Bundeskartellamt interrupts patent dispute between Nokia and Daimler

The Bundeskartellamt has joined in the “Automotive Patent Wars”. As has now become known, last week the German competition authorities sent a 24-page fax to the regional court in Mannheim, which is negotiating a legal dispute between Nokia and Daimler. As a result, the court postponed the announcement of a decision scheduled for Tuesday in one of ten German patent infringement proceedings to August 4. Nokia is suing Daimler on the basis of standard essential mobile phone patents and is calling for nationwide sales bans.

In the “Automotive Patent Wars” the plaintiffs like Nokia aim at car manufacturers. The contested patents mostly fall into the same categories as those against which Apple, Samsung & Co. have had to defend themselves for some time: patents on cellular standards such as 4G / LTE, but also on basic chip technology or application-specific functions such as the rendering of textures.

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The Bundeskartellamt recommends the regional courts of Mannheim, Dusseldorf and Munich I to suspend all Nokia Daimler patent litigation “analogous to § 148 ZPO and to the Court of Justice of the European Union by means of a request for a preliminary ruling under Art. 267 (2) TFEU, depending on the dispute in the present proceedings […] to submit decision-relevant questions to the decision. ”

These questions are all about component suppliers’ entitlement to a patent license on fair, reasonable and non-discriminatory terms (“FRAND”). These questions are fundamental to the automotive industry with its complex, multi-level supply chains. The respective automaker generally installs a telematics control unit (TCU) in Mercedes and comparable vehicles. The Federal Cartel Office has named two TCU suppliers – Continental from Germany and Valeo from France – as the official complainant against Nokia. A TCU usually contains a connectivity module (network access device, NAD), which in turn contains a baseband chipset (as is known from smartphones).

Daimler argues in his disputes with Nokia, Sharp and the user Conversant Wireless, equipped with patents from Nokia, that the mobile radio standards such as UMTS and LTE – to which Nokia partly claims patent rights – are in fact already implemented in the smallest component, the baseband chip. In no case is Daimler the right addressee for infringement lawsuits, as long as Nokia refuses to grant a full license to those companies that are higher up in the supply chain.

Daimler’s suppliers have stated in various court hearings and documents that Nokia has unsuccessfully requested such a license. Huawei (in Düsseldorf) and Continental (in the USA) have therefore even had their own antitrust lawsuits against Nokia.

The Bundeskartellamt has the opportunity ex officio to get involved in German litigation-related processes by submitting opinions. Usually this only happens at the highest judicial level. In the present case, however, a representative of the President of the Cartel Office, Andreas Mundt, argues that the question of whether Nokia can apply for a Mercedes sales ban and at the same time refuse to grant a license to suppliers such as Continental must be resolved uniformly across Europe. Otherwise, “a patchwork of case law could arise […], which ultimately also leads to a decision by the ECJ “.

The European Commission’s Directorate General for Competition (DG COMP) has received complaints against Nokia from Daimler since 2018 and its suppliers Continental, Valeo, Gemalto and BURY since 2019. The Bundeskartellamt attributes the fact that Brussels is not yet formally investigating Nokia to purely procedural circumstances and points out that experience has shown that any DG-COMP decision would ultimately concern the highest EU court in Luxembourg.

The German courts are not bound by the Bundeskartellamt’s opinion in their decision. However, their weight can already be seen in the short-term postponement of today’s Mannheim decision. Former mobile device manufacturer Nokia, which is under intense competitive pressure in the network infrastructure business and is increasingly dependent on patent license income, had hoped from the German infringement proceedings that Daimler would take a license to avoid a sales ban. This hope could have been shattered for years or, depending on what the ECJ decides, forever.

The questions raised by the Bundeskartellamt are not only relevant for the automotive industry (where it is common for suppliers to take all the necessary patent licenses). Whether or not holders of standard essential patents are only required to offer a license to terminal device manufacturers and can refuse to grant this to chip manufacturers is also controversial in the smartphone industry and is one of the key questions in the cartel proceedings of the US Federal Trade Commission against Qualcomm.


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