German court refers Nokia-Daimler connected car clash to European Court

A German court on Thursday referred a patent licensing dispute between Finnish telecoms equipment maker Nokia and German carmaker Daimler to the European Court of Justice to clarify the law as it applies to supply chains.

The Duesseldorf Regional Court said it would suspend proceedings in Nokia's fight against Daimler over royalties for technology used in navigation systems, vehicle communications and self-driving cars.

The long-running row revolves around standard technologies used in 4G mobile networks that provide information to vehicles known as connected cars, and whether Nokia is licensing them on fair, reasonable and non-discriminatory (FRAND) terms.

The dispute has raised concern in Brussels, where the European Commission has proposed a mechanism to establish whether certain patents are essential to a technology standard and to reduce arguments over their use.

"It's a welcome development that the European courts will pronounce on these very tricky questions," Commission Vice-President Margrete Vestager said in Brussels. "As you know we have tricky cases exactly in this area."

Thursday's referral to Luxembourg effectively freezes the status quo in which Daimler uses Nokia's patents for free - a blow to the Finnish firm that earns 1.4 billion euros ($1.7 billion) a year from licences. The judgment can be appealed.

"Daimler has been using Nokia's technology for 14 years and has looked for every avenue to avoid payment. In light of today's decision, we will now consider our options," Nokia said in a statement.

The Stuttgart-based carmaker welcomed the Duesseldorf court's referral, saying it would make it possible to clarify questions on standard essential patents "on a fundamental and Europe-wide level".

ABUSE OF DOMINANT POSITION?

Nokia has said that it has discretion to determine the point in the supply chain at which it issues licences, the Duesseldorf court said in a statement following Thursday's ruling.

Daimler has countered that, under European Union single market rules, Nokia is obliged to offer unlimited licences for all uses relating to standard patents.

In its ruling, the court found Nokia had the right to seek an injunction against Daimler for patent violation. But it also raised the question over whether doing so would represent an abuse of Nokia's dominant market position.

It suspended proceedings pending clarification of a list of related questions it put to the European Court.

The Duesseldorf case is one of several between Nokia and Daimler that are working their way through German courts - a typical feature of patent litigation as parties seek a ruling that can establish a favourable precedent.

With the latest decision, Daimler has pulled level with Nokia on two wins each.