According to a Reuters report, Nokia Corporation (NOK - Free Report) has submitted a proposal to the EU to amicably resolve the patent licensing disputes with leading European automobile manufacturers. The move could preempt a potential investigation by the European Commission and the consequent imposition of fine if Nokia was found to be at fault, probably preventing legal hassles and bad publicity associated with it.
Earlier, German automobile manufacturer Daimler AG (DDAIF - Free Report) , French auto component supplier Valeo S.A. (VLEEY - Free Report) , German car parts maker Continental AG (CTTAY - Free Report) and German electronics firm Bury Technologies registered a complaint with EU antitrust regulators to initiate a probe against Nokia’s patents. The bone of contention is Nokia’s patents relating to the automotive industry, which Daimler alleges are essential for the development of new products and services for connected driving. The auto major argued that fair and non-discriminatory access should be provided for the overall benefit of the auto industry. However, Daimler accused Nokia of using its patent rights to claim licensing fees for technologies used in navigation systems, vehicle-to-vehicle communication and self-driving cars, harming the progress of the industry.
Nokia countered the arguments by alleging that Daimler intentionally raised the issue to side-step the licensing program and avoid paying fees for its technological innovations. The telecom equipment manufacturer further pointed out that unlike other auto majors, Daimler had long been resisting efforts to take a license for using its technologies in its cars, and has thus sought the refuge of the antitrust regulators to bypass the legitimate licensing fees to Nokia.
With the draft proposal, Nokia has offered an olive branch to initiate constructive dialogue on the issue for a workable solution for the overall improvement of the automotive sector. Meanwhile, the European Commission has refused to comment on the industry grapevines.
Such a radical step seems to be the call of the hour as shares of the company have declined 37.5% in the past year while the industry has rallied 9.4%.
In order to fuel its growth momentum, Nokia remains focused on four strategic priorities. The first is its aim to lead in high-performance end-to-end networks with its communication service provider customers. The second priority is its relentless pursuit to expand network sales to select vertical markets, specifically energy, transportation, public sector, technical extra-large enterprises and webscale players. Building a strong standalone software business remains the third strategic priority of the company. The fourth pillar aims to create new business and licensing opportunities in the consumer ecosystem.
Nokia facilitates its customers to move away from an economy-of-scale network operating model to demand-driven operations by offering easy programmability and flexible automation needed to support dynamic operations, reduce complexity and improve efficiency. The company is continuously expanding its business into targeted, high-growth and high-margin vertical markets to address growth opportunities beyond its traditional primary markets. Rollouts of next-generation 5G networks are anticipated to improve market conditions significantly in 2019 and beyond for this Zacks Rank #3 (Hold) firm. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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