The High Stakes of Patent Protection in the Era of Self-Driving Cars

Children and parked cars are color-coded on a monitor inside a Mercedes-Benz S-Class automobile during the Daimler AG Tech Day autonomous driving and artificial intelligence (AI) demonstration on a town street in Immendingen, Germany, on Tuesday, July 17, 2018. Daimler plans to offer autonomous shuttles on public roads in California from next year, adding momentum to the global race for self-driving vehicles with technology giants like Alphabet Inc.'s Waymo and rival BMW AG. Photographer: Michaela Handrek-Rehle/Bloomberg

There are few inventions that have changed the face of the planet. First, there were motor vehicles, then airplanes, and now self-driving cars have emerged, set to completely revolutionize the way we travel. This convergence of so many disparate technology sectors will make self-driving cars a reality: chip companies; software developers; and cameras (to name a few). This has made investments in the space the hottest commodity in Silicon Valley. With continued innovation and efforts in technology such as engines, microchips and 5G all being funneled into the development of self-driving cars, technology companies should consider how to protect their intellectual property in a way that keeps them competitive and brings their innovations to the roadway as soon as possible.

There’s no time to waste—companies need to start thinking through now how they plan to protect their inventions, innovations, talent and investments—while still ensuring they don’t halt the growth of the industry in the process. Considerations of patent protection and strategy are critical in this burgeoning field. Here’s what companies need to keep in mind as they “autonomously” navigate new waters:

Step 1: Evaluate how to protect your innovations

Companies have two routes to consider as they look to protect their innovations—trade secrets or patents—and both have pros and cons to consider.

If companies choose to protect their intellectual property by taking the trade secret route, they can sue employees who leave and go to a different company and create a similar product. However, if a third company also creates a similar product, they can no longer sue. This makes trade secrets a risky route to take—the public won’t have access to information or innovation only for as long as the secret is kept under wraps.

On the other hand, if a company were to take the patent route to protect their intellectual property, the technology is disclosed to the public. With a patent in hand, one can choose whether or not to enforce it.

We’ve seen leading tech companies take the patent path to protect their autonomous vehicle software, but then customize it to fit their own needs. Take IBM—a powerhouse of patented information—that chooses to protect their intellectual property through patents but allows them to be licensed so others have access to their IP. This works well for IBM, as a primarily B2B company, because they are working with other companies to develop new technologies, which allow them to innovate and create new things with their partners. On the other end of the spectrum, Apple protects their intellectual property at every stage of the process in an effort to protect all of their information from being used by others. This works well for Apple because they are keen to develop their own ecosystem, which will help them gain a competitive advantage in the market.

Companies developing autonomous vehicle technology can learn a valuable lesson from the likes of IBM and Apple. On one hand, by licensing their patents, companies can collaborate with other companies to create better technology more quickly and cost-effectively. If companies decide to operate in silos and protect their information though trade secrets, the autonomous vehicle technologies could be vastly different – which could benefit consumers looking for the latest and greatest technology but cause bumps in the road for universal regulations.

Step 2: Prepare for a patent case

Autonomous driving is sure to present unprecedented challenges for IP professionals and corporations alike—so it’s critical that companies are prepared for what they might do in the event of a patent case and a possible injunction, and the effect it might have on their business and customers. Because all innovation in the self-driving space is cumulative, one innovation generally builds on another, leading to the eventuality that everybody is infringing on someone else’s patent. The stakes are high, and court battles will be public, lengthy and costly. Patent owners will surely look for injunctive relief as well to stop technology from being deployed.

Companies should try to avoid being tied up in litigation to save themselves time and money and to protect their consumers. For example, if a consumer’s autonomous vehicle were to have an engine or brake malfunction, and the company that sold them their car is tied up in an IP battle in court, the consumer may not be able to get the issue fixed quickly enough, leading to potentially dangerous consequences. To put this in context, imagine that Apple is tied up in litigation about their technology and your phone or laptop shuts down. With this in mind, companies developing self-driving technology must find a way to stay out of litigation so they can get on the road quicker, keep the cost of their products down and protect consumers.

Step 3: Embrace collaboration to combat patent trolls

The self-driving car market is ripe for unexpected patent attacks from competitors and others seeking to make a quick buck through lawsuits. We will likely begin to see a wave of either consolidation or a shake-out of the many companies in the space. For those that fail before being acquired, their IP portfolios may be sold off, creating an opportunity for non-practicing entities (commonly referred to as patent “trolls”) to purchase them.

To combat these issues, companies should brainstorm and implement creative approaches to patent management to avoid the time and money spent arguing rights in court. With the increase of patent filings in self-driving technology, companies are realizing that they’ll need to collaborate with competitors and companies in other industries in order for self-driving cars to become a reality. Both automakers and tech companies will need to be aware that the remedies for infringing intellectual property (particularly patents) pose risks for the future—for example, in addition to stifling software enhancements, patents could inhibit the repairs of existing cars. In collaborating, companies should ensure they are complying with the relevant antitrust and consumer protection laws.

One company pioneering the self-driving car space that has embraced collaboration is Tesla. Their view: anyone can use their patents in an effort to advance their technology. This kind of collaboration is key to continuing innovation and effectively avoiding litigation.

Step 4: Expedite the patent process to spur innovation

Finally, Silicon Valley should band together to ask the PTO for expedited patents in the autonomous vehicles space, as a faster process would spur innovation and let others know when patents are filed. Right now, there’s some uncertainty about an accelerated process, and whether or not it could encourage companies to file more patents—which could lead to an eventual swell in patent lawsuits that will clog court systems and bring innovation to a halt, like the trend we’ve seen in smartphone development.

Remedies for infringement of a patent could get tricky. Automakers, suppliers and technology companies are entering into collaborative partnerships at a level previously unforeseen. Some consequences of this include tricky patent ownership, and disputes involving misappropriation, trade secrets and patent infringement. There are already high-profile cases like this beginning to play out that have already had impactful results when considering how to protect your intellectual property.

It’s clear that the patent considerations in the autonomous vehicles space are unique. Thanks in part to the multiple parties involved in the development of this technology, companies will be forced to start seeking out nontraditional ways to protect intellectual property or begin to utilize unique remedies for possible infringement. To get autonomous vehicles on the road soon, companies must decide what the best course of action is for them to protect their technology while also allowing innovation to flourish. For some, it may be keeping their information a secret and relying on their talent to remain loyal and bring new ideas to the development of autonomous vehicles. For others—and perhaps most—expanding their portfolios and reaching out to partner companies that can help innovate the autonomous technology and take it to new heights could yield higher returns and happier customers, and promote unity in regulations and throughout the industry.

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Author Information

Bijal Vakil is the Executive Partner of the Silicon Valley office, a member of the Global Technology Industry group and the founder of the Taiwan Country Practice at global law firm White & Case.