldwide FRAND rates for single patents in the past, there is no guarantee they would agree to do so for a patent pool.

While Judge Fancourt said it had "given [him] some concern" that Tesla could pursue the claim in the High Court, he indicated that the chance for the parties to resolve the dispute in Delaware allayed his worries.

Tesla and its U.K. arm, Tesla Motors Ltd., launched their case in December. The automaker said Avanci's 5G licensing rates are more than double the amount it charges Tesla to use 4G on its vehicles. It contends that the rates are above the agreed ceiling for a FRAND licensing rate.

InterDigital is a wireless and digital tech company that specializes in telecommunications. It owns a range of SEPs in the U.K. and internationally that are essential for meeting standards that the European Telecommunications Standards Institute, or ETSI, has set for 4G and 5G, Tesla said.

When a patent becomes essential to a standard set by the institute, that requires the owner to license those patents on FRAND terms.

Texas-based Avanci facilitates joint patent licensing arrangements — or pools — for holders of standard essential patents for the relevant standards set by ETSI.

InterDigital applauded Judge Fancourt's decision Tuesday, saying that the company "remain[ed] committed to receiving a fair return on our innovation wherever it is implemented."?

Representatives for Tesla did not immediately respond to requests for comment.

Tesla is represented by James Segan KC of Blackstone Chambers, and Ligia Osepciu of Monckton Chambers, instructed by Peter Damerell and Bethan Hopewell of Powell Gilbert LLP.

InterDigital Patent Holdings Inc. and Interdigital Holdings Inc. are represented by Thomas Raphael KC of Tenty Essex Chambers and Maxwell Keay of 8 New Square, instructed by Alex Brodie of Gowling WLG (UK) LLP.

Avanci LLC is represented by Brian Nicholson KC and Kathryn Pickard of 11 South Square, instructed by Osborne Clarke LLP and EIP Europe LLP.

The case is Tesla Inc. and others v. IDAC Holdings Inc. and others, case number HP-2023-000042, in the High Court of Justice of England and Wales.

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