Goodwin Insights May 30, 2019

Key Takeaways from
Auto IP USA

Did you miss the Auto IP USA conference in Detroit last month? Goodwin was a sponsor at the event, and our lawyers attending heard from experts across the automotive landscape as they shared insights into the IP challenges facing those driving change in the new era of connected vehicles.

Key takeaways included:

  • Safety first. It is a given that the automotive industry's marriage with the tech world has moved beyond the niceties of infotainment systems into drivetrain management, crash avoidance, and vehicle stability systems. The convergence of the two industries fuels the race towards connected cars, Electric Vehicles (EVs), and Autonomous Vehicles (AVs). Today, the auto industry's embrace of the latest and greatest electronics is fundamentally a safety issue. Yet, the auto industry remains wary of a perceived notion that tech companies push out new technologies before they have adequately been tested for safety and reliability, and fail to account for the vehicle market’s much longer product cycles.

  • More disputes. Historically, the auto industry has been non-aggressive in terms of litigation, with few patent or IP disputes among the traditional industry players. This trend is predicted to change with the convergence of technology companies with those traditional players. Tier 1 suppliers will continue to be the real parties in interest, as their components and systems will likely be on the firing line with technology companies, and the vehicle manufacturers’ buying power will continue to command indemnity pledges from the suppliers.

  • More IP cross-licensing. The tech companies’ contributions in this relationship will generate compatibility and integration issues. The current industry standard Controller Area Network (“CAN”) bus in vehicles will require close collaboration with emerging platforms to ensure compatibility and reliability. This, in turn, implicates IP cross-licensing with all its trappings.

  • Joint R&D efforts will require more care and transparency. The vehicle industry historically has been marked by a détente among the car companies and Tier 1 suppliers, with the suppliers often ceding IP ownership to the vehicle makers. Adding tech companies to the mix is expected to bring about an increased need to craft joint R&D agreements in order to reduce the likelihood of litigation. Joint development efforts among vehicle makers and Tier 1 suppliers on the one hand, and tech companies on the other, will likely bring about demand for detailed agreements on IP ownership, including careful parsing of “background” IP versus jointly developed IP. Tech companies typically value their independence strongly, and their valuation is often more highly dependent on IP ownership. As such, they will likely push back strongly against the “tradition” of the vehicle makers owning the IP, such that we expect to see more license-back agreements.  

  • Standard Essential Patents (SEPs) will be at play. Vehicle development is already highly standards-dependent due to the efficiencies gained from the CAN bus standard that enables a variety of devices in a vehicle to share common, multiplexed wiring. As additional and more complex systems are introduced, the CAN bus standard may be modified, or additional standards may be introduced into the mix, bringing into play the usual SEP considerations.

  • 5G and FRAND will emerge. The 5G SEP holders are already positioning themselves to attack, using the value of the car as a way to value their portfolios. Nokia has already started conducting surveys to test the value of the connected car.

  • Privacy and Cybersecurity will be challenging. On the connected cars front, data ownership and privacy will remain a challenge, much like in other tech arenas. AVs depend on data amassed from the hundreds of thousands of miles of “training” experience given the machine learning systems that guide them. But existing notions of IP protection often fall short of adequate protection for the value of that data. The massive amounts of location, operating and other personal data collected as to drivers and occupants of AVs will raise increasing privacy issues. As the level of automation in vehicles rises from today’s Level 2 (partial automation) to Level 5 (full automation), the risks of harm from hackers also will rise, requiring the industry to remain vigilant on issues of cybersecurity.

  • No end in sight yet for internal combustion engines (ICEs). The death of the ICE is not imminent despite the expected continued rise of the EV. ICE-powered vehicles will continue in importance for at least the near future given their extensive infrastructure and supply chain advantage compared to EVs. Battery life and supply issues may eventually be solved using hydrogen fuel cells instead.

Goodwin’s IP lawyers counsel companies with complex IP development agreements and protect and defend them in litigation at all stages, with extensive experience across a variety of the complex technologies relevant to vehicles. As the automobile industry converges more closely with technology, our team is experienced and well positioned to advise and protect clients and their IP in this emerging area. Goodwin has been named an industry leader in technology and IP by top publications including Chambers USA and U.S. News and World Report/Best Lawyers.

About the Authors:

Darryl M. Woo is an IP litigation partner in Goodwin’s office in San Francisco, where his practice combines two of his passions: cars and technology. He grew up hot-rodding small block Chevys and was a technical advisor for season five of HBO’s Silicon Valley. Today, Darryl can be found lapping tracks such as Laguna Seca Raceway, and representing companies with disruptive and cutting edge technologies in IP and other complex technology litigation.

Steve Shahida is a patent litigation partner in Goodwin’s office in Washington D.C. His practice focuses solely on litigating complex technologies. With an electronics and computer engineering background, Steve has litigated divergent technologies including cases involving hybrid engines, semiconductor design/fabrication, collision avoidance, park assist, and on-board infotainment systems. Steve has not seen a classic car that he did not love, with particular affinity for those manufactured in the 1960’s.