Nokia's connected-cars SEP licensing prompts EU queries on R&D to parts makers

Are Nokia’s patent-licensing practices holding up research and development investment among makers of automotive components? That’s the nub of a questionnaire sent by EU antitrust enforcers to auto-parts makers following antitrust complaints from Daimler and four parts makers against Nokia.

In the document, the European Commission asks makers of communication modules for connected cars whether they’ve “suspended” research spending because Nokia has refused to license standard-essential patents, or SEPs, that underpin technology for mobile connectivity.

The commission is understood to have also sent questionnaires to patent holders and carmakers, as MLex has reported.

Nokia insists that carmakers should be the ones licensing its cellular technology, while Daimler and the parts makers argue that the licenses should be taken further upstream in the automotive industry. Daimler first lodged its complaint with the commission in mid-March, and has been joined by Bury, Continental, Valeo and Gemalto.

The innovation issue is a key part of the commission’s questionnaires because if respondents’ describe how their R&D spending declined or was halted by Nokia’s licensing practices, then the complainants’ argument that the Finnish company is abusing its market in violation of EU antitrust rules could gain traction.

The complainants have argued that they have held up investing because they haven’t been given any assurance on which level of the automotive value chain can obtain a license from patent holders and at what rate the royalties would be, MLex understands.

In the questionnaires to parts makers, which included more than 25 questions, the EU regulator asked whether the companies contacted Nokia or whether it offered its technology to them. In other words, did the parts makers express “willingness” to seek a license from Nokia, the commission asks.

— Case law —

In a landmark 2015 case involving SEPs belonging to Chinese technology companies Huawei and ZTE, the EU Court of justice set out specific steps that a potential licensee must show to be considered a “willing licensee.” A patent holder would violate EU antitrust rules if it sought an injunction against a company that’s considered a willing licensee.

While Daimler isn’t claiming that it’s facing an injunction from Nokia, the commission’s question indicates that the context of licensing negotiations is an important element in the regulator’s fact finding.

The commission also asked auto-parts makers to describe their licensing negotiations with Nokia, including specific dates of meetings. If Nokia refused to license its technology, what reasons did the company provide, the regulator asks.

Finally, the commission asks whether the fact that a component maker wasn’t able to get a license meant that it couldn’t win a contract to supply a car maker.

Daimler and other carmakers have resisted taking licenses because they want suppliers further up the value chain to indemnify the company for potential patent infringement lawsuits.

The commission’s questionnaire shows the importance of guarantees or indemnification of SEPs that could be made to ensure that licensees won’t face infringement claims.