Tuesday, March 17, 2020

Continental says Nokia impedes innovation and sustainability in automotive industry and IoT by refusing to license component makers

While Nokia has always been outspoken about the automotive industry's antitrust complaints over its refusal to grant exhaustive component-level licenses to suppliers, I gave up at some point on the complainants' willingness to provide any information or share their views. It just didn't seem to be in their DNA. All the more surprising to me was the fact that Continental issued a statement today on the definitive failure of mediation efforts with Nokia.

The Mannheim Regional Court had originally scheduled two Nokia v. Daimler trials today, which were canceled in part because of the coronavirus situation. Continental is an intervenor in all those German SEP infringement actions against one of its largest customers, Daimler. Tires made Continental a household name, but it's a lesser-known fact that they are also a huge supplier of electronics components to car manufacturers. They and their competitors depend on exhaustive SEP licenses in order to be able to invest in further progress in this field. Today's statement refers to "connected, autonomous and sustainable mobility." I interpret "sustainable" in the sense of increasing energy efficiency at the component level as well as technologies that help reduce fuel consumption. In other words, Continental wants Nokia to make its contribution to the fight against climate change--an extremely high priority for the von der Leyen Commission--by enabling innovation a the component level.

Nokia refuses to grant exhaustive licenses to component makers. Instead, it seeks to force end-product makers such as Daimler into licenses, and in discussions involving component makers proposes alternative structures that fail to address the most important competition and innovation concerns.

Here's the full text of Continental's unprecedented statement:

The mediation between Continental and Nokia in the context of Continental's EU complaint against Nokia's licencing practice for Standard Essential Patents (SEPs) has now taken place. Continental still has no direct license for Nokia's SEPs for mobile telecommunications standards such as 3G and 4G. This is unsatisfactory for Continental.

Continental will therefore continue to seek licenses under the commitments from Nokia and other SEP-owners to grant licenses on 'fair, reasonable and non-discriminatory' (FRAND) terms and continue pursuing its complaint with the EU Commission.

Only being granted its own SEP-licenses under FRAND terms will allow Continental to realize its full potential as one of the market leaders and driving forces of innovation in connected, autonomous and sustainable mobility. Without access to the respective licenses Continental and other suppliers are not able to develop, manufacture or sell important technology for future automotive and non-automotive applications.

Nokia's refusal to license its SEPs to Continental and other car parts suppliers, wanting to just license car manufacturers is blocking innovation in the field of connectivity for a more intelligent, safer, and more sustainable mobility. Likewise, this practice is damaging emerging European markets in the automotive industry and the Internet of Things more generally.

Continental will continue to pursue its civil litigation seeking a FRAND patent license from Nokia and others in the U.S. District Court for the Northern District of Texas where Continental has submitted to an independent rate setting by that court. Continental will continue to support its customers against assertions of standard essential patents by SEP-owners applying coercive pressure and injunction claims to obtain supra-FRAND rates.

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