Opinion: Daimler-Nokia deal is nail in component-level tyre

The standard essential patent war between Nokia and Daimler on the matter of end-point and component-level licensing in automotive was brought to an abrupt stop yesterday.

After several hard-fought races in the German courts, at the European Commission and the Court of Justice of the EU (CJEU) – and indirectly in Texas through auto supplier Continental – the Finnish telecoms company and the German car maker signed a patent licence agreement, settling all litigation.

The deal will serve as a boon to IP owners with SEPs pertaining to connectivity technologies that can be used in cars, including 4G and 5G. Daimler, one of the fiercest detractors of end-point licensing in automotive, and which some said had engaged in an SEP “holy war”, has finally given in to the practice.

But the settlement will obviously be far less heartening to automotive SEP implementers. In fact, it will act as a nail in the tyre of the driving machine for component-level licensing – it may not completely stop the collective push to secure a ruling that licensing exclusively to car makers doesn't meet fair, reasonable or non-discriminatory terms, but it will certainly slow it down.

• Counsel divided on impact of Avanci case dismissal

• Daimler and Nokia settle SEP ‘holy war’

• SEP wars: ‘no peace’ in Germany until CJEU ruling

This car had already taken a few hard knocks.

In August 2020, the US Court of Appeals for the Ninth Circuit sided against the Federal Trade Commission, ruling that Qualcomm’s SEP licensing model, including its insistence on licensing only to end-product manufacturers, was competitive.

The next month, the US District Court for the Northern District of Texas dismissed Continental’s SEP antitrust suit against patent pool Avanci and its licensor partners, including Nokia.

This year, the EPO and the Federal Patent Court in Germany upheld the validity of Nokia’s patents, roughly six months after Daimler was ruled to be an unwilling licensee by Germany’s Mannheim Regional Court in August 2020.

Until the recent announcement, there was some hope among implementer counsel that they, or others, could reverse the course of the courts.

As counsel for SEP implementers pointed out to Managing IP after the FTC formally dropped its case against Qualcomm, there was still the Continental v Avanci appeal at the US Court of Appeals for the Fifth Circuit and the fact that the FTC had promised to look for similar cases to FTC v Qualcomm to develop SEP antitrust law.

That hope might still be there because those matters are ongoing, so the car hasn’t ground to a halt just yet.

But because of that pesky Daimler-Nokia-deal nail, it’s struggling. As counsel noted in the same article, implementers were pinning a lot of their hopes on the reference from the Higher Regional Court of Düsseldorf to the CJEU.

It will now be much harder for companies that are still insisting on component-level licensing to stay on the tarmac. Not only have the hopes of an implementer-favourable outcome from the CJEU been dashed, but the component-level argument simply doesn’t hold as much sway now that even Daimler has taken a licence.

Life will become harder for those automotive implementers that refuse to take a licence from Avanci or one of its licensor partners – including Continental, which may well feel a lot more pressure to end its case with the connected car licensing platform.

The next deal we see will probably be from Continental.