In April 1775 it was Paul Revere’s famous cry, “The British are coming! The British are coming!” Two hundred years later, Lee Iacocca and his Ford and GM colleagues were in the headlines warning, “The Japanese are coming! The Japanese are coming!”
Today, the entire auto industry is getting ready for another revolutionary onslaught, “The techies are coming! The techies are coming!” Are they ever!
Apple, Microsoft and Google have made no secret of their plans to develop everything from car-to-car communications and computerized steering systems to composite technologies and driverless cars. They’re looking at all the things that have been done mechanically on vehicles in the past to come up with innovative software driven systems with a goal of taking the “driver” completely out of the equation, including producing the vehicles themselves, and aggressively filing patent applications to protect systems that achieve this goal. If it isn’t quite a “fait accompli,” it’s getting closer and closer to becoming one.
So exactly what does all this fast approaching technology mean to the auto industry? How will it change the traditional business model in Detroit and what does it mean to OEM and supplier legal departments?
Likely, it will bring cosmic changes to the way vehicles are designed and manufactured in general and certainly it will create huge issues for auto-related legal departments. My many years working in manufacturing and design engineering at General Motors provides insight that the legal issues will be large in number and extremely complex in scope due to the integration of software and electronics with mechanical parts. In fact, it’s already started.
It’s readily apparent that tech companies are unusually aggressive and ambitious in their willingness to litigate their patents that are increasingly including automotive content. Google, Microsoft and Apple have been involved in 1,100+ patent lawsuits over the last ten years; GM, Ford and Chrysler (FCA Automotive), on the other hand, have been involved in just 204 such suits. Expect tech companies to watch the autos very closely and calling “foul” at every potential opportunity.
Further, tech companies have 552 currently active patent infringement lawsuits while the former Big Three have just 72. And it’s not just the “big three” tech companies pulling the trigger on lawsuits versus established companies. Advanced Media Networks LLC recently slapped GM, Mercedes-Benz and FCA with patent infringement suits for allegedly ripping off technology for mobile hot spots by providing WiFi in certain vehicles. It hardly requires a specialized billion dollar lab to conceive and patent WiFi for cars!
What’s a long-established technology-driven company like the autos to do when a relative newbie in the technology field comes calling with infringement lawsuit in hand? My advice: Play defense, and don’t wait for the call. Litigation avoidance needs to be front and center as auto manufacturers begin to sort through and understand the coming new realities of the industry. Here are some important guidelines to get your company on the right track:
- Hold periodic technology strategy sessions. Project where you’re going in the next five to ten years, or more. Will your mechanical parts need software infusions and how will you get that accomplished? Engage your IP assets early in the design phase.
- Closely monitor your existing patents and any new patents pending. Determine who owns potentially detrimental patents before development. Design-around is an option.
- Consider publishing defensive articles and white papers to inhibit third parties from obtaining patents.
- Anonymous prior art submissions to the USPTO are now an option to prevent your competition from obtaining patents that are not valid.
- Reevaluate your indemnification obligations in your supply agreements to the Original Equipment Manufacturers. Contributory infringement liability increases when your products become part of a complex system required for connected and automated vehicles.
Of course, there is one other option to consider. Partnerships. The tech companies are bringing innovations to future vehicles using resources not generally available in the automotive industry. Partnering with the right tech company could help vehicle manufacturers shorten the timeline in providing advanced products to the rapidly changing automotive industry, while reducing the likelihood of being a target for a patent infringement suit. There’s widespread agreement that the technological change now underway will be the biggest change the auto industry has seen since the inception of mass production. It will keep legal departments busy for years. Whether you partner or compete, start getting ready for it now.