Patent litigation in autotech markets: new technologies, new plaintiffs?
- New competitors
- New technologies
- More patents
- More disputes
- New plaintiffs
These are just a few of the points that automobile manufacturers and their suppliers are currently confronted with. In the past, automobile manufacturers were rarely involved in costly and high-visible patent disputes, but instead settled them silently.
This has changed massively in recent times, particularly due to the increasing digitization of automobiles. There has been a significant increase in patent infringement proceedings against automobile manufacturers.
1) New players in the market
It is noticeable that not only what has been assumed for years has come true, namely that automobile manufacturers are becoming the target of NPEs. Moreover, disputes about „components“ concerning the telecommunications side of the automobile has increased in recent times. For example, at the end of 2017, chip manufacturer Broadcom spectacularly sued the automobile manufacturers VW and Audi (and later probably Porsche as well) out of a total of seven patents affecting chips for wireless communication (docket nos. i.a. Mannheim District Court, 2 O 166/17, 2 O 167/17, 7 O 174/17 and 7 O 192/17). In addition, these cases involved many of the „classical“ automotive suppliers as interveners.
Just shortly after these proceedings were settled in late November 2018, at the beginning of 2019 Broadcom initiated the next actions, now against Daimler (Mannheim District Court, 7 O 16/19) and BMW (Mannheim District Court, 7 O 10/19 and 7 O 14/19).
Moreover, in the same timeframe, a further lawsuit started against VW and Ford as well as the supplier Texas Instruments, this time initiated by the Dutch Innovative Foundry Technologies which tried to enforce a patent relating to infotainment modules originally applied for by the US chip manufacturer AMD (docket no. Dusseldorf Regional Court, 4a O 127/18).
As far as is publically known, more and more non-NPE companies are appearing on the scene, enforcing their patents either directly, or indirectly through jointly organised patent exploitation organisations, which apparently have found a new „target“ in the automotive sector to monetise their patents.
A relevant number of the patents, especially as far as communication technologies are concerned, are likely to be in the standard essential range. However, it is to be expected that the enormous interest in connected cars, battery technology, artificial intelligence („AI“), robotics, Internet of Things („IoT“) etc. will also lead to increasing disputes about non-standard essential patents („SEP“) in the future – as far as known, none of the patents enforced by Broadcom were SEP, for example.
2) Rising amount of patents relating to the autotech industry
In November 2018, the European Patent Office („EPO“) published the report „Patents and self-driving vehicles“ („SDV“). As a result, the number of SDV related patent applications increased by almost 330 % compared to 2011, while the total number of patent applications increased by only about 16 % in the same timeframe. In total, almost 18,000 patent applications from the last 10 years are classified as SDV related, of which almost 4,000 were still filed in 2017.
The top 25 applicants include – not surprisingly – the major suppliers to the automotive industry as well as the manufacturers Toyota, Volvo and Audi, but also almost all the big telecommunications and IT companies.
The fact that these companies do not file patent applications purely for their own ends is probably evident and has already been proven in the past. In fact, automobile manufacturers will have to make friends with the fact that a new squad of – in some cases extraordinarily – financially strong potential plaintiffs will appear here. What will increase the issue is that at least some of these companies are themselves entering the connected car / SDV market with their own products and are therefore unlikely to have „only“ monetization in mind, but in particular market clearance for their own products by way of injunction.
3) Discussions about new legal approaches
This may also be the reason why there has recently been an increasing demand for discussion as to whether the grant of an injunction is actually mandatory under German law if a patent infringement was found by the courts. In the area of SEPs, there is also an increasing discussion about the extent to which the entire product, in this case the relatively high-priced cars, may be the basis for determining a FRAND licence fee or whether the „smallest saleable unit approach“ might be an alternative, suitable way to determine a reasonable and fair licence fee in this industry.
4) Important steps to go in near future
Either way, in the increasingly fast-paced autotech sector there will be significantly more patent disputes in the future compared with the past. These will most likely involve a large number of new players. Assumingly, there will be more and more representatives of the telecommunications industry on the plaintiff’s side who have already gained a lot of experience in enforcing (and defending) against alleged patent infringements during the „Smartphone Wars“. In particular, this applies in particular for such companies who want to introduce their own products (e.g. SDVs) into the large-volume automotive market. Hence, it can be expected that there will be more disputes also between „new“ car manufacturers on the one side and „established“ car manufacturers on the other side, which directly concern market shares in the automotive market.
For all parties involved, this requires building up and strengthening the necessary know-how for dealing with involved (new) players and related issues, such as FRAND, licensing negotiations, management of a large number of parallel patent proceedings with possibly different opponents, development of active nullity/invalidity strategies (like it is known from the pharmaceutical industry), or the development of design-around solutions – and we are always happy to help in this connection.