The biggest news from today's Nokia v. Daimler doubleheader patent infringement hearing in Munich was Huawei's potentially groundbreaking German antitrust lawsuit against Nokia over the former handset maker's refusal to extend an exhaustive component-level standard-essential patent (SEP) license to Huawei, which is at least an indirect--through telematics control unit (TCU) makers like Continental--supplier to Daimler. But there's more (I typed 11 pages of notes)...
The two divisions of the Munich I Regional Court that hear patent infringement cases (the 7th Civil Chamber and--which held today's hearings--the 21st Civil Chamber) appear to have an interesting self-concept. While they very much focus on patent cases, their responsibility extends to all fields of civil law, depending on what issues get raised in their cases. Competition law is not an exception. But their protective instincts consistently benefit patent holders, even trolls and other abusers, and apparently never those whose businesses are profoundly impacted by antitrust violations.
Hogan Lovells's Dr. Benjamin Schroeer ("Schröer" in German), counsel for Nokia v. Daimler intervenor Peiker (a Valeo subsidiary), was one of several attorneys for Daimler suppliers who explained to the court how their clients are affected by Nokia's refusal to extend exhaustive component-level licenses to them, choosing to sue Daimler instead. But what matters to the court is that Nokia holds patents and elected to sue Daimler over them--end of story, for the time being...
Dr. Schroeer suggested that Daimler is just serving as a proxy for Nokia to sue because, in reality, it's about the telematics control units (TCUs) supplied by the likes of Peiker and Continental. In that context he even hinted at a violation of the intervenors' right to be heard. Whether he meant to indicate to the Munich court that they're considering a complaint with the Federal Constitutional Court of Germany wasn't clear--but that's where a complaint over a denial of the right to be heard would ultimately go.
When Dr. Schroeer stressed his client's antitrust injury, Judge Dr. Hubertus Schacht, who filled in for Presiding Judge Tobias Pichlmaier today, said the following:
"Complaints [over Nokia's allegedly anticompetitive conduct] are also pending with the [European] Commission. It appears there are legal remedies for [what you've described]."
It's a well-known fact that Daimler and at least four suppliers (Continental, Valeo, BURY, and Gemalto) have lodged such complaints this year. The EU Commission will at some point--possibly in the near term--decide whether to open formal investigations. Assuming the Directorate-General for Competition (DG COMP) does investigate, and finds that Nokia has violated Art. 102 of the Treaty on the Functioning of the EU (TFEU), and further assuming that such Commission decision would be upheld by the Court of Justice of the EU, Nokia might indeed get fined. But in the meantime, the German courts will have to adjudicate the pending Nokia v. Daimler patent infringement actions (at least ten are known, and more may be--or may even have been--filed). If a patent injunction is ordered against Daimler, and actually enforced, the car maker will be left with no choice but to bow to Nokia's demands--and those may be totally out of line, as counsel for Huawei said today that he's ready to produce the existing Huawei-Nokia patent license agreement covering mobile end products within five minutes of Nokia waiving the confidentiality requirement, and the court would see that what Nokia is seeking from Daimler is a disproportionately higher license fee for its cars than the one it's actually getting from Huawei for its mobile phones and tablets.
As I noted in another post on today's hearing, the positions the Munich court took today were highly preliminary. It's happened before in some Munich cases--though never with respect to an antitrust defense to the best of my knowledge--that the court adopted a different position at the time of the second hearing, which is the actual trial. Should Nokia be granted injunctive relief in these cases, it would amount to a dereliction of duty with respect to the application of competition law. In that light, I found it disappointing and disconcerting that a German judge would tell automotive suppliers to complain with the EU's competition authority instead of recognizing the ramifications of Nokia's refusal to license component makers.
Relying on EU competition commissioner Margrethe Vestager is not the answer to serious antitrust issues raised in a German patent infringement litigation.
If Daimler's suppliers are--as any remotely reasonable reading of the CJEU's Huawei v. ZTE makes perfectly clear--entitled to an exhaustive SEP license, the Munich court can't just argue that the bottom-line commercial effect of Daimler taking a license from Nokia would be that Daimler can continue to make and sell cars that come with cellular connectivity. With Huawei's private antitrust lawsuit against Nokia, it's fairly possible that the central question here--access to exhaustive component-level licenses that enable suppliers to sell to any customer anytime (one of the fundamental freedoms of the EU: freedom of movement of goods)--will reach the EU's top court within a few years. Should the CJEU then find that Nokia's refusal to deal was an antitrust violation, some people may end up looking very bad because they would have condoned or even abetted illegal conduct despite having had every chance to do their job and thwart SEP abuse.
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