Thursday, July 2, 2020

European Commission circling above--and still failing to help resolve--patent licensing dispute over automotive components

Last week, MLex published a report by Khushita Vasant (not paywalled, though most MLex reports are available only to subscribers, which is why I rarely have the chance to link to them) on a "third round of questions" the European Commission's Directorate-General for Competition (DG COMP) expects automotive suppliers to answer sometime this week.

MLex says the questionnaire "also asks carmakers about 'have-made' rights in Nokia's license offers." An academic paper recently discussed the shortcomings of such "have-made rights", and I commented on it. The Bundeskartellamt (Federal Cartel Office of Germany) summarized the parties' positions, including Nokia's offer to grant "have-made rights," in its submission to the courts hearing Nokia's German patent infringement complaints against Daimler, but clearly wasn't persuaded that the availability of "have-made rights" would obviate the need for judicial clarification on the availability of a full component-level license affording suppliers freedom to operate.

On the one hand, it's a positive sign that Daimler's and its suppliers' antitrust complaints against Nokia are still being preliminarily investigated by DG COMP. On the other hand, the Commission's hesitance to launch formal investigations is in stark contrast to a variety of cases involving American companies (you name them).

In recent months I heard from various sources that Nokia's "have-made rights" and similar proposals were flatly rejected by automotive suppliers from Europe, America, and Asia in response to the previous round of questions. If the Commission had wanted to, it could have considered that feedback a clear indication just like in scenarios in which it performs a market test of potential remedies. Here, the market responded with an unequivocal thumbs-down, and there's no reason why that should be different this time around.

In the weeks and months ahead, three German courts will decide on the well-thought-out suggestion by the Federal Cartel Office to refer certain questions of EU antitrust law to the CJEU. Meanwhile, DG COMP will have to decide on whether or not to launch formal investigations of Nokia's conduct. Should the EU's top court ultimately find that Daimler's suppliers had been entitled to a full SEP license all along, DG COMP would look bad--in terms of a dereliction of duty--for not having taken action. I believe the proper course of action would be for the Commission to launch formal investigations, which the Commission could stay pending the CJEU ruling on the underlying competition issues.

Share with other professionals via LinkedIn: