Standardising a revolution?

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The role of Standards Essential Patents in the automotive industry

The ACES revolution

The automotive industry is undergoing some of the most fundamental changes in its history since the introduction of mass production. This revolution is underpinned (and driven by) the ongoing maturation of the ACES (or CASE) technologies and business themes: Autonomous, Connected, Electric and Shared. These technologies, and their corresponding intellectual property rights, present new challenges and opportunities that the automotive industry needs to effectively address.

A lot of these new technologies are subject to standards, which in themselves are new. And although the sector is certainly no stranger to standards, the new technologies entering the fray are subjected to newer standards and therefore more likely to be subject to standard essential patents (SEPs).

SEPs and FRAND

Whilst a patent is intended to grant a negative monopoly, having a patent that covers an essential feature of a standard could grant a complete monopoly to its owner. Standards essential patents (SEPs) are in force patents which cover technologies that must be implemented in order to meet a specific standard. As a third party must meet the standard, but must also not infringe the patent, a solution to prevent complete monopolies was required. SEPs were considered to be the answer. Marking a patent as standard essential means that licences to it are compulsory. However, the licences must be FRAND – fair, reasonable and non-discriminatory.

SEPs are a powerful tool, and whilst they are positioned to create potentially a more collaborative environment, there are still areas in which contention can be found. There is much than can be learnt from the other industries in which they are prevalent, such as telecoms.

So with this in mind, how will this type of IP impact tomorrow’s automotive sector?

Autonomous

Currently there are many players working towards vehicles with varying levels of autonomy. The potential of this as yet untapped market is huge, whether through the provision of new features to vehicles, or the realisation of fully autonomous fleets. In either case, as more control falls under the jurisdiction of the vehicle, more thought needs to be put into how the vehicle ‘fails safe’. Such considerations fall primarily within the realms of operational safety or functional safety, such as defined in the ISO 26262 series of standards. Standards are currently few and in their infancy, but with the potential safety concerns and benefits it is reasonable to expect more to arise. Automatic Emergency Braking (AEB) already appears to be heading towards standardisation, so expect more technologies and features that benefit safety to follow suit.

Connected

A new generation of suppliers from the IT and telecommunications sectors are entering the automotive industry who are more likely to assert their SEP rights. A connected car requires the provision of communication devices and technologies, along with all the various protocols and standards associated with them. Modern cars are now expected to be connected to the internet, provide a Wi-Fi hotspot to passengers, and automatically update software just like a computer or smart phone. In order that the ‘Internet of Things’ can communicate to one another, the protocols used must follow standards.

Electric

Electrification may be rooted in the automotive industry, but the rate of development and push for innovation in this area is bringing a raft of different solutions and approaches. It is likely standardisation is being pushed for in many areas, both in safety cases and in order to try and remove consumer confusion. Take electric vehicle charging points, currently there are various alternatives configurations, and whilst standards exist they are often at odds. Such an area is ripe for a standardisation overhaul which would increase consumer confidence and take-up of electric vehicles. This is in sharp contrast to fuel pumps, which are standardised and therefore provide a much more intuitive end-user experience.

Shared

Shared vehicles incorporate the idea of mobility as a service. Private vehicle ownership generally does not make efficient use of the vehicle and so there are various opportunities to improve use in view of the sharing economy. Heavily reliant on the connected theme, and making most financial sense when associated with autonomous vehicles, the standards applied here are likely to crossover from those other areas.

Opportunities and Threats

It would seem that we are therefore going to see SEPs playing a larger role in the automotive industry, driven primarily by the ACES revolution. As with any other patent, the validity of a SEP can be attacked, and there are also arguments to be made as to whether a standard falls within the scope of a patent (or vice versa). Discussions as to whether terms are FRAND can also sometimes be fraught, with some high profile cases being recently decided in the courts. Awareness and consideration of SEPs, and patents and IP in general, is therefore required through all parts of the supply chain.

The OEM of course sells the end product to the consumer that will be making use of the technologies, but the technologies and associated components will most likely be provided by a supplier, which may be Tier 1, Tier 2 or further within the supply chain. Who is responsible for dealing with potential infringement and licensing actions is likely to rest with the supply agreements as much as it does with the scope of protection of the patent.

If you would like to explore this area further please get in touch with Alex Smith or contact your usual attorney.