Alliance for Automotive Innovation and a coalition of the world’s leading automotive trade associations are asking Dallas, Texas-based Avanci, LLC for predictability, transparency and a full accounting of how it sets licensing royalty rates for its 5G connected vehicle program.
In a new letter to Avanci founder and CEO Kasim Alfalahi, Alliance for Automotive Innovation, the Japan Automobile Manufacturers Association, European Automobile Manufacturers’ Association, German Association of the Automotive Industry, Korea Automobile & Mobility Association and the French Association of the Automotive and Suppliers Industry called on Avanci to make this information public and “lead by example.”
What’s the issue?
Automaker access to certain network connectivity technology is controlled by Avanci, an operator of licensing platforms for standard essential patents (SEPs) necessary to enable 4G and 5G network connections in vehicles.
What’s a SEP?
A SEP is a patent on an invention that must be used to comply with a mandated technical standard in certain products. SEPs exist all over the connected economy.
A SEP is inherently anti-competitive, so SEP holders (like participants in Avanci’s platform) normally say: if our patented innovation is included in the technical standard – in this case connecting to a 5G network in a vehicle – we will offer a license to all willing implementers of the patent on fair, reasonable and non-discriminatory terms (FRAND).
Avanci is not meeting its FRAND obligations.
Why is transparency important?
Avanci does not disclose the patents it licenses through its platform. This prevents potential licensees (like automakers) from assessing the value of each SEP being licensed.
It also prevents a licensee from knowing if a patent for which it has an existing license has been sold or assigned to a third party. Transparency is fundamental to sound and competitive SEP licensing.
Why do FRAND obligations matter?
Rather than offer licenses to automotive suppliers that produce connected vehicle technology, Avanci will sell licenses only to automakers.
They refuse to offer licenses to automotive suppliers, which have traditionally assumed the responsibility for obtaining all necessary licenses for the components they sell to automakers.
By pegging the license to the value of a more expensive finished vehicle rather than the value of a considerably less expensive communications module inside the finished vehicle, Avanci is (successfully) extracting exorbitant royalty rates from automakers for required 4G and 5G licenses.
Read the letter to Avanci HERE.
