Daimler and Nokia bury hatchet over patented 4G technology in cars

Daimler and Nokia have signed a license agreement for the use of patents on mobile technology. Daimler is installing 4G in its cars, but found the royalty amounts too high for that, after which a legal battle started. The parties have now settled.

In a joint statement, the second companies report that they have entered into an agreement that will allow Nokia to license mobile telecommunications technology to Daimler. In return, Mercedes-Benz’s parent company will pay for it. All pending lawsuits, including a complaint by Daimler about Nokia filed with the European Commission, will be settled and thus come to an end. Further details about the closed deal have not been disclosed as they are covered by a duty of confidentiality.

This is about access to certain UMTS and LTE technologies from Nokia. Daimler sees this as crucial for the use of communication and navigation services in its cars. Nokia has set up a patent pool together with others such as Qualcomm and Sharp, with a fixed royalty amount of 15 dollars per vehicle to obtain a license for the implementation of the 4G standard. The Finnish company earns EUR 1.4 billion annually in royalties for licensing its patents.

Daimler thought the amount was too high. The car manufacturer also felt that it should be able to gain access to the standardized technology through suppliers. Nokia previously indicated that it agreed to this, but that Daimler nevertheless used Nokia’s inventions without permission and proper compensation. In the end, Nokia won two lawsuits in Germany, potentially forcing Daimler to cease car sales in Germany.

Continental continues to fight Nokia

In a case between Nokia and Daimler, the German court referred the dispute to the European Court of Justice. That is now coming to an end, although Bloomberg writes that German car parts supplier Continental will continue to fight against Nokia at EU level and in the US. At the time, Continental joined forces with Daimler and several other companies in a complaint to the European regulator about the royalties to be paid. Continental wants the European Commission to come up with a legal framework because technology and other IoT companies looking to use standardized technology run into economic and legal uncertainty and put them at a disadvantage compared to Asian and American competitors.

This is about a common technology standard, namely 4G. In addition, the so-called standard essential patents come into play. These patents protect the many technologies that collectively form the standard. The idea is that everyone should be able to use the technology. Because thwarting the use of such a patent can hinder the adoption and development of a standard, standard essential patents are usually licensed on so-called Frand terms. This is an abbreviation that stands for fair, reasonable and non-discriminatory; or licensing the patents under reasonable conditions. This should lead to a situation in which the patented technology can be used without much hassle, but that proves to be disappointing in practice and involves too much litigation.

Partly because of this, the EU is considering introducing new rules to enforce the use of standard essential patents and thus make the 5G and IoT sectors more transparent for small businesses. According to the Commission, this is very important because these patents have been identified as a key element in the digital transformation of the European industry, specifically mentioning the release of connected cars and other IoT products. This is probably also the framework that Continental is referring to.