Daimler and Nokia enter into patent licensing deal, ending their legal battle

Ending the legal battle in Germany, carmaker Daimler has agreed to pay royalties fees to Nokia for using its patent. This marks the end of the legal battle between the technologies and car companies over the payment of royalties.

Through licensing revenues, Nokia earns $1.7 billion each year. These royalties come from the usage of navigation systems, vehicle communication, and self-driving cars in the automobile, the patent of which is with the tech firms. Instead, the automakers contend that the suppliers should pay, thereby reducing the patent fees.

The agreement with Daimler is the latest win for Nokia. Moreover, recently Nokia too struck a deal with China's Lenovo. The deal results in making the net balancing payment to the Finnish telecoms and resolves all the pending litigation. Also, Nokia entered a deal with Samsung for making royalty payments of the patented technologies which Samsung is using related to video standards.

No such disclosure was made by Nokia and Daimler in terms of their patent licensing deal since the carmaker has not paid any fees to Nokia. The only disclosure which was made was with effect to halt the litigation. Daimler spokeswomen said, "We welcome the settlement, from an economic point of view and because we avoid lengthy ... disputes." The German Court's request to the Luxembourg-based Court of Justice for its guidance will be rendered as moot.

Speaking on the deal, Danske Bank analyst Mads Rosendal said, "The revenue stream is not likely to be material but at the very least it will be very stable and high margin. Also, the ending of the dispute should save a fair amount of legal costs going forward. Slightly credit positive for Nokia, in our view,"

Nevertheless, Continental, a German car parts maker stated that it would not be dropping its legal fight in the United States. Continental along with Daimler, Bury technologies Valeo and Thales-owned Gemalto complained to EU antitrust regulators in 2019 against Nokia's patent fees urging the EC for a binding patent licensing framework.

"It must ... define this framework otherwise European companies will face an insurmountable competitive disadvantage in the future market of the Internet of Things compared to Asian and American market participants," Continental board member and head of its vehicle networking and information business unit Helmut Matschi said in a statement.