Two major corporations are arguing in court over licensing deals, and the ongoing dispute has caught the attention of a very large governing body. The repercussions could lead to significant changes, even for the smaller entities in technology.
The European Commission has plans to step between Nokia Corporation and Daimler AG concerning the former’s standard essential patents (SEPs). The telecom company and the auto manufacturer are at odds over a licensing agreement, and the Commission is set to intercede by way of putting a new system in place that will monitor such deals.
Cutting costs
Nokia makes around $1.7 billion in annual revenue from licensing, a number they say Daimler is cutting into by skirting around licensing requirements. The car company wants its suppliers to pay the fees, while Nokia believes it is a move to avoid payments. The Commission has responded to a complaint by Daimler by proposing a regulation committee that would oversee aspects of SEPs.
SEPs are technology patents that are essential for use among today’s infrastructure requirements. Developing technology that works over Wi-Fi, uses Bluetooth or taps into 5G networks can all benefit from SEPs. Patent holders generally have to provide licenses on fair, reasonable and non-discriminatory terms, or FRAND terms, in return for their patents inclusion as a standard.
Checking connections
The Commission wants to establish an independent system that will help avoid these kinds of disagreements in the future. Whatever body they task will have to ask some important questions of specific SEPs:
- Are they really vital for an operating standard?
- Do they need to be included in licensing agreements for certain technologies?
- Are the prices too high for the licensing rights?
The answers could make a big difference in the technology landscape moving forward. While there are billions in play for major corporations around the world, smaller operators could also see drastic changes as patents move in and out of technology standards.
