Friday, March 6, 2020

Desperate Nokia doth protest too much against complaints over its anticompetitive conduct

Nokia's corporate communications efforts hit a new low this week with a blog post that must have been written in a reality distortion field.

Arguably, the weakest part is what's missing from it: an explanation of how it is sound innovation policy to threaten the commercial viability of low-margin component makers by exposing them to indemnification claims far in excess of their margins.

But what Nokia wrote up is bad enough. Let me just highlight some passages that I can debunk very easily by virtue of having attended some court hearings:

  • "Nokia contributes its cutting-edge cellular technologies to open standards in return for the right to license them on fair, reasonable and non-discriminatory (FRAND) terms. Companies can license and use these technologies without the need to make their own substantial investments in R&D."


    Various suppliers have said in open court, and Nokia has not disputed (and in some ways even acknowledged), that it refuses to license them.

  • "Our licensing offers guaranteed access to Nokia technologies for all relevant parties in a supply chain through a single license at the smartphone or end-device level."


    It's not for Nokia--an increasingly irrelevant company (totally irrelevant in the smartphone business by now)--to arbitrarily determine who is or is not "relevant." If certain suppliers weren't relevant, they wouldn't have had a basis for joining the Nokia v. Daimler patent infringement cases in Germany as intervenors (the legal requirement for an intervention is that they must be affected as a result of some liability). The name of the game is the claim, and the claims of the patents Nokia is asserting against Daimler make the whole supply chain all the way up to the baseband chip totally relevant.

  • "The huge success of the smartphone sector, with it’s [sic] many diverse competitors and new market entrants, attests to the success of this framework."


    Neither does Nokia prove that the smartphone industry wouldn't have been equally or even more successful on the basis of component-level licensing nor does it take into account that the automotive industry has been very successful with component-level licensing.

  • "Many automotive brands, including Audi, Bentley, BMW, Mini, Porsche, Rolls Royce, Seat, Skoda, Volkswagen and Volvo are already licensed to Nokia's patents for their connected vehicles."


    First, the list of ten brands is misleadingly inflated: there's six Volkswagen (Audi, Bentley, Porsche, Seat, Skoda, Volkswagen) and three BMW (BMW, Mini, Rolls Royce) brands among them--plus Volvo. So we're talking about three licensees, not ten. But that's just misleading. The actual lie here is this:

    Those companies aren't all "licensed to Nokia's patents." I've heard from various sources that Volkswagen and BMW have Avanci licenses that come with major limitations such as not including 5G for the time being. Nokia would have had to say "to some Nokia patents" or "to many Nokia patents," but not just "licensed to Nokia's patents."

  • "Nokia has continually made fair offers for licencing, providing a range of flexible approaches – direct to automakers, to tier-1 suppliers and through a collective licencing pool alongside other players in the industry."


    The pool they mention, Avanci, licenses only to automakers, so it doesn't really add anything here. But the real issue is that Nokia mentions "tier-1 suppliers" (the ones who sell telematics control units to the car makers): All they have offered so far are "have-made rights" to car makers, but those aren't actual licenses from the perspective of tier 1 suppliers. Real licenses would, for one example, afford tier 1 suppliers the operating freedom to sell (excess quantities, for instance) to other car makers.

  • "Nokia has carefully followed the legal framework set out by the European Court of Justice and has made several FRAND offers available before pursuing legal action."

  • FACT CHECK: NOT "carefully," BUT selectively

    The Court of Justice of the European Union (CJEU) made it clear in Huawei v. ZTE that it's an antitrust violation to refuse to grant a license on fair terms to an implementer. All those suppliers who have been seeking a license from Nokia were denied a license in contravention of Huawei v. ZTE. The patents Nokia selected for the litigation campaign against Daimler are all implemented by the baseband chip (tier 3) to the same extent they are implemented by the end product (a Mercedes).

  • "When certain players continually refuse to take a license from Nokia, litigation becomes the only option."


    Currently, litigation of this kind is pending only against Daimler, and it's plain wrong to allege that Daimler "continually refuse[s] to take a license from Nokia." The fact that Daimler made a counteroffer to Nokia was discussed in open court in Munich on February 6, and the court's preliminary assessment was that Daimler's counteroffer satisfied the pertinent part of Huawei v. ZTE. It's very dishonest on Nokia's part to suggest, by talking about a continual refusal to take a license in a context that applies to only one company at this point, when an offer is actually on the table even though Daimler wouldn't have to make one had Nokia lived up to its FRAND licensing promise with respect to Daimler's suppliers.

Two Nokia v. Daimler trials will take place in Mannheim on the 17th. I'll be there, and hopefully some more light will be shed on the overall situation. The Mannheim court may decide one way or the other, but I doubt that it will be affected by smokescreens.

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