Time to intervene on behalf of innovation in Europe’s smart car market

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

After taking action to prevent anti-competitive practices by chipmakers, the European Commission should do the same in the smart car sector, writes Brian Scarpelli. [NISSAN MOTOR CO., LTD. / Flickr]

After taking action to prevent anti-competitive practices by chipmakers, the European Commission should do the same in the smart car sector, writes Brian Scarpelli.

Brian Scarpelli is Senior Global Policy Counsel at ACT/The App Association

Last month European Union Commissioner for Competition Margrethe Vestager took a bold step by issuing interim measures against Broadcom to protect its competitors from further harm amid an ongoing inquiry into the chipmaker’s practices. She could consider similar action to prevent immediate harm to consumers’ interests in another market: smart cars.

The European Commission has received numerous complaints against Nokia recently over its approach to licensing of its standard essential patents on communications technologies needed to connect apps and devices to the internet.

The complainants, including Daimler, and several auto parts claim that Nokia is not honouring the fair, reasonable and non-discriminatory licensing principles it signed up to when it volunteered its patents for standard essential status.

Nokia has retaliated against Daimler by seeking injunctions against it in the German courts. The legal battle that is just starting is already hindering innovation behind the development of smart cars.

Nokia is effectively holding innovation in the auto sector hostage in a bid to maximise returns on its SEPs, just as Motorola Mobility did in the smart phone market until the European Commission intervened in 2014.

Just like Motorola then, Nokia now has turned to the German courts to get an injunction. In Motorola’s case it was against Apple and Samsung. Nokia’s is against Daimler. Daimler, in turn, is supported by auto suppliers including Bosch, Tom Tom, Valeo, and Continental. Nokia refuses to grant them the licenses they need in order to develop smart car technologies. Instead it only wants to grant a license to the car manufacturer.

If Nokia succeeds in the German courts it will force Daimler to take the Nokia licenses. This would set a worrying precedent for all kinds of Internet of Things technologies. Thousands of small innovators including app developers could find themselves in the same situation as Continental, Valeo and others – denied licenses and therefore unable to innovate independently of their clients.

Ms Vestager has an opportunity to avert the damage if she steps in in Germany and requests a stay in proceedings examining Nokia’s injunction requests.

Today’s legal disputes in the auto sector look like a re-run of what has dogged the smart phone market. At the time of the April 2014 ruling against Motorola Mobility, Competition Commissioner Joaquin Almunia said:

“While patent holders should be fairly remunerated for the use of their intellectual property, implementers of such standards should also get access to standardised technology on fair, reasonable and non-discriminatory terms. It is by preserving this balance that consumers will continue to have access to a wide choice of interoperable products”

Nokia’s fights in the German courts offer Ms Vestager an opportunity to take action to prevent an anti-competitive distortion from taking root in the smart car market.

If she takes this opportunity it would be fully in line with yesterday’s decision to impose interim measures on Broadcom, and would send a very clear message that she will not wait for a full antitrust ruling before taking interim action to prevent anti-competitive behaviour from distorting a market.

And with so many other industries set to go ‘smart’ after cars and mobile phones, the Commission would be sending another clear message: balance in SEP licensing means applying fair, reasonable and non-discriminatory, or FRAND licensing terms, and, if needed, the Commission will use interim measures to maintain that balance.

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