In the period of internet-connected autos, Europe’s carmakers are embroiled in mental property battles with a few of the area’s largest telecoms teams. Looming behind these conflicts is worry concerning the rising dominance of China.
Companies from Asia’s largest economic system, led by Huawei, have filed a deluge of patents across the important know-how that enables merchandise, from vehicles to cell units, to entry 4G, 5G and WiFi networks. Anything that connects to the web should safe a licence for these so-called customary important patents (SEPs) from know-how creators.
Chinese firms have been behind 65 per cent of filings of SEPs final 12 months to requirements physique ETSI, in keeping with information collected by Clarivate, up from 37 per cent in 2019. EU commissioner Thierry Breton this week famous that since 2014, the share of SEPs globally held by European firms dropped from 22 to fifteen per cent, whereas Chinese firms’ doubled.
“I’m strongly urging and encouraging companies to file and file and file patents . . . Chinese companies are doing it a lot,” he mentioned.
Breton was setting out new European Commission proposals to extend transparency and scale back litigation within the patent market, led partly by fears that competitiveness within the bloc was underneath risk. Under the brand new guidelines, firms must register their patents with the EU Intellectual Property Office, which might in flip assist set licensing and royalty charges.
The transfer has sparked controversy amongst main patent holders who worry it would create much more onerous procedures, akin to registering each single patent with the brand new physique, and scale back their entry to the courts for infringement circumstances. This may finally hit their international competitiveness, they fear.
The assessment follows a number of authorized disputes, together with a lawsuit between Nokia and Mercedes-Benz. The telecoms group sued the carmaker, beforehand often called Daimler, for patent infringement when negotiations over pricing broke down. The case was settled exterior courtroom two years in the past.
China’s rising curiosity in SEPs has sparked concern within the automobile trade, which is already reliant on the most important Asian nation for key parts throughout a lot of its provide chain and has turn into deeply cautious of the escalation of geopolitical tensions between Washington and Beijing.
Huawei, which has suffered from US and European sanctions imposed over fears it helps Beijing conduct cyber-espionage and know-how theft, has led the pack, submitting hundreds of patent purposes in 2020 and 2021.
“In 5G, the winner is clear — it’s Huawei,” mentioned Michael Schlögl, head of patents at German automobile provider Continental.
Huawei, which invested $21.8bn in R&D in 2021, has developed a number of licensing relationships inside the automobile trade. But it has to this point opted to not license its IP through a patent pool referred to as Avanci utilized by Ericsson, Nokia and others, selecting as a substitute direct agreements with element makers together with a Volkswagen supplier. It has signed bilateral SEP agreements with at least 13 carmakers, together with Audi and BMW.
Patent possession can turn into a very good supply of revenue for telecoms know-how firms akin to Huawei, which has been dropping enterprise internationally as many western nations have began purging the corporate from telecommunications networks due to concerns over its relationship with Beijing.
Chinese firms at the moment are more and more ready the place they may “keep other companies out of business — not just in the automotive supply, but for the whole Internet of Things”, mentioned Schlögl.
Christian Loyau, authorized affairs and governance director at the physique answerable for standardisation of communication know-how in Europe, ETSI, warned that if Chinese firms felt they weren’t allowed to take part pretty in western markets, Beijing may resolve to “use their patents as weapons” and curtail western firms’ entry to key applied sciences.
An individual near Huawei mentioned that it negotiates licences in a “friendly and amicable way” within the hope that its know-how will be “beneficial for the whole industry”.
Telecoms gear group executives level to the truth that the amount of patents filed doesn’t essentially equate to their high quality and that Ericsson and Nokia nonetheless dominate in relation to profitable high quality patents. Huawei generated about $1.3bn from patent licensing between 2019 and 2021. Nokia generated €1.5bn in 2021 alone, whereas Ericsson generated round €900mn final 12 months.
Nevertheless, fears concerning the function of Chinese firms in patent improvement come as a rising variety of merchandise turn into linked, prompting the necessity for licences for wi-fi entry to 4G, 5G and finally 6G networks.
Car firms are amongst conventional industries more and more cautious of the facility telecoms gear makers maintain over circumstances akin to pricing for the IP licences.
Groups together with Nokia and Ericsson have been pegging the worth of connectivity patents to the worth of a automobile, slightly than the considerably cheaper connectivity {hardware} developed by automotive suppliers, that means they will cost extra.
Anja Miedbrodt, senior counsel in mental property defence at Mercedes-Benz, mentioned the battle between the 2 industries was additionally threatening to upend provide chains.
With autos such because the Mercedes-Benz E-class requiring greater than 3,700 completely different elements from greater than 340 suppliers, she mentioned, carmakers couldn’t be answerable for making certain every half was patent-compliant — including that requiring this “would turn around the entire set-up of the automotive industry”.
However, an individual near Nokia mentioned that patent holders have been charging solely round $20 per automobile. The firm mentioned that the “refusal by some companies to pay for the use of other companies’ technology is the main barrier to efficient and effective SEP licensing”.
The $20 value “might not sound like much for the consumer, but multiply this by hundreds of standards [needed by] car technologies”, mentioned Schlögl, including that if connectivity SEP charges saved rising, “you might indeed see a bill of licence fees that an end consumer would never accept”.
Additional reporting by Javier Espinoza
