[Guest post] IP in the global automotive industry: IP seminar at Volvo cars - day 1
Thanks go to Alexander de Leeuw (Brinkhof) for these two guest posts:
This writer was fortunate enough to attend the yearly IP Seminar organized by Premier Cercle. Last year’s conference was organized at Airbus and focussed on IP in aerospace (see here). This year’s conference was held at Volvo Cars in Gothenburg, Sweden, and focused on the challenges and opportunities in the future of the automotive industry. Touching upon topics such as self-driving cars, the internet of things (IoT), connectivity and data produced by vehicles, it soon became clear that many of these concepts and the underlying technologies are no longer science-fiction and that the automotive industry is actively looking for ways to drive into a sustainable, safe, cooperative and competitive future.
Strategic kick-off
After a warm and energetic welcome by Raymond Millien (Chief IP Officer at Volvo Cars, although he urged participants to look beyond titles and experience and engage with each other on an equal footing), day 1 started with a kick-off session by Daniel McCurdy (CEO of RPX).
One of the main challenges in the automotive industry seems to be the convergence of adjacent technologies, such as telecommunications and computing, into the automotive world. New technologies continue to be adopted in vehicles and this brings with it a tremendous amount of patents. This is also where SEPs come into play, and also patents that may well be essential but that have not been declared SEP. This leads to a difficult licensing landscape, and according to Daniel McCurdy, industry should not expect a government body to resolve these kinds of disputes when industry itself cannot agree on a proper mechanism.
Electrification & mobility: from conception to production of shared, connected, autonomous and green vehicles
Next up was a presentation by Nicole Shanahan (CEO of ClearAccessIP), who focused on the issue of patent filtering. It is a huge problem for companies to sort through all the patents that could be relevant for the products they (intend to) produce. Navigating through the patent landscape lends itself to the application of machine-learning and artificial intelligence, instead of using traditional search tools, and Nicole pitched the interesting thought of applying Tinder-like algorithms to the IP market, basically acting like a double-blind dating service for IP.
Alternative new players
The convergence of new technologies into the automotive industry brings with it an introduction of many new market players. Traditionally, the automotive industry was a rather closed circle of companies, with brands disappearing rather than showing up. The industry is now in a new era, with many new brands embedded in technology. A panel moderated by Nicolas Schifano (AGC of Microsoft) shared their thoughts on how this affects IP, and how IP affects the industry.
The elephant in the room was rather quickly addressed in this panel (and recurred throughout the entire seminar): how can we collaborate and be competitive at the same time? In the automotive industry, IP is increasingly seen as the vehicle for collaboration. Collaboration allows companies to be fast and innovative, and IP allows companies to protect those aspects of their products they do not want to see used by their competition. Some technologies – such as infotainment systems or navigation systems – can be best developed by devoted companies, which requires collaboration to provide customers with the best user-experience. If you are not the big player in a certain area, you better team up.
An immediate question is the extent to which sharing and collaboration is required, and how brands can be protected in collaborations. How does a brand maintain its unique character? Could a brand be collaborative? Perhaps two brands working together create new value. An interesting question from the audience prompted the comment that it is also important to distinguish between brand building towards consumers and towards employees, in which the level of IP protection can also play a role. The panel ended with the reassuring words that “relationships are not about owning, they are about building trust, and the automotive industry is for the first time building a relationship with the customer. […] What you should do is offer the best services by teaming up.”
New entrants and technological ventures
Continuing on the previous topic, a panel moderated by Louis-Pierre Gravelle (partner at Robic LLP) delved deeper into the more technical aspects of this changing industry.
An important aspect of the increased incorporation of (digital) technology in cars is the creation of data. Cars are moving sensors that generate data. But what should companies do with all this data? What is the value of data? And who actually owns the data? These questions were addressed numerous times throughout the Seminar and are relevant because sometimes most of the value comes from the dataset instead of traditional IP.
This panel suggested that the data itself is not anyone’s property, it is just out there for anyone to find and you have to collect the data in order to be able to use it. Ownership of data was seen as a contractual issue. It was further suggested that the provision of top quality products might rely on data sharing instead of privatizing ownership. Optimizing systems – such as safety systems – requires data. Accordingly, participants were invited to think about using IP/ownership as a strategy not only to protect, but also to create value for your partners by being open about data without giving away your innovations. An option that was mentioned is co-ownership of IP.
Additionally, start-ups were advised to pick expert advisors early on and to make sure that the people you are engaging with not only understand IP, but also understand where your business is heading. A critical step in the innovation process is scanning the market before developing a product to make sure you are not in a head-to-head conflict with another party. Another important step is to familiarize your people with IP, empowering them to use it to the company’s advantage (considering that IP is still very important for funding).
Risks and opportunities for IP in a dramatic changing automotive landscape
After a lively networking lunch the participants were presented with a different type of autonomy. Moderator Lionel M. Lavenue (partner at Finnegan) explained that he flew his own plane all the way from the United States to Sweden! This IPkat was surely impressed.
This panel session focused on litigation trends and risk assessment. Most automotive-related litigation seems to take place in the US, followed by Germany and the UK. China is also becoming an increasingly popular venue for IP litigation. The majority of patent suits filed by foreign companies with the IP Court of Beijing were decided in favour of the foreign companies. The amount of damages awarded in infringement cases also significantly increased, sometimes going beyond statutory damages. Furthermore, this year Chinese patent law will be amended for the fourth time. Among some of the changes as a result of the fourth amendment are:
- maximum statutory damages increases from 1 million to 5 million RMB;
- punitive damages against wilful infringement is possible;
- shifting the burden of proof on damages to alleged infringer; and
- the role of patent administrative departments is strengthened.
According to Xuting Huang (patent attorney at ZF Group) the Chinese government is determined to show to the world that China is not in any way underestimating the importance of IP protection. The proposed legislation and recent case law shows the willingness to create fair competition. A controversial aspect of the proposed changes is that ISPs can be held jointly liable together with the infringer if they have knowledge of the infringement, such as from take-down notices. If they fail to respond timely and adequately, they can be held jointly liable.
Trade secrets were also mentioned as an important option of protection, especially considering the Defend Trade Secrets Act and more recent European Trade Secrets Directive. More litigation on trade secrets is expected as employees are switching companies relatively often and take knowledge with them. According to some statistics, the amount of trade secrets in the automotive industry (compared to patents) has doubled. Then again, data also shows that patents are still increasing. Xuting Huang indicated that there will probably be similar trade secret legislation in China in the near future.
Another aspect that needs to be addressed is the protection of consumers. Who is taking care of consumer protection? Is it the vehicle manufacturer? The supplier? The insurance company? What can be expected of the average consumer? And how should we deal with cybercrime? Cars are moving away from just being a driving vehicle. If the automotive industry takes away the attention of the driver, it has to think of how to make driving safe. Cyber security seems to be one of the topic where all parties agree that they would benefit from cooperation.
Internet of Things in the driver’s seat: captors, sensors, connectivity, to enable autonomous driving
In this session, moderator Andrew Hammond took (CEO of Valea AB) us back in time to the first car he purchased: a Hillman Imp (for those who don’t know it, it is worth a Google search). This car did not include a single piece of electronics. Even the windscreen fluid had to be pumped to the window manually. In short, cars still have four wheels, but the rest has changed. There are sensors gathering, processing and sending data, and this requirement for continuous connectivity brings with it many challenges.
On the issue of data ownership, one of the panel members commented that contract law is not a simple tool for protection. Often there are many parties involved who are all interested in and want a share of the data. Moreover, many times data can be labeled personal data, requiring compliance with privacy laws. Chris Storm (Legal Director Emerging Technologies, Uber) highlighted that nobody in the automotive industry feels comfortable about personal data (e.g. information about license plates, facial recognition) and that this clearly complicates the whole ecosystem. A data sharing platform was suggested as a possible venue to explore in order to facilitate innovation.
Another hot topic is how to determine a fair licensing price. Should this be determined based on the technical value contributed by the licensed technology? Or should we rather base it on end use? A related problem is that some products will never be licensed, because it is simply not possible as a licensor to analyse all uses of your protected technology. One of the suggestions in this regard is to ensure your company’s IP portfolio does not get too big and let the portfolio serve the goal of releasing products on the market, rather than using IP with monetization (apart from releasing your own products) as an end goal.
IP management: a roaring landscape
The second to last session of the day ended with a sneak peek of how companies such as Zenuity, Faurecia and Group PSA deal with IP management. As mentioned above, data was one of the hot topics. Jenny Widahl (chief intellectual property officer at Zenuity) enlightened us with some data about data. Up until recently, the average autonomous vehicle collected about 8 terabyte of data per day. By now, vehicles collect up to 100 terabyte of data per day. Processing and storing these data will be an increasingly significant problem. Hence, a lot of effort is going towards getting rid of data and saving the data that is truly needed.
Safety was also addressed, noting that the real difference between traditional vehicles and autonomous vehicles is safety. One of the problems is how to prove that a vehicle is safe. In order for a vehicle to be as safe as an airplane, a high standard must be met. One of the penal members suggested that with a fleet of 100 cars, you probably should have started testing 300.000+ years ago. This is unrealistic, of course, and industry should find other ways of proving safety.
OEMs and suppliers: where is IP propelled in the value chain?
In this final session moderated by Pauline Debré (partner at Linklaters) trends in terms of patent filings and general IP protection was discussed. Perhaps not surprisingly, the trend to file patents is still strong. Defining the value of a start-up company, for example, is for a large part based on IP. Trade secrets are also a useful tool, but as Scott Witonsky (VP IP & licensing at Witricity) rightfully mentioned, customers don’t want to be presented with a black box. They want to know what is inside the black box. It is therefore about balancing your IP portfolio with patents, copyrights and trade secrets. So how do you choose between patents and trade secrets? According to Wolfgang Stalder (European patent attorney at Denso) the choice is not that difficult: things you cannot reverse-engineer you can keep secret.
Further, the risk of a patent war seems to be luring at the surface. Will the automotive industry be the new battlefield for SEP litigation? And how do you determine FRAND licensing terms? Technology related to connectivity is only part of the commodity of a car. On the other hand, some technologies such as e-call are mandatory for new cars. It is difficult to determine the market behind connectivity and to give it a price tag. Recent German SEP case law and the risk of injunctions (a problem amplified by SEP litigation) were not considered helpful by many participants of the Seminar.
Some figures on the value of connectivity and royalty rates were kindly provided by Bowman Heiden (co-director of the Center for Intellectual Property and director of the Sahlgrenska School of Innovation and Entrepreneurship):
Concluding remarks
A big focus of the changing market is the focus on lifestyle. New developments are framed in the need for saving the planet and making the world a better place and let’s be honest, who would not like to contribute to that. This requires connectivity and sustainability, which is going to play an ever-increasing role in the future of the automotive industry. The key question is who will capture the value of these developments and how to prevent disproportionate costs due to IP litigation and licensing difficulties.
For those interested – and still reading this report – a report on day 2 of the IP Seminar will soon follow!
This writer was fortunate enough to attend the yearly IP Seminar organized by Premier Cercle. Last year’s conference was organized at Airbus and focussed on IP in aerospace (see here). This year’s conference was held at Volvo Cars in Gothenburg, Sweden, and focused on the challenges and opportunities in the future of the automotive industry. Touching upon topics such as self-driving cars, the internet of things (IoT), connectivity and data produced by vehicles, it soon became clear that many of these concepts and the underlying technologies are no longer science-fiction and that the automotive industry is actively looking for ways to drive into a sustainable, safe, cooperative and competitive future.Strategic kick-off
After a warm and energetic welcome by Raymond Millien (Chief IP Officer at Volvo Cars, although he urged participants to look beyond titles and experience and engage with each other on an equal footing), day 1 started with a kick-off session by Daniel McCurdy (CEO of RPX).
One of the main challenges in the automotive industry seems to be the convergence of adjacent technologies, such as telecommunications and computing, into the automotive world. New technologies continue to be adopted in vehicles and this brings with it a tremendous amount of patents. This is also where SEPs come into play, and also patents that may well be essential but that have not been declared SEP. This leads to a difficult licensing landscape, and according to Daniel McCurdy, industry should not expect a government body to resolve these kinds of disputes when industry itself cannot agree on a proper mechanism.
Electrification & mobility: from conception to production of shared, connected, autonomous and green vehicles
Next up was a presentation by Nicole Shanahan (CEO of ClearAccessIP), who focused on the issue of patent filtering. It is a huge problem for companies to sort through all the patents that could be relevant for the products they (intend to) produce. Navigating through the patent landscape lends itself to the application of machine-learning and artificial intelligence, instead of using traditional search tools, and Nicole pitched the interesting thought of applying Tinder-like algorithms to the IP market, basically acting like a double-blind dating service for IP.
Alternative new players
The convergence of new technologies into the automotive industry brings with it an introduction of many new market players. Traditionally, the automotive industry was a rather closed circle of companies, with brands disappearing rather than showing up. The industry is now in a new era, with many new brands embedded in technology. A panel moderated by Nicolas Schifano (AGC of Microsoft) shared their thoughts on how this affects IP, and how IP affects the industry.
The elephant in the room was rather quickly addressed in this panel (and recurred throughout the entire seminar): how can we collaborate and be competitive at the same time? In the automotive industry, IP is increasingly seen as the vehicle for collaboration. Collaboration allows companies to be fast and innovative, and IP allows companies to protect those aspects of their products they do not want to see used by their competition. Some technologies – such as infotainment systems or navigation systems – can be best developed by devoted companies, which requires collaboration to provide customers with the best user-experience. If you are not the big player in a certain area, you better team up.
An immediate question is the extent to which sharing and collaboration is required, and how brands can be protected in collaborations. How does a brand maintain its unique character? Could a brand be collaborative? Perhaps two brands working together create new value. An interesting question from the audience prompted the comment that it is also important to distinguish between brand building towards consumers and towards employees, in which the level of IP protection can also play a role. The panel ended with the reassuring words that “relationships are not about owning, they are about building trust, and the automotive industry is for the first time building a relationship with the customer. […] What you should do is offer the best services by teaming up.”
New entrants and technological ventures
Continuing on the previous topic, a panel moderated by Louis-Pierre Gravelle (partner at Robic LLP) delved deeper into the more technical aspects of this changing industry.
An important aspect of the increased incorporation of (digital) technology in cars is the creation of data. Cars are moving sensors that generate data. But what should companies do with all this data? What is the value of data? And who actually owns the data? These questions were addressed numerous times throughout the Seminar and are relevant because sometimes most of the value comes from the dataset instead of traditional IP.
This panel suggested that the data itself is not anyone’s property, it is just out there for anyone to find and you have to collect the data in order to be able to use it. Ownership of data was seen as a contractual issue. It was further suggested that the provision of top quality products might rely on data sharing instead of privatizing ownership. Optimizing systems – such as safety systems – requires data. Accordingly, participants were invited to think about using IP/ownership as a strategy not only to protect, but also to create value for your partners by being open about data without giving away your innovations. An option that was mentioned is co-ownership of IP.
Additionally, start-ups were advised to pick expert advisors early on and to make sure that the people you are engaging with not only understand IP, but also understand where your business is heading. A critical step in the innovation process is scanning the market before developing a product to make sure you are not in a head-to-head conflict with another party. Another important step is to familiarize your people with IP, empowering them to use it to the company’s advantage (considering that IP is still very important for funding).
Risks and opportunities for IP in a dramatic changing automotive landscape
After a lively networking lunch the participants were presented with a different type of autonomy. Moderator Lionel M. Lavenue (partner at Finnegan) explained that he flew his own plane all the way from the United States to Sweden! This IPkat was surely impressed.
This panel session focused on litigation trends and risk assessment. Most automotive-related litigation seems to take place in the US, followed by Germany and the UK. China is also becoming an increasingly popular venue for IP litigation. The majority of patent suits filed by foreign companies with the IP Court of Beijing were decided in favour of the foreign companies. The amount of damages awarded in infringement cases also significantly increased, sometimes going beyond statutory damages. Furthermore, this year Chinese patent law will be amended for the fourth time. Among some of the changes as a result of the fourth amendment are:
- maximum statutory damages increases from 1 million to 5 million RMB;
- punitive damages against wilful infringement is possible;
- shifting the burden of proof on damages to alleged infringer; and
- the role of patent administrative departments is strengthened.
According to Xuting Huang (patent attorney at ZF Group) the Chinese government is determined to show to the world that China is not in any way underestimating the importance of IP protection. The proposed legislation and recent case law shows the willingness to create fair competition. A controversial aspect of the proposed changes is that ISPs can be held jointly liable together with the infringer if they have knowledge of the infringement, such as from take-down notices. If they fail to respond timely and adequately, they can be held jointly liable.
Trade secrets were also mentioned as an important option of protection, especially considering the Defend Trade Secrets Act and more recent European Trade Secrets Directive. More litigation on trade secrets is expected as employees are switching companies relatively often and take knowledge with them. According to some statistics, the amount of trade secrets in the automotive industry (compared to patents) has doubled. Then again, data also shows that patents are still increasing. Xuting Huang indicated that there will probably be similar trade secret legislation in China in the near future.
Another aspect that needs to be addressed is the protection of consumers. Who is taking care of consumer protection? Is it the vehicle manufacturer? The supplier? The insurance company? What can be expected of the average consumer? And how should we deal with cybercrime? Cars are moving away from just being a driving vehicle. If the automotive industry takes away the attention of the driver, it has to think of how to make driving safe. Cyber security seems to be one of the topic where all parties agree that they would benefit from cooperation.
Internet of Things in the driver’s seat: captors, sensors, connectivity, to enable autonomous driving
In this session, moderator Andrew Hammond took (CEO of Valea AB) us back in time to the first car he purchased: a Hillman Imp (for those who don’t know it, it is worth a Google search). This car did not include a single piece of electronics. Even the windscreen fluid had to be pumped to the window manually. In short, cars still have four wheels, but the rest has changed. There are sensors gathering, processing and sending data, and this requirement for continuous connectivity brings with it many challenges.
On the issue of data ownership, one of the panel members commented that contract law is not a simple tool for protection. Often there are many parties involved who are all interested in and want a share of the data. Moreover, many times data can be labeled personal data, requiring compliance with privacy laws. Chris Storm (Legal Director Emerging Technologies, Uber) highlighted that nobody in the automotive industry feels comfortable about personal data (e.g. information about license plates, facial recognition) and that this clearly complicates the whole ecosystem. A data sharing platform was suggested as a possible venue to explore in order to facilitate innovation.
Another hot topic is how to determine a fair licensing price. Should this be determined based on the technical value contributed by the licensed technology? Or should we rather base it on end use? A related problem is that some products will never be licensed, because it is simply not possible as a licensor to analyse all uses of your protected technology. One of the suggestions in this regard is to ensure your company’s IP portfolio does not get too big and let the portfolio serve the goal of releasing products on the market, rather than using IP with monetization (apart from releasing your own products) as an end goal.
IP management: a roaring landscape
The second to last session of the day ended with a sneak peek of how companies such as Zenuity, Faurecia and Group PSA deal with IP management. As mentioned above, data was one of the hot topics. Jenny Widahl (chief intellectual property officer at Zenuity) enlightened us with some data about data. Up until recently, the average autonomous vehicle collected about 8 terabyte of data per day. By now, vehicles collect up to 100 terabyte of data per day. Processing and storing these data will be an increasingly significant problem. Hence, a lot of effort is going towards getting rid of data and saving the data that is truly needed.
Safety was also addressed, noting that the real difference between traditional vehicles and autonomous vehicles is safety. One of the problems is how to prove that a vehicle is safe. In order for a vehicle to be as safe as an airplane, a high standard must be met. One of the penal members suggested that with a fleet of 100 cars, you probably should have started testing 300.000+ years ago. This is unrealistic, of course, and industry should find other ways of proving safety.
OEMs and suppliers: where is IP propelled in the value chain?
In this final session moderated by Pauline Debré (partner at Linklaters) trends in terms of patent filings and general IP protection was discussed. Perhaps not surprisingly, the trend to file patents is still strong. Defining the value of a start-up company, for example, is for a large part based on IP. Trade secrets are also a useful tool, but as Scott Witonsky (VP IP & licensing at Witricity) rightfully mentioned, customers don’t want to be presented with a black box. They want to know what is inside the black box. It is therefore about balancing your IP portfolio with patents, copyrights and trade secrets. So how do you choose between patents and trade secrets? According to Wolfgang Stalder (European patent attorney at Denso) the choice is not that difficult: things you cannot reverse-engineer you can keep secret.
Further, the risk of a patent war seems to be luring at the surface. Will the automotive industry be the new battlefield for SEP litigation? And how do you determine FRAND licensing terms? Technology related to connectivity is only part of the commodity of a car. On the other hand, some technologies such as e-call are mandatory for new cars. It is difficult to determine the market behind connectivity and to give it a price tag. Recent German SEP case law and the risk of injunctions (a problem amplified by SEP litigation) were not considered helpful by many participants of the Seminar.
Some figures on the value of connectivity and royalty rates were kindly provided by Bowman Heiden (co-director of the Center for Intellectual Property and director of the Sahlgrenska School of Innovation and Entrepreneurship):
Concluding remarks
A big focus of the changing market is the focus on lifestyle. New developments are framed in the need for saving the planet and making the world a better place and let’s be honest, who would not like to contribute to that. This requires connectivity and sustainability, which is going to play an ever-increasing role in the future of the automotive industry. The key question is who will capture the value of these developments and how to prevent disproportionate costs due to IP litigation and licensing difficulties.
For those interested – and still reading this report – a report on day 2 of the IP Seminar will soon follow!
![[Guest post] IP in the global automotive industry: IP seminar at Volvo cars - day 1](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhc91wf59T5fuGAkNRO9PNogE-fONs7luY7gQH4yCdbwhnPkkIk6LsNQ-NIp3hzBhr5to7SsYjakqjEEPrZ9YF_qatqlrSihmaPy8rO1l8c04IPmXA6yUoUas7a4Qm3qnzBuKITLi5thGU/s72-c/IP+seminar.jpg)