Jan 17th 2020

Car wars: how Nokia could find itself at centre of EU investigation over technology patents

by Enrico Bonadio and Luke McDonagh

 

Enrico Bonadio

Senior Lecturer in Law, City, University of London

 

Luke McDonagh

Senior Lecturer in Law, City, University of London

Mercedes’ new electric SUV is made by Daimler which has complained to the European Commission about Nokia. Daimler AG

 

Thanks to cutting-edge digital technology, cars are increasingly like “smartphones on wheels”, so manufacturers need to have access to the latest patented 4G and 5G technologies essential to navigation and communications. But often the companies that hold the patents are reluctant to license them because manufacturers will not accept the high fees involved, which leads to patent disputes and licensing rows.

 

Such rows are now commonplace, but in the past, large car manufacturers often shied away from expensive litigation or formal complaints when issues of patent infringement arose, opting instead to settle out of court. But times have changed.

Car makers and their suppliers are becoming more conscious of the role of competition authorities and the legal options available if patent owners abuse their monopolistic rights. In the EU there is a robust body of competition law designed to fight cartels and monopolistic behaviours.

Nokia v everyone

One such battle involves Nokia, a Finnish telecoms company, over licences for patented technologies that are essential to standards for navigation, vehicle communications and self-driving cars.

Specifically, a group of 27 companies, including Daimler, Ford, BMW, Dell, Cisco, Continental, Lenovo and Sky, has complained to the European Commission about alleged abuses of the patent system that jeopardise the development of self-driving vehicles and connected devices.

Best known for its early mobile phones, Nokia is one of the world’s leading telecoms companies. Eightinc, CC BY

Although the complaint did not mention Nokia by name, it clearly pointed the finger at the Finnish multinational and its refusal to license its standard essential patents to car companies and component suppliers on acceptable terms.

Refusals to license intellectual property rights are not a new phenomenon; when they have occurred in the past, EU competition authorities have been strict in imposing big fines on companies that unreasonably refuse to share their technologies.

Nokia owns several patents protecting technologies on which current mobile phone standards are based, such as wifi, 3G, 4G, and the latest 5G. This means that companies requiring these technologies for their products must obtain a licence from the Finnish company. Nokia’s patent enforcement strategy appears to be quite aggressive; it has begun several legal actions, particularly against Daimler, claiming patent infringement on the basis that the defendants were using its patented technology without a licence.

Nokia’s refusal to license such patents has been disputed by a variety of industry players. Complaints have been lodged with the European Commission by Daimler, electronics company Bury Technologies, automobile parts manufacturer Continental as well as automotive supplier Valeo and digital security company Gemalto. All claim that Nokia has refused to license their patents on the principle of “fair economic conditions”, which means they believe the licensing fees demanded by Nokia are too high and unfair, amounting to an illegal abuse of its dominant position and violating EU competition rules.

Some commentators have argued that an investigation into Nokia’s licensing scheme could have a negative impact on Europe’s strategic autonomy when it comes to 5G, as Nokia and its competitor Ericsson are Europe’s major 5G players. However, the EC may soon begin a formal competition procedure aimed at shedding light on Nokia’s practices.

Competition and consumers

As highlighted in the letter sent by the 27 companies to the EC, the practice of some patent owners to grant licences only to certain entities prevents companies across the Internet of Things from investing in research and development.

It is a practice – the letter argues – that stifles innovation, discourages newcomers to the market and ties suppliers to existing customers, which means European companies and consumers may be exposed to higher prices than they would be in a more competitive market.

The existence of such patents – and associated litigation – has potentially disruptive consequences for the manufacture, marketing and distribution of complex “networked” products that include a variety of functions developed and patented by different companies – for example, smartphones that incorporate camera, video, web browser, wireless, text messaging and so on.

By enforcing these patents, owners can often stymie competitors (and their suppliers) and prevent them from launching products that use the same standards. This raises serious concerns over competition in the marketplace and the need to ensure that the Internet of Things industry can develop.

Disputes can disrupt manufacture of ‘networked’ products like smartphones with functions patented by different companies. Shutterstock

Striking a fair balance

An appropriate balance must be reached that ensures that there are still incentives for companies like Nokia to keep developing new technologies (meaning they can still make decent profits), while allowing fair competition and consumer protection. This can be achieved by the endorsement of fair licensing practices on the part of the patent owner, which is what Daimler and the other complainants claim Nokia is failing to do.

But patent holders of standard technologies are required to give an irrevocable undertaking that they are prepared to grant competitors licences on terms that are fair, reasonable, and non-discriminatory. Daimler and its suppliers argue that Nokia’s licensing behaviour doesn’t comply with these obligations, which is why they have filed antitrust complaints with the European Commission.

As the EC has severely condemned refusals to share intellectual property with competitors in the past, it is now possible that Nokia will face a similar fate. In the seminal 2015 case Huawei v ZTE, the EU’s top court found that every player is entitled to obtain a patent licence for standard technology on fair and reasonable terms.

Perhaps fearing a negative reaction by the European Commission, in November 2019, Nokia declared that it was in talks with Daimler and the other complainants about settling the controversy via mediation.

If no settlement guaranteeing the right of Daimler and the other complainants to access these essential technologies is reached, Nokia could risk being sanctioned for anti-competitive behaviour.

Enrico Bonadio, Senior Lecturer in Law, City, University of London and Luke McDonagh, Senior Lecturer in Law, City, University of London

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Browse articles by author

More Current Affairs

Feb 15th 2020
EXTRACT: "Global dissatisfaction with democracy has increased over the past 25 years, according to our recent report. Drawing upon the HUMAN Surveys project, the report covered 154 countries, with 77 countries covered continuously for the period from 1995 to 2020. These samples were possible thanks to the combination of data from over 25 sources, 3,500 national surveys, and 4 million respondents. Not surprisingly, the gloomy headline finding – rising democratic dissatisfaction – attracted the most attention. Less widely discussed, however, is the “good news” – that a small sample of countries has bucked the trend, and have record high levels of satisfaction with their democracies."
Feb 14th 2020
EXTRACT: "This is how dictatorships begin. As the US prepares for its next presidential election in November, it is every citizen’s responsibility rationally to examine Trump’s dictatorial impulses, which reelection would only reinforce. It is not safe to assume that he won’t go too far, or that he is too much of a “mediocrity” – as Leon Trotsky called Stalin (an assessment with which many Bolsheviks agreed) – to transform his country......Vladimir Lenin, himself a ruthless Bolshevik, wrote in 1922 that, “Stalin concentrated in his hands enormous power, which he won’t be able to use responsibly,” owing to traits like rudeness, intolerance, and capriciousness. Trump has all of them in spades. The more power he concentrates in his own hands, the dimmer the long-term outlook for American democracy becomes. His reelection could mean lights out."
Feb 9th 2020
EXTRACT: "Does this mean that the dream of European unity is over? Does the exodus of a member state obliterate the vision of Victor Hugo and Václav Havel? Does Europe now fit the description of what the great American president Abraham Lincoln called a house divided against itself? Not necessarily. History is more imaginative than we are. The EU still has the option of keeping Britain close in heart and mind. We can still benefit from our absent partner, by resurrecting the partnership through our actions."
Feb 7th 2020
EXTRACT: "There, no formal change from a republican system to an autocratic system ever occurred. Rather, there was an erosion of the republican institutions, a steady creep over decades of authoritarian decision-making, and the consolidation of power within one individual – all with the name “Republic” preserved.........Will the GOP-led Senate’s endorsement of this defense clear a path for more of the manifestations – and consequences – of authoritarianism? The case of the Roman Republic’s rapid slippage into an autocratic regime masquerading as a republic shows how easily that transformation can occur."
Feb 7th 2020
EXTRACT: "So all that is why Cramer is talking about the death knell of petroleum stocks. We probably agree on almost nothing else, but when people are right, you have to give them credit. He is right."
Feb 3rd 2020
EXTRACT: "........as the citizens of the remaining 27 states have observed the destabilising impact that the referendum decision has had on British politics, they have been inoculated against the desire to secede from the EU. Outside the UK, national-populist parties have moderated their anti-EU rhetoric and nowadays profess to want to change the EU from within instead of destroying it."
Feb 2nd 2020
EXTRACT: "Senators will soon decide whether to dismiss the articles of impeachment against President Donald Trump without hearing any witnesses. In making this decision, I believe they should consider words spoken at the Constitutional Convention, when the Founders decided that an impeachment process was needed to provide a “regular examination,” to quote Benjamin Franklin. A critical debate took place on July 20, 1787, which resulted in adding the impeachment clause to the U.S. Constitution. Franklin, the oldest and probably wisest delegate at the Constitutional Convention, said that when the president falls under suspicion, a “regular and peaceable inquiry” is needed."
Feb 1st 2020
EXTRACT: "Britain will be celebrating its glorious independence from the complications of international cooperation at a time when the intellectual, political, and economic hostility between China’s communist leadership and liberal democracies is becoming ever clearer. If liberal democracy is to survive, it must stand up for itself. And we should be under no illusion: open societies under the rule of law, from the Americas to Europe, Africa, and Asia, are in China’s hostile sights. The West should not aim to encircle or pen in China. But liberal democracies cannot allow it to distort international norms in its own favor."
Jan 29th 2020
EXTRACT: "Switzerland and Denmark have gone furthest into negative territory, both offering unprecedentedly low rates of -0.75%. The Swiss National Bank, which has kept its rate at this level since 2015, signalled recently that it intends to stick with this experiment and is not ruling out going even more negative. It has said that negative rates were boosting the economy and that the country’s fundamentals were not being significantly affected."
Jan 28th 2020
EXTRACT: "Electricity will dominate the future global energy system. Currently, it accounts for only 20% of final energy demand,......Without assuming any fundamental technological breakthroughs, we could certainly build by 2050 a global economy in which electricity met 65-70% of final energy demand,....."
Jan 27th 2020
EXTRACT: "With the world economy operating dangerously close to stall speed, the confluence of ever-present shocks and a sharply diminished trade cushion raises serious questions about financial markets’ increasingly optimistic view of global economic prospects."
Jan 26th 2020
EXTRACT: "Gibson’s diagnosis is supported by international attitude surveys. One found that most Americans rarely think about the future and only a few think about the distant future. When they are forced to think about it, they don’t like what they see. Another poll by the Pew Research Centre found that 44% of Americans were pessimistic about what lies ahead. But pessimism about the future isn’t just limited to the US. One international poll of over 400,000 people from 26 countries found that people in developed countries tended to think that the lives of today’s children will be worse than their own. And a 2015 international survey by YouGov found that people in developed countries were particularly pessimistic. For instance, only 4% of people in Britain thought things were improving. This contrasted with 41% of Chinese people who thought things were getting better."
Jan 24th 2020
EXTRACT: "........while over 80% of the ECB scheme buys government and other public sector bonds, a huge chunk still goes into corporate bonds and other assets. At the time of writing, the ECB holds €263 billion worth of corporate bonds – a very significant amount in relation to individual firms and the sectors in question. According to the ECB, 29% of these bonds were issued by French firms, 25% by German firms and 11% each by Spanish and Italian firms. As at September 2017, the sectors they came from included utilities (16%), infrastructure (12%), automotive (10%) and energy (7%)."
Jan 17th 2020
EXTRACT: "Thanks to cutting-edge digital technology, cars are increasingly like “smartphones on wheels”, so manufacturers need to have access to the latest patented 4G and 5G technologies essential to navigation and communications. But often the companies that hold the patents are reluctant to license them because manufacturers will not accept the high fees involved, which leads to patent disputes and licensing rows."
Jan 13th 2020
EXTRACT: "Recent polling from Pew Research demonstrates how the public’s attitudes toward the US and President Trump have witnessed sharp declines in many nations across the world. In Europe, the Americas, and the Middle East favorable attitudes toward the US went from lows during the years of George W. Bush’s presidency to highs in the early Obama years to lows, once again, in the Trump era. And in our Zogby Research Services (ZRS) polling we found, with a few exceptions, much the same trajectory across the Middle East."
Jan 13th 2020
EXTRACT: "In the absence of a declaration of war against Iran, the killing of a foreign official – by a drone strike on Iraqi territory – was possibly illegal. But such niceties do not perturb Trump. The evidence is that Trump’s decision was taken without consideration of the possible consequences. The national security system established under Dwight D. Eisenhower, designed to prevent such reckless measures, is broken to non-existent, with ever-greater power placed in the hands of the president. If that president is unstable, the entire world has a very serious problem."
Jan 9th 2020
EXTRACT: "It is possible that Trump’s reverential base won’t be sufficient to keep him in the White House past 2020. But such ardent faith is hard to oppose with rational plans to fix this or that problem. That is why it is so unsettling to hear people at the top of the US government speak about politics in terms that rightly belong in church. They are challenging the founding principles of the American Republic, and they might actually win as a result."
Jan 7th 2020
EXTRACT: "If anything has become clear in our recent Zogby Research Services (ZRS) polling in Iraq, is that most Iraqis are tired of their country being used as a playground for regional conflict, especially the conflict between the US and Iran. In fact, our polling has shown Iraqis increasingly upset with the role played by both the US and Iran in their country. Majorities see both of these countries as having been the major beneficiaries of the wars that have ravaged their nation since the US invaded in 2003. "
Jan 5th 2020
EXTRACT: "Under his [Suleimani's] leadership, Iran helped Hezbollah beef up its missile capabilities, led a decisive intervention to prop up Syrian President Bashar al-Assad, supported the Houthi rebels who have been waging a war against Saudi-led forces in Yemen, and backed a wave of resurgent Shia militias in Iraq. According to Gadi Eizenkot, who completed his term as the Israel Defense Forces’ chief of general staff last year, Suleimani had plans to amass a proxy force of 100,000 fighters along Syria’s border with Israel."