This article originally ran in WardsAuto.
Autonomous vehicles are being developed at an astonishingly rapid pace. The transformative technological change is disrupting the automotive industry. Indeed, autonomous vehicles will change the entire model of transportation and the players that will drive the industry forward.
The race to develop autonomous vehicles includes many entrants, from traditional automotive companies to leading-edge technology companies and entirely new technology entrants who have little or no experience operating in the unique automotive-supply chain. Along with powerhouses like Google and Apple, other significant companies are participating. For example, Baidu, a China search-engine giant, announced committing a 100-person autonomous vehicle team in Silicon Valley.
Ford recently announced doubling its Silicon Valley workforce for R&D of self-driving vehicles. Ride-on-demand service Uber already is testing self-driving vehicles (currently with human backup) on U.S. streets in various cities.
Major chip companies are investing, too. Qualcomm very recently announced its purchase of NXP, referring in its announcement to “NXP’s leading industry sales channels and positions in automotive, security and IoT.”
Autonomous vehicles incorporate technologies not previously contemplated for conventional vehicles and such companies are playing in an arena where there are significant challenges to integrating traditional hardware (vehicles) and software. In reaction, governmental regulators are taking steps to address regulation of such vehicles.
In September 2016, the U.S. Department of Transportation issued a Federal Automated Vehicles Policy –not formal regulations – covering the safe deployment of highly automated vehicles, including autonomous vehicles. The report, spanning more than 100 pages, covers several areas including vehicle performance guidance, model state policy, current regulatory tools and model regulatory tools. The required level of compliance depends on the level of autonomy of the vehicle, i.e., an increased level of autonomy means more areas of compliance.
Base technology underlying an autonomous vehicle itself presents vast array of technologies. The DOT Report covers aspects of deploying highly automated vehicles, noting the need to address system safety, vehicle cybersecurity and human machine-interface issues.
A vast field of players and technologies exists just for the base autonomous vehicle operation. Add to that the technology associated with deploying autonomous vehicles, including those mentioned in the DOT policy guidance.
This creates a classic situation of deep and significant IP opportunities, as well as potential IP and product-liability risks.
The study also shows a patent thicket is forming, and certain traditional automotive OEMs and some technology companies are dominating the patent landscape at this point. To be sure, the field remains open for high-tech companies, whether hardware or software-focused, to develop and obtain protection for fundamental technology that will define autonomous driving.
At the same time, companies with great technology but not keeping their eye on IP are subjecting themselves to the risk of infringing on third-party IP and being excluded from the market. (Put aside the net positive that IP brings to a company’s valuation.) Waiting to address IP until after development and deployment will simply be too late. The normal automotive platform cycle brings the issue into great clarity. Companies cannot just make changes in existing, approved automotive platforms – they need to plan for the future.
The players developing autonomous-driving technology need to navigate the growing patent thicket. Employing clearance studies during the development process represents basic blocking and tackling. Just as importantly, companies should make intentional decisions about protecting their own IP, whether by patents or another form such as copyrights or trade secrets. They also should implement company procedures using best practices for achieving maximum protection.
Strong IP brings real benefits, including using a patent portfolio, at least for defensive purposes against competitors should they try to exclude the company from the marketplace, and increasing company value for present or future investors/buyers/collaborators and going on the offensive if another party invades or misappropriates the IP.
To be clear, autonomous vehicles present a whole new level of complication to IP and product-liability issues. The traditional automotive industry already presents a particularly complicated IP and supply-chain landscape due to the diverse horizontal and vertical chain of companies providing the many pieces to create an integrated whole. Add to it the technology to make a vehicle autonomous (and being used in a connected-car fashion), and the IP and product liability issues multiply.
First, the technology array of patents expands multifold in the case of autonomous vehicles. Patents relating to computer technology, telecommunications, robotics and displays represent just a few areas. This wide spectrum presents greater risks and rewards. Companies must consider this spectrum for defensive clearance purposes. At the same time, companies have broader ability to develop advanced technologies to differentiate themselves in the marketplace and gain patent protection to protect that differentiation.
One specific issue relates to who carries the responsibility for evaluating and defending against third-party IP. In addition, entry of these non-traditional players creates business and regulatory challenges where the automotive industry already faces much uncertainty surrounding liability issues automakers seek to shift to the supplier.
For regulatory issues, the role of governments will be critical, especially for proposing and regulating liability limiting and/or sharing mechanisms and bridging the mindset of the traditional automotive OEM and the technology-focused supplier.
Third, autonomous-vehicle technology entails areas beyond traditional automotive technology, especially cybersecurity and privacy. These issues are particularly acute and are emerging as potentially even greater than the traditional patent issues arising from technology development. Companies can consider utilizing best practices from other industries where such issues have existed for many years.
Autonomous vehicles represent an incredible opportunity for companies to invest in an area that will transform transportation. Staying ahead of, or at least keeping pace with, the curve on the IP side helps protect (and maybe even accelerate) that investment.
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