EC to intervene in patent dispute between tech and carmakers

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Carmakers claim it’s a case of antitrust rather than just a contract dispute.

The European Commission (EC) has told Reuters that they plan to intervene in the patent dispute between tech companies and carmakers that has been dragging on for over a year. They may also establish a system to determine whether some patents are essential to a technology standard as claimed.

The Commission’s move has been driven by the current dispute between Finnish telecom equipment maker Nokia and German automaker Daimler. The two industry heavyweights have been battling in German courts over the level of royalties to be paid for key navigation and communications technologies – and who should pay them.

The EC will soon release an “Action Plan” for intellectual property

The EC proposals around handling such IP issues are part of the Commission’s Intellectual Property Action Plan, which European Competition Commissioner Margrethe Vestager and EU digital chief Thierry Breton will present on Nov. 24.

The plan calls for the Commission to engage with the automotive sector to explore the possibility of effective licensing solutions. This is because the Commission perceives need for clarity in the automotive as being the most pressing.

What the dispute is about

The Daimler-Nokia dispute centers around standard essential patents (SEPs). Tech companies and the car industry have fought for years over royalties paid on “standard” and “essential” technologies used in navigation systems, vehicle-to-vehicle communication and self-driving cars. The dispute grew as these areas are of more focus with the development of electric vehicles.

The Commission to date has refrained from the disputes and has urged the companies to resolve the issue themselves. The problem is that while Nokia sees the dispute as a contractual matter, Daimler says it is really more about antitrust. That is why they have called on Vestager’s office to settle the dispute.

Patents are a lucrative source of revenue for Nokia which makes 1.4 billion euros ($1.7 billion) in licensing revenues annually. The company claims that Daimler has been using its cellular standard-essential patents (SEPs) without authorisation.

Daimler, in response, says that Nokia should license its suppliers rather than with the company itself. Thus Nokia would receive less in royalties overall.