Daimler Infringes Nokia’s Patent

On August 18, 2020, the Finnish company, Nokia, took Mercedez’s maker, Daimler, to a German court for unauthorized use of its Standard Essential Patent (SEP) on cellular technology. The judgment proved to be one of its kind and the ruling went in favor of Nokia.

One of the ten suits filed by Nokia in Germany, this relates to the patent EP2981103 which involves the Zadoff-Chu sequence. The patent uses this sequence to connect the mobile unit to the base station. Legally the patentee had to first make a FRAND offer after which the licensee would have been given a counter offer. But this injunction wasn’t followed by the Court. The judgment was astounding because Daimler’s component manufacturers approached Nokia to get a FRAND license but were refused by them.

The ruling means that Daimler will have to stop selling its vehicles in Germany. This has been particularly upsetting to Daimler and other brands such as Continental, AG, and Robert Bosch GmnH who stand in solidarity on the issue. These European carmakers believe that e-connectivity is preponderant for the vehicles. Nokia’s intention is to charge the fee per car as against granting a license to the car auto-parts markers.

Similar cases by Nokia relating to mobile technology patents were dismissed in February by the Mannheim Court while two others were put on hold. For Nokia, this is a victory since this judgment validates the engineering work of its innovators. For them, it is their innovators getting a fair reward. To this effect,  Nokia is making Daimler pay royalties on each car sold which is considered too high.

The decision will be clearly challenged by Daimler and its supporters in the European Commission for the misuse of market power. With this Nokia also runs risks on antitrust fronts. It could be slapped heavily with fines by both the European Commission’s Directorate-General for Competition and the Germain Federal Cartel office.

Moreover, Nokia will also be looking at a bond or deposit of € 7 billion as security if it wishes to obtain an injunction against Daimler. The Mercedez makers have already released a statement challenging the decision of the court. The winner will be asked to set aside a significant sum before any sales ban enforcement. It will be a long battle before a decision or settlement is reached. With internet connectivity becoming indispensable and high stakes of the case, it is being closely monitored by the entire market.