Connected tech becomes hotbed for patent wars in automotive industry, Auto News, ET Auto

New Delhi: The German carmaker Daimler and the Finnish telecom equipment maker Nokia has been at loggerheads since March 2019 over the latter’s refusal to grant a patent license for technologies used in navigation systems, vehicle-to-vehicle communication and self-driving cars.

Nokia owns several patents protecting technologies on which current mobile phone standards are based, such as wifi, 3G, 4G, and the latest 5G which it licenses at the car level.

However, Daimler says component makers should also be able to apply for them which has dragged a number of suppliers into the fight. The luxury carmaker alongside German electronics firm Bury Technologies, car parts maker Continental, France’s Valeo and chipmaker Gemalto have complained to the Commission about the fees demanded by Nokia for patents that are essential to car communications.

Japanese electronics company Sharp has also sued Daimler several times in the German courts over connected car patents. Sharp accuses Daimler of infringing five standard essential patents.

Evolving landscape with new players in the market

Connectivity and Mobility are the fastest-growing patented technology for OEMs over the last year (more than 14{7e488363c11ee5ef50445c8c4fa770b6e6e4f99e57faea264a05ac52abb3ffe0} growth) and second fastest for suppliers.~

The convergence of advanced connected technologies in automobiles has introduced a host of new players into the value chain. Patent intelligence is critical at a time when there is an accelerating shift from conventional technologies to connectivity, autonomy, shared services and electrification. It is not only the OEMs and their suppliers who are investing billions in automotive R&D, but an entire network of technology companies and a vast swathe of start-ups.

Connectivity and Mobility are the fastest-growing patented technology for OEMs over the last year (more than 14{7e488363c11ee5ef50445c8c4fa770b6e6e4f99e57faea264a05ac52abb3ffe0} growth) and second fastest for suppliers.

Patent filings for Mobility and Connectivity

At the end of 2017, chip manufacturer Broadcom sued the automobile manufacturers VW and Audi over seven patents affecting chips for wireless communication.

Earlier, there were not many cases of patent litigation in the automotive market as most technologies were either developed by the automakers themselves or their closely bound suppliers. The suppliers avoided suing the automakers for patent infringement as they would be suing actual or potential customers.

As the innovations and new technologies are driving change in the automobile sector, there been a sharp increase in the rate of licensing rows in the sector — a trend that is only expected to rise even more dramatically in the near future.

Indian Patent Scenario

Coming to India, in September 2007, Bajaj Auto had accused TVS Motor of infringing its patent on DTS-i (Digital Twin Spark Plug ignition) when the later launched its motorcycle model Flame 125cc that had Controlled Combustion Variable Timing Intelligent (CC-VTi) technology.

Patent filings and grants in India are dominated by foreign applicants: they filed two-thirds of patent applications in 2018-19, and got four-fifths of grants.~

Bajaj Auto had claimed that TVS’ CCVTi technology was a copy of its DTS-i technology, which it uses in various products including the Pulsar series of bikes. However, both companies amicably settled the decade-old dispute on October 31st, 2019.

Patent filings and grants in India are dominated by foreign applicants: they filed two-thirds of patent applications in 2018-19, and got four-fifths of grants, according to the Office of Controller General of Patents, Designs and Trade Marks.

Among Indian companies, TVS Group, Tata Motors, and M&M have been among the top Indian applicants for patents whereas Globally though the top ten innovator list is dominated by Japanese auto majors with the likes of Honda and Toyota featuring prominently.

Meanwhile, the number of patents granted to some Indian automakers in India has increased significantly in the last 10 years.

The number of patents granted to some leading Indian manufacturers in India (January 1, 1990 – July 31, 2018)

Company	1990 – 2000	2001 – 2010	2011 – 2018
Tata Motors	–	10	57
M&M Limited	–	16	29
TVS Motor Company Limited	–	87	161
Maruti Suzuki Limited	–	–	10
Bajaj Auto Limited	–	13	14
Ashok Leyland	–	4	11
Sona Koyo Steering Systems Limited	–	4	2

Source: Compilation using Indian Patent Advanced Search System Statistics, Office of Controller General of Patents, Design & Trade Marks under the Indian Ministry of Commerce and Industry.

The majority of Indian patent applications filed by automobile companies fall under the categories of mechanical engineering, in areas like arrangement or mounting of propulsion units, transmissions systems, instrumentation for vehicles, conjoint control of drive units, arrangements in connection with cooling, air intake, gas exhaust, or fuel supply of propulsion units in vehicles.

However, globally the fastest-growing segment is connected vehicles, navigation, entertainment and safety all of which are leading towards the ultimate aim of a driverless vehicle. Indian companies too are investing in connected vehicles and but their footprint in those areas is much smaller.

Patent Protocols in Place

Daimler while lodging complaint with European Commission against Nokia had said in a statement,“We want clarification on how essential patents for telecommunications standards are to be licensed in the automotive industry.”

It further added, “Fair and non-discriminatory access to these standards for all users of the essential patents for telecommunications standards is a key prerequisite for the development of new products and services for connected driving.”

The important patents for mobile phone standards are subject to special rules. The patent holders must offer Standard Essential Patents (SEPs) to all market participants on fair, reasonable and non-discriminatory terms (FRAND). If they do not, injunctive relief actions can be considered an abuse of a dominant position.

However, Nokia’s lawyers argued that its offer complies with FRAND requirements, that it is not acting in an unlawful manner and that it, therefore, has a right to injunctive relief against Daimler.

Whereas in India, automotive patents do not usually face any peculiar issues.

Apart from the basic criteria of patentability viz. Novelty, Inventive Step and Industrial applicability which are governed by Section 2 of the Indian Patent Act, the relevant provision that impact the inventions under this category is Section 3(f) which states that “the mere arrangement or re-arrangement or duplication of known devices each functioning independently of one another in a known way” is not patentable.

But going ahead companies may need to rethink their IP strategies when contracting with components makers or parties providing new technologies, and adopt innovative legal strategies to minimise the impact of the changed landscape.