IP Information & News

Trends in IP — what does the future hold for automotive manufacturers?

Jonathan Higgs

By Jonathan Higgs

Senior Patent Attorney

Unsurprisingly, the automotive sector continues to be a major economic and industrial force. However, it will face many challenges in the years to come, including transitioning away from fossil fuels and a potentially fundamental shift in the way people use and own cars when driverless models become the norm.

Turning challenge into opportunity

Imagine paying a subscription service for a luxury, driverless taxi service that shows up on demand within minutes of hailing via an app on your phone. Is this preferable to buying and maintaining a vehicle that spends most of its time in your driveway or in a carpark at work?

We can see this change in focus for the automotive sector clearly from the subject matter of patent litigation, which is moving away from the broad field of ‘transport’ to more specific areas such as environmental technology, computer technology and engines. There is a particular increase in audio-visual technology and electrical machinery subject matter, which supports the general understanding that smart/driverless cars are the way of the future.

In any event, it’s certainly sensible to conclude that it’s more important than ever for automakers to identify and protect their IP, including freedom-to-operate reviews and potential licensing opportunities.

Truth in numbers

According to Darts-ip, which maintains a database of case law globally, there has been a general increase in trade mark activity in the automotive sector, which increased by 58% from 2013 to 2017. Today, automakers are facing brand counterfeiting problems and increased competition, particularly in the aftermarket (i.e. spare parts). A registered trade mark is an effective tool a company can use to protect itself against confusion regarding the origin of genuine products, so it’s natural that there will be an increase in this activity — and overall, I expect this trend in trade mark litigation to remain at least constant, or see growth, for the near future.

Conversely, patent litigation activity has slightly decreased over the last few years. However, non-traditional technology companies are now breaking into the automotive sector with potentially extensive patent portfolios of new and crossover technologies. Most of the decrease in patent litigation in recent years can be attributed to less activity in North America, where automakers are particularly pressured in domestic and foreign markets by competitors, notably China. However, the marked decrease in the North American region will bottom-out and reverse, while other regions will likely grow in activity. Generally, patent activity should rise, as industries continue to diversify and overlap.

Patent trolls — a lesson to learn?

One phenomenon which will contribute to a rise in patent activity is the action of NPEs (non-practicing entities), also known as ‘patent trolls’ (depending on which side of an action they are on). Indeed, in any patent battle with one of the top 20 car manufacturers, it’s more than likely that a NPE will be on the other side.

This trend comes as broad patents relating to communications and connectivity become increasingly relevant to the operation of vehicles. This type of litigation will boost legal activity in the North American region, as most NPEs are registered in the USA. Automakers may find that they need to adopt a strategy similar to NPEs by looking outside of their industry and identifying/buying key patents before they can be held to ransom.

IP activity around the world

The case law database also shows that the most assertive of the top 20 auto manufacturing companies in both trade mark and patent litigation are German, topped by Volkswagen in both categories. The USA, France and Japan occupy the middle of the table, whereas Chinese companies tend to be the least litigious.

However, as confidence grows, by sheer manufacturing volume, Chinese companies are likely to become more active and/or be drawn into more disputes. Furthermore, Chinese courts have recently been more willing to award higher damages, for example, in the event of auto parts infringement. A sizeable proportion of disputes have been and will continue to be related to spare parts where trade marks, designs and utility models are enforced.

Trends show automotive embracing innovation

We can see that there’s increased IP activity across the board for automotive manufacturers. The industry has embraced innovation by necessity to remain viable, as the regulatory environment and customers’ expectations evolve. Ultimately, the days when the idea of owning your own car for personal use will eventually pass and yield to a more environmentally-sustainable model.

As the technology within our vehicles continues to proliferate and the industry becomes ever more focused on innovation, we’ll see IP activity in all areas continue to rise — making it all the more important that you think about protecting your rights at the earliest possible opportunity.

From my perspective as an attorney, it’s great to be at the forefront of the game-changing developments taking place in the automotive industry and related supply chain. Our expert automotive team works with many organisations in the industry, from innovative SMEs to multinationals. We’re also conscious that innovation in this area often begins with relatively small-scale start-up companies, and we’re equally well-placed to provide the friendly, practical and affordable advice that such clients require.

If you think you could benefit from IP protection, please feel free to get in touch with me at jgh@udl.co.uk.

Find out more about our work in the automotive sector here.

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