Within the period of internet-connected automobiles, Europe’s carmakers are embroiled in mental property battles with among the area’s largest telecoms teams. Looming behind these conflicts is concern in regards to the rising dominance of China.
Firms from Asia’s largest economic system, led by Huawei, have filed a deluge of patents across the important expertise that enables merchandise, from vehicles to cellular units, to entry 4G, 5G and WiFi networks. Something that connects to the web should safe a licence for these so-called commonplace important patents (SEPs) from expertise creators.
Chinese language corporations have been behind 65 per cent of filings of SEPs final 12 months to requirements physique ETSI, in response to knowledge 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 corporations dropped from 22 to fifteen per cent, whereas Chinese language corporations’ doubled.
“I’m strongly urging and inspiring corporations to file and file and file patents . . . Chinese language corporations are doing it rather a lot,” he mentioned.
Breton was setting out new European Fee proposals to extend transparency and cut back litigation within the patent market, led partially by fears that competitiveness within the bloc was beneath risk. Underneath the brand new guidelines, corporations must register their patents with the EU Mental Property Workplace, which might in flip assist set licensing and royalty charges.
The transfer has sparked controversy amongst main patent holders who concern it’s going to create much more onerous procedures, resembling registering each single patent with the brand new physique, and cut back their entry to the courts for infringement instances. This might in the end hit their international competitiveness, they fear.
The evaluate 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 outdoors courtroom two years in the past.
China’s growing curiosity in SEPs has sparked concern within the automobile trade, which is already reliant on the most important Asian nation for key elements throughout a lot of its provide chain and has change 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 expertise theft, has led the pack, submitting hundreds of patent purposes in 2020 and 2021.
“In 5G, the winner is evident — 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. However it has up to now opted to not license its IP through a patent pool known as Avanci utilized by Ericsson, Nokia and others, selecting as a substitute direct agreements with part makers together with a Volkswagen provider. It has signed bilateral SEP agreements with at the very least 13 carmakers, together with Audi and BMW.
Patent possession can change into a superb supply of earnings for telecoms expertise corporations resembling Huawei, which has been dropping enterprise internationally as many western nations have began purging the corporate from telecommunications networks due to considerations over its relationship with Beijing.
Chinese language corporations at the moment are more and more ready the place they may “maintain different corporations out of enterprise — not simply within the automotive provide, however for the entire Web of Issues”, mentioned Schlögl.
Christian Loyau, authorized affairs and governance director on the physique chargeable for standardisation of communication expertise in Europe, ETSI, warned that if Chinese language corporations felt they weren’t allowed to take part pretty in western markets, Beijing may resolve to “use their patents as weapons” and curtail western corporations’ entry to key applied sciences.
An individual near Huawei mentioned that it negotiates licences in a “pleasant and amicable method” within the hope that its expertise will be “useful for the entire trade”.
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.
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Nonetheless, fears in regards to the function of Chinese language corporations in patent growth come as a rising variety of merchandise change into related, prompting the necessity for licences for wi-fi entry to 4G, 5G and finally 6G networks.
Automotive corporations are amongst conventional industries more and more cautious of the facility telecoms gear makers maintain over circumstances resembling pricing for the IP licences.
Teams together with Nokia and Ericsson have been pegging the worth of connectivity patents to the worth of a automobile, moderately than the considerably cheaper connectivity {hardware} developed by automotive suppliers, which means they’ll 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 automobiles such because the Mercedes-Benz E-class requiring greater than 3,700 totally different elements from greater than 340 suppliers, she mentioned, carmakers couldn’t be chargeable for making certain every half was patent-compliant — including that requiring this “would flip across the complete set-up of the automotive trade”.
Nonetheless, an individual near Nokia mentioned that patent holders have been charging solely round $20 per automobile. The corporate mentioned that the “refusal by some corporations to pay for the usage of different corporations’ expertise is the principle barrier to environment friendly and efficient SEP licensing”.
The $20 price “may not sound like a lot for the patron, however multiply this by lots of of requirements [needed by] automobile applied sciences”, mentioned Schlögl, including that if connectivity SEP charges stored rising, “you may certainly see a invoice of licence charges that an finish shopper would by no means settle for”.
Further reporting by Javier Espinoza
