Ford faces sales and production ban in Germany over patent laws

23 May 2022


US manufacturer Ford is facing a nation-wide sales and production ban on its vehicles in Germany, as the carmaker has been accused of violating wireless-technology patents. The verdict of a regional court reflects a wider issue in the automotive industry and could be a heavy blow to Ford.

The dispute has arisen over microchips found in Ford cars. The court in Munich has ruled that the carmaker will face a shutdown of its operations if it does not settle the claims. The case centres on 4G cellular chips for which the company has not paid licensing fees.

The ruling is still subject to appeal. It could be enforced in two weeks should Ford not come to an agreement with the plaintiffs, which were not specifically named but include a group of eight owners of a 4G mobile-communications patent.

The case was brought forward by IP Bridge, a Japanese company specialising in the management of intellectual property and funds. A €227 million security payment by IP Bridge was required for the verdict to become ‘provisionally enforceable.’

Ford Germany stated to Autovista24 that ‘the reason for this court case is the licensing of standard-essential patents for LTE networks. Since the corresponding negotiations are ongoing and we do not yet have the written reasons of the verdict, we do not want to comment on them at this point in time.’

Microchips and patent laws

German newspaper Wirtschaftswoche exclusively reported on the verdict, saying that the judge Matthias Zigann was considering the recall and potential destruction of all Ford cars from dealerships.

A spokesperson from the regional court in Munich was unable to comment on the matter, but did share the verdict with Autovista24. According to this, the ruling is aimed particularly at Ford cars with the so-called ‘FordPass-Connect’ modem. This embedded device allows users to connect and control vehicle functions, such as remotely locking and unlocking a vehicle, as well as remotely starting or locating a parked car.

Microchips are key components of connected cars and also play an important role in autonomous vehicles. Ford is the latest carmaker to come under pressure from tech companies and patent owners, which want manufacturers to pay royalties for technologies found in vehicle communications and navigation systems.

Other carmakers in Germany have seen similar cases. IP bridge sued Volkswagen (VW) over patent infringements in the same court in Munich. The carmaker managed to settle the matter by buying a patent licence from a platform dubbed Avanci. Mercedes-Benz Group was also involved in a patent dispute over mobile technology in its cars, with the case brought forward by Nokia and Sharp in 2020.

Many international companies bring disputes over patents before Germany’s courts, and similar cases involving other carmakers could follow. Patent laws were reformed last year, with the German Association of the Automotive Industry (VDA) welcoming the decision.

‘The abuse of patent law has increased sharply in recent years, and spectacular injunction proceedings have been brought against the [automotive] industry,’ said VDA president Hildegard Müller at the time.

‘This has led to high costs, which have placed an unnecessary burden on companies. With the patent law reform, the courts can now take into account the economic effects of far-reaching production stops in their assessment. That is why the patent law reform is good news for Germany as an industrial location,’ she added.