Once a mobile-phone superpower, Nokia still has a potent weapon

A good decade after Nokia Oyj’s mobile-phone business suffered a fatal blow at the hands of the iPhone, the Finnish company is still feeding off a lucrative asset that it salvaged from the wreckage.

Nokia retained a catalogue of thousands of wireless communications patents that is steadily growing thanks to a thriving research operation. Now an attempt to change how those patents are monetised has led Nokia into court with Daimler, the maker of Mercedes-Benz cars.

A ruling a few weeks ago in Germany sided with Nokia, and more verdicts are pending later in September.

Modern automobiles are so brimming with electronic gadgetry that the industry has casually likened its products to smartphones on wheels. Wireless technology allows occupants to make calls, stream music or dial up emergency services in case of an accident. Traditionally, automakers require that their components makers, be it Continental or Robert Bosch, handle any royalty issues, and indemnify them for any patent demands that may come later.

In a bid to streamline the process, wireless-technology companies from Qualcomm to Sharp and Nokia joined forces in the Avanci patent pool, which promises to collect royalties from the car industry by offering a fixed price per vehicle, currently running at $15 a car for a 4G-standard license.

“There has to be a solution and we feel we are the solution,” said Kasim Alfalahi, the founder and CEO of Avanci. “It’s a fair price for the value of the technology in the car.”

Trouble is that Daimler disagrees and has no desire to sign up. Instead, the company wants to maintain the practice of suppliers negotiating the licenses, ideally at a fraction of the umbrella-deal cost. Nokia is trying to enforce its approach via a high-stakes court battle, with hearings in Munich, Dusseldorf and Mannheim. It’s here that the Finns struck legal gold: the company won an injunction that could stop Daimler from selling cars in Germany, which would be a suicidal situation for the inventor of the automobile on its home turf.

One consolation for Daimler is that enforcing a car-sale ban would require Nokia to post collateral of ^7 billion ($8.3 billion) in a separate proceeding, a risky proposition for the Finnish company given the huge outlay.