Nokia's patent assertion tactics conflict with von der Leyen's environmental and Vestager's industrial policy goals

Daimler brought its EU antitrust complaint against Nokia in 2018, and the Euporean Commission is still dragging its feet while another court decision (Nokia v. Daimler, scheduled for May 20) is around the corner. Just for a few seconds, let's imagine an alternative universe in which the target of the complaints would have been a cellular SEP holder like Qualcomm, InterDigital, Huawei, or LG--as opposed to Nokia. Those organizations, especially the American ones, might already have been fined by now, or at a minimum they'd have received a strong Statement of Objections (SO). But Nokia and, by extension, Ericsson benefit from such an obvious and indefensible kind of protectionism that this situation threatens to wreak havoc to the EU Commission's credibility as a competition watchdog on the global stage.

So Daimler's and its suppliers' tough luck here is that shrinking Nordic companies are above EU law in the eyes of some people in Brussels--according to what I've heard from a variety of sources, Nokia can also count on French commissioner Thierry Breton, who has a telecoms background that appears to be infinitely more important to him and his cabinet than the importance of the automotive industry to Europe as a whole and his native France. As an EU commissioner, he's supposed to focus on the European interest, which he is apparently not doing; and as a French appointee, there is a natural expectation in his country that he would keep French industrial interests in mind as opposed to personal preferences or loyalty conflicts.

But instead of regretting Daimler's and its suppliers' (politically, not legally) wrong choice by complaining about Nokia first, the Commission should also look at it from another angle: Nokia self-servingly seeks to leverage its increasingly-devalued patent portfolio without giving a damn about the EU's economic interests and the Commission's overarching policy goals.

1. There's a simple reason for which Nokia decided to sue Daimler prior to any other automaker on this planet and previously bullied Volkswagen and BMW--two rather cowardly organizations--into Avanci license agreements of limited scope. That reason is Germany's unbalanced patent litigation system. While it's obvious that a patent holder like Nokia would firstly go after premium car makers in order to establish high royalty amounts, those three German corporations aren't the only ones operating in that segment. Nokia could have sued some non-European brands first, but preferred to go to Germany because an injunction in that country would give them maximum leverage over a company with major manufacturing operations and logistics centers in that country.

   As I mentioned in previous posts, Germany won't make more than a negligible modification to its patent injunction regime. Nokia is lobbying very actively for the status quo. In fact, I personally participated in a WebEx conference in which Nokia's chief in-house litigator, Dr. Clemens Heusch, lobbied the German parliament to ensure patents would remain superstrong in Germany.

   By milking and suing European companies that are falling behind in terms of digital technologies and need resources to confront some fundamental challenges, Nokia makes it harder for EU Commission EVP Magrethe Vestager to achieve her vision of "A Europe Fit for the Digital Age."

2. As automotive supplier Continental publicly stated in March, Nokia's refusal to provide the prereqisite degree of legal and financial certainty to everyone in the supply chain has already prevented innovation from happening--digital innovation that in some cases has direct environmental impact.

   By impeding digital and environmentally-friendly innovation on the part of automotive suppliers like Continental, Nokia's patent licensing tactics run counter to both Commission President Ursula von der Leyen's "EU Green Deal" and Commission EVP Magrethe Vestager's "A Europe Fit for the Digital Age" policies.

3. As I reported yesterday, the Avanci patent pool/platform, whose primary purpose it is to advance Nokia's (and Ericsson's, Qualcomm's etc.) agenda of refusing to license component makers, has singled out Tesla as its next target for its patent attacks. It doesn't even matter whether those parties explicitly coordinated their lawsuits or simply act uniformly because of a shared strategic interest. Either way, they've decided to gang up on Tesla like a clan of hyenas.

   While Nokia itself isn't suing Tesla yet, Nokia patents are being asserted against Tesla by Sisvel as well as Conversant, with the latter being a Nokia front no matter how much Nokia disowns its privateer. And even Nokia itself apears to have bullied Tesla before based on what I hear (and what I conclude from what was discussed in the closed-door part of a Nokia v. Daimler trial in Munich).

   Many patent holders (this also applies to owners of non-standard-essential patents) consider Tesla a perfect target: they believe it may be somewhat soft because it's a small organization regardless of its market capitalization being about as high as the aggregate of the caps of VW, BMW, and Daimler; and they know that Tesla is a company everyone's watching closely in the industry.

   By choosing Tesla its next strategic target after those German car makers, Nokia--directly and indirectly--attacks the most innovative company in the automotive sector (which even invests big-time in Europe) instead of letting Tesla focus on what it's best at: eliminating automotive emissions and keeping up the pressure on the car industry at large to abandon combustion engines.

   Targeting Tesla after Daimler creates another conflict between Nokia's opportunistic patent monetization tactics and Commission President von der Leyen's EU Green Deal policy agenda.

Nokia is being very inconsiderate, so the Commission should take off its velvet gloves, focus on the actual issues, and just disregard the countries in which the different parties are based. Europe doesn't even own 15% of all 5G patents, so from a strategic point of view, patent abuse by non-EU companies poses a several times greater threat than whatever Nokia and Ericsson are doing.

That said, it would of course be desirable for Europe to slow down Nokia's and Ericsson's demise, or to enable them to grow again. But there's a right way and a wrong way to do it. Condoning SEP abuse is a bad deal for Europe on the bottom line.

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Avanci conflict with Tesla escalates as Nokia-fed patent troll Conversant sues Tesla in Texas and Germany

Avanci, which usually refers to itself as a licensing "platform" though its lawyers also described it as a "pool" in at least one U.S. court filing, offers a license to cellular SEPs held by a group whose key members are notorious standard-essential patent (SEP) abusers such as Nokia and Ericsson as well as some trolls they fed with patents. Various additional patents have been contributed by numerous organizations, such as Deutsche Telekom, that elected to come in for convenience and lack the strategic sophistication and foresight to realize the Avanci approach (of refusing to extend licenses to component makers) runs counter to their interests.

One Avanci member, Foxconn-owned Sharp, sued Tesla in Japan last month, requesting the Tokyo District Court to impose an import ban. Sisvel, a patent troll and Avanci member, sued Tesla in the District of Delaware in December over former Nokia patents. Yet another Avanci member, Nokia, may have an interim agreement with Tesla in place as an unnamed American car maker "X" was referenced in the public part of a Nokia v. Daimler trial in Munich in February; should Tesla have been that mysterious U.S. company, then they actually provided a fair amount of information that Daimler presented to the Munich court while the courtroom was sealed. And now we're witnessing an all-out Avanci v. Tesla patent litigation campaign as Conversant Wireless Licensing is asserting various Nokia patents against Tesla in two complaints filed in the Western District of Texas last week (this post continues below the two documents):

20-04-24 TXWD20cv323 Conver... by Florian Mueller on Scribd

20-04-24 TXWD20cv324 Conver... by Florian Mueller on Scribd

Conversant previously filed some German SEP lawsuits against Tesla as well:

"After no further communication from Tesla, on or about February 26, 2020, Conversant filed patent infringement complaints against Tesla, Inc. and its German subsidiary Tesla Germany GmbH before the Manheim [sic] Regional Court in Germany."

The correct spelling of the German city name is, of course, Mannheim. There are a few towns named "Manheim" in the U.S., but anyone who's ever driven from O'Hare Airport to downtown Chicago has seen "Mannheim Road".

I'm trying to find out how many cases Conversant brought in Mannheim, and what the patents-in-suit are. I just emailed the Mannheim Regional Court's spokesman before writing this post. At this stage the Mannheim court can't provide case and patent numbers, but I hope this will change in the months ahead.

The combination of Sharp and Conversant suing Tesla in different jurisdictions is the usual bulling with which Avanci is trying to coerce Daimler into a SEP license agreement on supra-FRAND terms while the likes of Nokia and its trolls refuse to license automotive suppliers, an issue that I hope Tesla will raise as well. Tesla is far more of a digital company than Daimler and therefore may be vertically more integrated with respect to cellular data communications, so it wouldn't surprise me should Tesla not buy telematics control units (TCUs) from the likes of Continental, but even Tesla won't make its own baseband chips. In contravention of its FRAND licensing obligations, Nokia licenses only end-product makers.

With respect to component-level licensing, a new academic paper was published yesterday in reply to a write-up by Nokia's outside counsel (which also mentioned this blog because of a recent post).

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The most lucrative patent shakedown strategy against German corporations: sue their CEOs

According to conventional wisdom, the way to extract patent royalties from German corporations is the pursuit of injunctive relief. While a reform process is underway, the corridor for any "reform" (a misnomer, thus in quotes) is so very narrow that it won't have any impact on negotiation dynamics. The pro-reform camp missed the opportunity: instead of acting like piranhas that smell blood in the water and then kill their prey, they kept making the kinds of modest political demands (only ultra-rare exceptions for extreme cases of egregiously abusive conduct) with which they got the reform process started, and they continued to limit themselves by operating only within the framework of associations (a recipe for failure). Now it's too late to move into a higher gear, and the German patent injunction regime is here to stay.

But most patent assertion entities have failed to identify and seize what would likely result in even higher royalty payments by German (and to some extent other European) companies, even though proof of concept was delivered more than six years ago. Admittedly, I didn't know either, though I could have found out as early as in the second half of 2013, but (in my defense) that's because I focus primarily on disputes between large operating companies rather than on patent troll cases.

In the summer of 2013, Reuters reported: "IPCom lands cash bonanza from D[eutsche] Telekom settlement." The deal settled all 20 cases between Fortress-funded IPCom (which was asserting former Bosch patents) and Deutsche Telekom. The financial terms weren't disclosed but two sources told Reuters that IPCom was going to receive "a low-to-medium triple-digit million euro" amount. (This blog, too, reported on the settlement.)

I remember overhearing a conversation between lawyers in Mannheim (just before some other trial) who defended other parties, such as HTC, against IPCom. Nokia and HTC defended themselves against IPCom for many years, and numerous parties intervened in various IPCom cases, particularly the cases against carriers. So there were a lot of patent litigators in Germany who had knowledge of where those cases stood, and they weren't impressed with the headway IPCom had made at the given time. Against that backdrop, they were all puzzled as to why Deutsche Telekom would, without an injunction looming large, cough up a rumored amount of hundreds of millions of euros.

The answer: a "CEO suit" strategy played out perfectly for the patent assertion entity. One might also call it the "sleepless nights" strategy.

Deutsche Telekom's 2012 Annual Report (PDF, in German) contained the following passage on patent-related risks (page 163; click on the image to enlarge; this post continues below the image):

The passage I underlined in that screenshot states that IPCom sued not only Deutsche Telekom but also "individual members of its executive board" (in the U.S., one would colloquially call them "C-level execs").

One of those individual defendants was then-CEO René Obermann, who served from late 2006 until the end of 2013. So the settlement fell into place a few months before Mr. Obermann would no longer have been covered by Deutsche Telekom's D&O (directors & officers liability insurance). If IPCom had prevailed after he left Deutsche Telekom, he'd have ended up with a potentially ruinous financial liability. He'd have gone from being a multi-millionaire to personal bankruptcy in an instant.

When the end of his term was approaching, he increasingly got nervous about the fact that the dispute with IPCom hadn't been settled yet. IPCom capitalized on this factor, big-time.

Most likely, this was by far and away the biggest license deal IPCom ever struck, despite the fact that there was no realistic chance that IPCom would have obtained and enforced an injunction anytime soon.

Under German patent law, members of the executive board are personally liable, a fact that patent holders can exploit. However, it works only against executives who live in Germany or at least some other EU member state. Otherwise, cross-border enforcement is unlikely to succeed. Hypothetically speaking, enforcement against a U.S.-based CEO would probably work only if he flew to Germany on a private jet that could be confiscated. The managing directors of local subsidiaries can be sued, but only if their entities actually sell products--not if they are merely marketing agencies within a global group structure.

Germany- and EU-based C-level executives can also be scared into settlements by threatening with criminal action. Willful patent infringements are a punishable crime in Germany (and the pseudo-reform that is in the making won't change a thing about that either), though the hurdle is reasonably high.

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German patent reform process is already over before it's formally begun: automatic injunctions are here to stay

In the most formalistic sense, the German patent reform process will only begin when the federal government (with the Federal Ministry of Justice having the lead on this subject) officially relays its legislative proposal to the country's two legislative bodies, the Bundesrat (Federal Council), which could theoretically veto it (though its veto would be easily overruled) and the Bundestag (Federal Parliament). Despite the corona crisis, that's still likely to happen before the summer hiatus.

But in political terms, it's game over for the pro-reform camp. (I was going to say "pro-reform forces," but they're far too weak to justify that label.)

Merkel's party, the nominally conservative Christian Democratic Union (CDU), has already decided to support in the parliamentary process what the ministry outlined back in January (led by the junior coalition partner, the center-left Social Democratic Party). The ministry made it clear that it merely sought to clarify the law as it stands, and leading German patent litigators have confirmed this blog's analysis that it won't change anything, or only have minimal impact at best (which took some of the pro-reform people weeks or months to understand, and some are so analytically challenged that they haven't even grasped it by now and probably never will). The CDU definitely wants to preserve Germany's system of (near-)automatic patent injunctions across all industries regardless of complaints by automotive and other companies over a dysbalance. Only extreme cases that legally qualify as abuse should give rise to further analysis; contrary to Article 3 of the EU's Intellectual Property Rights Enforcement Directive, the CDU opposes a mandatory proportionality analysis.

I can't provide verbatim quotes here because of a request to treat certain statements confidential, though a WebEx conference call with two members of parliament, three parliamentary advisers, and about two dozen industry representatives on the line is a semi-public event on the bottom line, as the organizers well recognized. (Their insistence on a somewhat confidential treatment is undemocratic at best, unconstitutional at worst.)

The "debate" is now about minor editorial changes that won't impact the outcome of a significant number of cases and, therefore, won't put defendants in a better position when negotiating settlements.

The formal vote will probably be held in the fourth quarter of this year, or maybe in early 2021. There will be new elections in the fall of 2021, so if the fallout from the corona crisis requires the executive and legislative branches of government's nearly-undivided attention for several more quarters, discontinuity might derail the process, which would be preferable over the kind of decision that would be made during this term without the slightest doubt.

It wouldn't have been impossible to convince the Federal Parliament of Germany of the need for a paradigm shift away from the "Property Rule" (which the CDU still seeks to uphold). I was one of only two activists to achieve a unanimous resolution (against software patents) by the same legislative body in 2005, and in 2013 a similar resolution was adopted thanks to the late Jimmy Schulz. But the people advocating proportionality are, by and large, political novices who lack almost everything it takes to overcome the mendacious but effective resistance by the likes of Siemens, Nokia, and Ericsson. Germany's pharmaceutical and chemical industries also seek to preserve the status quo, but with a more intelligent and differentiated approach it would have been possible to address their (legitimate!) concerns over collateral damage from a statute favoring the interests of makers of highly multifunctional products.

The performance of those pro-reform advocates is more pathetic than anything I've ever seen in a comparable context (apart from the fact that they got the process started at all, which is remarkable but will ultimately be pointless). They have no one to blame but themselves. I know that some of them will try to spin-doctor their defeat into a victory, but you can all rest assured that this blog is going to tell it like it is.

The influence of patent trolls on both the Federal Ministry of Justice and the Federal Ministry of Econmics is shocking. Sisvel was the only company invited to a roundtable by the former (other companies were only allowed to participate to the extent their employees represented industry bodies), and Fraunhofer advises the latter. If the pro-reform camp wasn't as uncapable as it is, it would have been vocal about this issue, but weaklings don't win ball games. (A number of them are so unbelievably clueless and incompetent that the verb "to orchestrate" isn't even part of their political vocabulary; they play the game at a lower level than high school students campaigning for a local cause.)

So the problem will persist, and many will suffer. A solution is not going to come during this legislative term short of some German courts handing down spectacular patent injunctions this year that would lead to second thoughts among Berlin decision-makers. As I said before, the best scenario of those that aren't entirely unrealistic would be for the process to be derailed by corona like so many other initiatives, but most likely this will just go through as a low-priority item that will be considered uncontroversial because those who disagree don't have what it takes to make their presence felt and their positions clear. In the event of adoption in 2020 or 2021, those who want meaningful reform will have to go back to the executive and legislative branches of government next term and push for an upgrade. Additionally or alternatively, some might opt to challenge Germany's (near-)automatic patent injunctions under EU law. Just like Germany's disastrous Orange-Book-Standard approach to standard-essential patent (SEP) injunctions never got fixed within Germany until the European Commission and, especially, the Court of Justice of the EU set the record straight, the wider problem of automatic patent injunctions might also be solved through litigation--not legislation, and much less through national case law--somewhere further down the road.

Where things stand now, any pro-reform advocacy is futile. No one can help a bunch of misguided companies that obsequiously thank their government for backing mostly foreign patent trolls and failed businesses increasingly reliant upon a troll-like business model. I had actually started to prepare an initative but decided to fold it before it got off the ground because it's pointless under the circumstances, and I have more exciting and promising things to do, part of which you'll read about soon. That said, I will continue to comment on the process, but this blog was never intended to influence German politics--as its language demonstrates.

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Europe's top three digital industry challenges: automotive; automotive; and don't forget, automotive

European Commission EVP Margrethe Vestager's mission statement is found on her homepage: "A Europe Fit for the Digital Age" That, of course, is easier said than done, given that the digital economies of both the United States and East Asia are far, far ahead of the European Union. There's no European Google, Apple, Facebook, Twitter, Amazon, eBay, Uber, AirBnB, whatever. No European cloud. No European smartphones (practically speaking). And U.S. tech giants employ far more top-notch researchers than all of the world's universities combined, which is just one of various factors contributing to the brain drain affecting Europe (and for which Africa--let alone sub-Saharan Africa--is never going to provide an adequate replacement).

"Incredible Shrinking Europe" (as the WSJ called it) has a rich history and a bleak future. What Mrs. Vestager faces is not merely a Herculean task. Putting Europe on an equal footing with America and East Asia is mission (absolutely) impossible. At the end of her term, Europe will have lost more ground than during the previous decade, no matter how hard she tries. But the EU can at least try to slow down its decline in an increasingly digital economy, and maybe avoid or delay the point at which a future European Commission president--if the EU still exists at that point--will have to fly to Washington DC and Beijing to beg for development aid.

That may sound like an exaggeration, but it's basically where continental Europe is headed in economic terms. In a matter of a few decades, the economic discrepancies between the more advanced parts of the world and Europe will be comparable to today's differences between Europe and, say, Latin America. One of various early indicators is the severe underperformance of continental European students in math (as evidenced by TIMSS), which keeps deteriorating.

The EU is wasting money on such a non-starter as its European Cloud Initiative. I've heard enough about it from industry experts to have no doubt that it's a fool's errand. So let's talk about what the real priority should be.

By far and away the biggest threat Europe faces in connection with an increasingly digital economy is the demise of its automotive industry: a doomsday scenario in which European car makers will suffer the fate of the handset divisions of Siemens, Bosch, Nokia, Ericsson, Philips, and Alcatel--not necessarily in the sense of non-European companies acquiring or licensing their brands, but the likes of Google (as the recent Android Auto deal with BMW already shows) will own the digital services, which is where the high returns, network effects, and most of customers' loyalty (even a lock-in at some point) will be, while some European companies will go out of business and others will just be making the low-margin parts that don't provide much differentiation. There's plenty of portents that this might actually happen. Not during Mrs. Vestager's term, but not to so long thereafter that she might not end up being considered one of the EU leaders who missed the last chance to avert a catastrophe comparable to the dinosaur extinction.

In fields like digital platforms, the EU has no chance to make headway, which is bad enough. But when it comes to automotive, it stands everything--its "automojo" if you will--to lose. Last month I pointed to some numbers that show how incredibly important the automotive sector is to the European economy (and, by extension, society). But that industry is being affected by digitization at a breathtaking pace and, as a result, is basically getting absorbed by the informations and communications technology (ICT) sector.

The European Commission would have to be asleep at the steering wheel not to make the automotive industry its #1 priority with respect to digital-industry policies. Cars are smartphones on wheels, software is increasingly in the driver's seat, and what most politicians probably don't even know is that the whole business model is going to change. By that I don't primarily mean ride-sharing. Whether future cars will be owned by one household or called on demand, the most lucrative revenue streams will be digital. Today, money is made primarily by selling, maintaining, and repairing the thing. Services (such as navigation) play a minor role. It will be just the opposite in about ten years' time.

Automobiles are the most important category of (increasingly-)digital products in which Europe today has significant market share. But those companies are all on the wrong track. Here's one data point that an analyst recently highlighted to me:

Tesla's market capitalization of US$135B (as of closing on Wednesday) is roughly the same as the aggregate of the market caps of Volkswagen (€64 billion), BMW (€32 billion), and Daimler (€30 billion). Tesla will turn 17 this summer while those three large German automakers are, on average, about 100 years old.

The stock market isn't always right, and it often changes mind. One or more of those traditional automotive companies may at some point stage an Apple- or Microsoft-like comeback. But at this point, and based on the profile of the Old Boys' Network people running those organizations now--there's no reason to be confident it will happen.

The market cap comparison I just drew is not merely about propulsion technologies. To just the same extent, it has to do with the fact that Tesla is truly a digital company, and Tesla will know how to derive digital service revenues from its customer base, while those European companies are still struggling to deliver a great digital experience.

As CEO of Daimler, "Dr. Z" tried to modernize the Mercedes company. He should have started with Daimler's user interfaces, but that was probably a world too far from his area of expertise. He aspired to be unconventional, appearing in sneakers at a Green Party convention, but his 19th-century moustache was a visual symbol of him not being a digital leader. The EU can't force those automotive companies to appoint digital industry executives as their CEOs now (or people with a mixed background, though that may be hard to come by). But at least the EU could and should define the automotive industry as part of the digital sector, and ensure that it won't fall too far behind. Mrs. Vestager chairs the working group of EU commissioners on digital industry affairs ("Commissioners' Group on a Europe Fit for the Digital Age").

This here is separate from how the antitrust laws should be enforced. The focus of this post is purely on industrial policy, regardless of poor structural choices made by the EU when the current Commission was put together.

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With new restrictions on standard-essential patent (SEP) injunctions against connected cars and other IoT products, Japan may leave Old Europe behind

Through IAM I became aware of a Nikkei.com article on a Japanese policy initiative regarding standard-essential patent (SEP) injunctions in the Internet of Things (IoT) space (including, inter alia, connected cars). I've tapped some other sources to find out about the status of Japanese policy-making in this area.

At the meta level, two differences between the situation in Japan and the one in the Western world are striking:

1. The new initiative to further restrict access to SEP injunctions comes from the Japan Patent Office (JPO). By contrast, the people working on policy matters at the European Patent Office (under whatever president) and the United States Patent & Trademark Office under Director (and long-time patent trolls' lawyer) Andrei Iancu are pro-patent-holder extremists whose only policy idea is to have more patents, stronger patents, and ever more leverage for owners of patents that for the most part shouldn't have been granted in the first place in light of prior art.

2. Even other policy-making institutions, such as the leadership of the IP subcommittees of U.S. Congress, the European Commission, or the German Federal Ministry of Justice have yet to acknowledge for the first time in history that it may be smart innovation policy to weaken patent rights. In Japan, an undoubtedly very innovative country, they're ahead of the pack. Especially in Europe, one-dimensional, backwards-oriented thinking is prevalent.

The Nikki article explains in its first paragraph that the JPO is working on a legislative initiative to deny SEP holders access to injunctive relief in cases in which their patents make only a minor contribution to IoT-related devices, which (as the Nikkei article clarifies) also includes connected cars and medical devices. It's hard to imagine a SEP that would not make only a minor contribution to an IoT product. Most SEPs are extremely underwhelming as they cover simple protocols of the "Hello, how are you? -- Thanks, I'm fine, how about you?" kind as opposed to rocket science. Even the few SEPs that are better than that merely constitute parts of standards with respect to which thousands of patents have been declared essential, and for every SEP there would have been numerous--often virtually infinite--numbers of viable alternatives at the time of standardization.

Japan wants its high-tech sector to be among the world leaders in IoT. You hear the same elsewhere, especially in the European Union, where one generation of politicians after the other states the ambition to make the economy more innovative while that continent is falling behind the U.S. and East Asia at a worrying pace. By contrast, Japanese policy makers appear to be prepared to not only talk the talk, but to walk the walk. According to Nikkei, the JPO's IoT-related proposal is envisioned to pass into law in 2021.

A JPO committee has outlined several cornerstones of a 2021 patent reform bill. Patent injunction reform has been discussed internally many times.

Not only is the JPO working on patent injunction reform but Japan's Ministry of Industry and Economy (METI) is drafting recommendations regarding SEP royalty rates.

I know that several Japanese car makers and automotive suppliers are watching with great interest what will come of Daimler's and four of its European suppliers' complaints against Nokia. At this point I'm not aware of official antitrust complaints lodged by Japan's automotive industry with the Japan Fair Trade Commission (JFTC), but anything's possible.

The draft patent reform bill Germany's Federal Ministry of Justice published earlier this year is fundamentally flawed and would likely have zero impact on SEP injunctions according to some leading litigators. While it's possible that Germany will enact a revised patent law slightly ahead of Japan, what actually matters is the impact any reform will have on litigation and, by extension, on licensing discussions that are informed by what would happen in hypothetical litigation. In that regard, Japan's approach looks more visionary for the time being.

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Rumors of Nokia facing hostile takeover bid: skepticism is warranted and competition enforcement can't wait

Nokia's stock price went up yesterday after a TMT Finance report said the company had hired Citi to fend off a hostile takeover bid from an unnamed U.S. private equity fund. The rumored bid could relate to the company as a whole or to specific assets. Nokia declined to comment.

Let's take a quick look at two questions:

• How likely is this to happen?

• What does this mean for the impending decision by the European Commission's Directorate-General for Competition (DG COMP) on the complaints brought by Daimler and four of its suppliers over Nokia's refusal to license component makers?

I haven't formed an opinion on the reliability of TMT Finance. That website may indeed have scooped all other media on this one.

Richard Kramer of Arete Research, a 20-year-old and highly specialized, independent analyst firm headquartered in London, wrote in a note to his firm's clients that "Nokia is sure to deflect this unwanted attention on multiple grounds." Mr. Kramer then points to Nokia's ownership structure: "Its largest shareholders are local Finnish pensions funds, who are unlikely to just want to cash in." (That's also my impression as I've had conversations with Nokia shareholders on various occasions, and they were all Finnish pension funds.) Nokia shareholders may not be happy with the fact that the company's shares are "down a third on a [12-month] view," but in Mr. Kramer's opinion "this reflects poor execution that [private equity] is not going to resolve quickly, and a messy, protracted effort to buy out an €18bn market cap company would be highly unwelcome with all the other issues a new CEO faces, so we see this as much more of a negative distraction than a signal of underlying value."

That makes sense to me, and I can only add something when it's clearer what the proposed deal structure would look like.

On the antitrust side, this rumor is no reason to delay anything. Much to the contrary, there is a risk of a buyout like this resulting in even more aggressive enforcement. For an example, Nokia's management might want to coerce a number of companies into license deals just to demonstrate to shareholders that this is a stock worth holding on to. If the deal happened, the new owners might ratchet up patent enforcement, or they might sell some or all of Nokia's patents to trolls (a practice called privateering, which Nokia has already engaged in to a large extent).

Cellular SEP licensing is of great concern not only to smartphone and car makers, but also to the wider Internet of Things (IoT) industry. Many (European) companies might face outsized royalty demands, and with most of them being rather small, they actually depend on their suppliers (such as chipmakers) having secured the relevant licenses.

Honest and consistent competition enforcement is always the best choice. Once an antitrust authority allows itself to be swayed by what's going on in the world of corporate finance, there's an increased risk of making bad decisions. There's always going to be some kind of volatility, and buyout offers are one typical imponderability. But what the EU should focus on is what its highest court decided in Huawei v. ZTE (in terms of everyone's access to a FRAND license), and take a principled stance. Next time, the SEP holder in question may not be European: European companies hold fewer than one in six 5G declared-essential patents.

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