| 1:52 PM EST

Daimler Settles with Sharp on Connectivity License

Battle over access to regulation-required patents continues.
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Daimler has sidestepped a possible sales ban in Germany by agreeing to pay a fee to use Sharp’s connectivity technology patents.

Last month Sharp won an injunction from a Munich court to block retail sales of Daimler vehicles unless the German carmaker pays up. Nokia was granted a similar court order in Mannheim in August.

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Details about the fees involved were not disclosed.

What’s Fair?

The issue about the use of so-called “standard-essential patents,” meaning those that protect technology mandated by a standard or regulation. Chips and algorithms that enable cellphones to work are a good example of such components.

Daimler says its agreement applies to only about 10% of the Sharp tech it uses, because the rest comes through telematics suppliers who have already paid a license fee to Sharp.

The carmaker reiterates its position that a company cannot be banned from using standard-essential patents if its suppliers are willing to pay the license fee. Courts back the right of the patent holder to charge a fee, but they also say fees must be reasonable for a standard-essential patent.

Daimler has complained that Sharp and Nokia are abusing their standards-based monopoly by charging too much for access.

More Rulings Ahead

The two German rulings are only the beginning. Sharp and Nokia are making their case in several other state courts. But favorable rulings don’t necessarily mean anything will happen.

Germany’s legal system requires a plaintiff to provide collateral against damages if the ruling is later overturned. The size of the escrow deposit is up to the court to determine.

In Nokia’s case, it’s a cool $3.8 billion—which explains for Nokia’s lack of enthusiasm about pursuing its victory. Sharp’s injunction requires only $6.5 million in collateral, making the threat of blocked sales far more likely. It also accounts for Daimler’s prompt response.

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