Car Wars: How Nokia Could Find Itself At Center Of EU Investigation Over Technology Patents

It is a practice – the letter argues – that stifles innovation, discourages newcomers to the market and ties suppliers to existing customers, which means European companies and consumers may be exposed to higher prices than they would be in a more competitive market.

The existence of such patents – and associated litigation – has potentially disruptive consequences for the manufacture, marketing and distribution of complex “networked” products that include a variety of functions developed and patented by different companies – for example, smartphones that incorporate camera, video, web browser, wireless, text messaging and so on.

By enforcing these patents, owners can often stymie competitors (and their suppliers) and prevent them from launching products that use the same standards. This raises serious concerns over competition in the marketplace and the need to ensure that the Internet of Things industry can develop.

Disputes can disrupt manufacture of ‘networked’ products like smartphones with functions patented by different companies. Shutterstock

Striking a fair balance

An appropriate balance must be reached that ensures that there are still incentives for companies like Nokia to keep developing new technologies (meaning they can still make decent profits), while allowing fair competition and consumer protection. This can be achieved by the endorsement of fair licensing practices on the part of the patent owner, which is what Daimler and the other complainants claim Nokia is failing to do.

But patent holders of standard technologies are required to give an irrevocable undertaking that they are prepared to grant competitors licences on terms that are fair, reasonable, and non-discriminatory. Daimler and its suppliers argue that Nokia’s licensing behaviour doesn’t comply with these obligations, which is why they have filed antitrust complaints with the European Commission.

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This article is republished from The Conversation under a Creative Commons license.

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