Why Ford shares were crushed by the market today

What happened

the ride on Ford (F -2.72%) stocks were not very smooth on Friday. The large American automaker saw its shares fall by nearly 3% on a day when the S&P 500 the index essentially traded sideways. A foreign court ruling was the key catalyst for that slowdown.

So what

A Munich regional court, ruling in a patent infringement suit brought by the Japan-based patent fund IP Bridge, has banned the sales and production of Ford cars with Internet connectivity. If this basically covers all current models of the company’s vehicles, it could have a huge impact on its operations in the great European nation.

Image source: Getty Images.

That said, according to a Reuters article on the subject, the sentence is not legally binding and Ford can appeal. In addition, a security payment of 227 million euros ($239 million) from IP Bridge is required to make the judgment “provisionally enforceable.”

IP Bridge filed the lawsuit for patents covering 4G, a well-established wireless communications technology. It’s the latest fight between technology patent holders who want to be handsomely compensated for such solutions and automakers who rely on a host of technologies for their assisted driving features.

Now what

In an emailed statement quoted by Reuters, Ford said “the reason for this court case is the licensing of essential standard patents for LTE networks. Since we have not yet received [sic] written opinion of the court, we do not wish to comment on this matter at this time.

IP Bridge has not yet issued a formal statement on the bug. It is unclear if he intends to hand over the security payment.

While all of this sounds a bit up in the air, the threat to Ford’s operations in Germany is concerning. However, one way or another, the company must find a way to resolve the situation. Investors will hope that this will not be too costly or cumbersome.

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