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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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