Daimler loses ruling in German patent dispute with Nokia

Nokia Oyj has won a court ruling in a patent dispute with Daimler, giving the Finnish company leverage in a long-running fight over mobile technology in vehicles. Daimler, owner of the Mercedes-Benz brand, violated Nokia’s mobile-technology patents, judges in Mannheim, Germany, said on Tuesday. The ruling goes to the heart of how technology must be licensed for mobile-telecommunication systems that are standard features in most modern cars.

“We cannot understand the verdict of the Mannheim court and will appeal,” Daimler commented in an emailed statement.

The court stated it had to side with Nokia as Daimler was not willing to abide by existing rules for standard essential patents. “The facts show that Daimler and its supporters in the case are not willing to take out a licence,” the court said in a statement.

The ruling potentially could allow Nokia to stop Daimler from selling vehicles in Germany, but doing so would require Nokia to post collateral of €7 billion in separate proceedings. Daimler said it didn’t expect Nokia to seek a sales ban.

“Today’s finding is a major endorsement of the long-term engineering work by innovators at Nokia and the important principle that innovators should receive a fair reward,” Jenni Lukander, president of Nokia Technologies, said in a statement. “We hope that Daimler will now accept its obligations and take out a licence on fair terms.”

Vehicle manufacturers (VMs) in Europe are dependent on the technology to enable their vehicles for e-connectivity. Nokia seeks to charge fees per car instead of granting vehicle component manufacturers licences for the parts they produce. As a result some suppliers, including Continental and Robert Bosch, are supporting Daimler in the litigation.

The case is being closely watched beyond the automotive industry as it may have repercussions for the Internet of Things, as mobile connectivity becomes increasingly important in almost all products and industries.

In a rare move that shows how high the stakes are, in June Germany’s Federal Cartel Office asked the Mannheim judges to seek the guidance of the European Court of Justice before deciding the dispute. The Mannheim judges on Tuesday rebuffed the request.

Nokia has sued Daimler in three German courts over the portfolio of mobile technology patents. The Mannheim court in February dismissed a similar suit by Nokia and has stayed two other cases to wait for a ruling on their validity.

More suits are pending in Munich and Dusseldorf. Daimler has also filed a suit to annul Nokia’s patents in a separate court.

The Finnish company wants Daimler to pay royalties based on each vehicle sold, but Daimler argues that the fees would be too high. The VM would like Nokia to license the technology to the suppliers of the equipment used to integrate mobile devices in its vehicles, who would then charge the German carmaker.

Daimler and some of its suppliers, including Continental, have asked the European Commission to prosecute Nokia, claiming the Finnish company misuses its market power. Vehicle components manufacturers also see their business model at stake, which is why they joined the suit to defend Daimler against Nokia.

Nokia has said its licence model has been accepted by other VMs, including Audi, Bentley, BMW, Mini, Porsche, Rolls Royce, Seat, Skoda and Volkswagen.

The winners in patent suits must weigh the risk of enforcing rulings, which include the possibility of massive damages should the injunction be overturned on appeal. That is why courts require the winners to set aside a large sum before allowing enforcement of a sales ban.