Today, Nokia and Daimler have announced the conclusion of a licensing agreement for the use of Nokia's mobile patents by the German carmaker. This settles the companies' global patent dispute over connected cars technology. The agreement also settles the case before the CJEU, where important FRAND issues were to be clarified.
1 June 2021 by Mathieu Klos
Observers had hinted at this in recent weeks; now it’s a certainty. The longest and most important dispute about connected cars patents is over.
Today, Daimler and Nokia announced that they have signed a patent licensing agreement. Under the agreement, Nokia licences mobile telecommunications technology to Daimler and receives payment in return. The two companies did not disclose the amount involved. Daimler and Nokia agreed that the terms of the agreement remain confidential.
In the coming days, the parties will withdraw all pending litigation, including the complaint by Daimler against Nokia to the European Commission and a case pending at the European Court of Justice (case ID: C-182/21).
The dispute began in spring 2019 after a breakdown in initial talks between the carmaker and the mobile phone company. Daimler and some of its suppliers complained to the European Commission that Nokia was exploiting its market power with its standard essential patents (SEPs).
Nokia launched a counter-offensive, suing Daimler for infringement of several patents at the regional courts of Düsseldorf, Mannheim and Munich. At the last count, Daimler had ten lawsuits pending before the courts. According to JUVE Patent information, the two companies were not in dispute outside Germany.
Numerous suppliers of Daimler joined the dispute, including Continental, Huawei, Burry, TomTom, Valeo/Peiker, Robert Bosch and Sierra Wireless. Invalidity suits against the Nokia patents at the European Patent Office and the Federal Patent Court soon followed.
The dispute quickly became the leading lawsuit over connected cars patents in Europe. Continental and Nokia kicked things off with a bitterly fought dispute over anti-suit injunctions. The major supplier of telematics control units for Daimler cars obtained an anti-suit injunction in the US in summer 2019. Nokia responded with a double ASI from the Munich Regional Court. However, the ASI dispute did not stop the infringement proceedings in Germany.
After some setbacks Nokia celebrated in August 2020 its biggest success. The Mannheim Regional Court granted an injunction against Daimler for the infringement of a Nokia patent (case ID 2 O 34/19). However, Nokia never enforced this judgment due to a security deposit of €7 billion.
In November 202O, the Civil Chamber 4c of the Düsseldorf court referred a Nokia case (case ID: 4c O 17/19) to the CJEU for clarification.
The Düsseldorf judges asked the CJEU to take a position on ten detailed questions. The main question, regarding the production chain issue is, “Is there an obligation for priority licensing of suppliers?”
But the questions go far beyond the matter of requirements for a FRAND licence in a production chain. Rather, the questions ask the CJEU to clarify the obligations of the SEP holder and implementer, as set out in the Huawei v. ZTE judgment.
Now, both questions will remain controversial between the German patent courts in the future. The CJEU will no longer decide on them. With the withdrawal of the action, the proceedings in Luxembourg are also settled.
Daimler and its suppliers had always stressed that not the carmaker, but rather its suppliers, should take the Nokia patents licence. But the Finnish company had long refused this. Only under the impression of the threatened submission to the CJEU did Nokia make an offer to Daimler suppliers.
It is currently unknown whether the Daimler suppliers are included in the licensing agreement or not.
The CJEU question regarding who in the supply chain is entitled to a FRAND licence will therefore continue to be a bone of contention in litigation in other industries regarding connectivity.
According to sources, Daimler has concluded the licence agreement with Nokia, but not with the Avanci patent pool. Nokia is a member of the pool, which handles the commercialisation of connected cars patents. Originally, Nokia had sued as its member. However, the pool also allows members to enter into agreements on their own behalf.
Currently, rumours persist that other members of the Avanci patent pool will sue other carmakers from France, Italy or the US to force a licence.
Most recently, Daimler reached an agreement with the two Avanci members Sharp and Conversant on a licence. So now only the lawsuits of the fourth Avanci member, IP Bridge, against the luxury car manufacturer are open.
Jenni Lukander, president Nokia Technologies, says, “The agreement is a hugely significant milestone which validates, once again, the quality of our patent portfolio, the contribution of Nokia’s R&D to the connected vehicle industry, and the growth opportunities for our automotive licensing program”.
“We welcome the agreement from an economic point of view, and because it allows us to avoid many years of legal disputes,” says a Daimler spokesperson.
Ultimately, Daimler’s decision to settle was probably based on economic considerations. Nokia had always pushed for a quick conclusion of the licence agreement in order to profit quickly from the licence payments. According to experts, a lengthy process at the CJEU would not have been in the interest of the SEP owner.
Prior to 2020, the Daimler competitors VW and BMW had accepted an Avanci licence.
Find out more information about Daimler’s suppliers and their advisors. (Co-author: Amy Sandys)
Update 1.06.2021: Reacting to the settlement, Continental announced that it will pursue its complaint with the European Commission, as well as its US lawsuit for a FRAND licence.