High Tech Cars Spark Fear of Automotive Patent Wars

We're surprised by this prospect? Cars have become rolling computers.

The electronics components of a state of the art auto comprise 40 percent of its value, versus the approximately 22 percent of such value they contribute to older, internal combustion engine models.

This is yet another example of how convergence is driving value in the global technological-driven economy. The rising price of auto ownership is driving down demand for drivers' license registrations in the US and other affluent regions. Auto-makers and their allies in the insurance, energy and add-on markets are trying to figure out how to stem the decline.

The lower potential cost of hybrid, electric or other innovative auto types could well command the market in a generation or less. So the battle over who reaps the greatest benefits from the associated technologies has significant financial implications. That said, with the US courts casting a baleful eye at entrepreneurial attempts to execute business strategy via the legal system, the automakers are likely to find litigation as frustrating as have the smartphone makers. At least in terms of establishing clear advantage. But what this may do, albeit unintentionally, is focus attention on advances that may actually deliver value to consumers, even as the manufacturers sacrifice margins in pursuit of elusive attempts at market dominance. JL

Henry Foy reports in the Financial Times:

An arms race between manufacturers to dominate the future market for green cars has sent patent activity to record highs and sparked worries of an intellectual property war similar to that which has engulfed the smartphone industry.

Traditional automotive giants desperate to stay on top of the pile, technology-heavy upstarts and industry outsiders are battling for supremacy over future engines, fuels, safety systems and in-car entertainment in the most research-intensive period the car business has seen since the birth of the combustion engine. Over the last five years, annual global patent grants for green engine technologies have doubled worldwide as carmakers battle to meet strict emissions and efficiency regulations, leading industry executives and legal experts to warn of an impending IP war. “You’re seeing a resurgence of innovation in the industry... It’s a very competitive time,” the head of patents and innovation at a top ten carmaker told the Financial Times. “We’re sitting in the movie theatre eating popcorn watching what’s going on in the smartphone industry and thinking ‘How do we avoid that?’”

The smartphone industry has been embroiled in a bitter battle over patents and intellectual property for at least five years, as companies such as Apple, HTC and Samsung trade injunctions to block rival products.

“As an industry the real fear is that cars become a rolling mobile phone, and that industry has faced considerable litigation,” said the person, who declined to be named due to the sensitivity of the topic.
In 2008, roughly 20 patents were filed in the US each quarter for hybrid or electric vehicle technologies, according to data from the Cleantech Group, which monitors green energy patents. Today, carmakers are filing 90 patents per quarter in that area.
“The signals very much suggest that the motor industry is set to become more litigious in the near future,” said Rebecca Lawrence, partner and IP expert at law firm Powell Gilbert LLP. “Historically, periods of rapid innovation...are usually accompanied by fierce battles over the right to use new technologies.”

Hybrid and electric cars are slowly creeping into the mainstream led by companies such as Toyota, Nissan and General Motors. But the new vanguard of innovation has opened the door to battery companies such as Panasonic or LG or entrepreneurs such as Tesla Motors to monetise alternative fuels and has spurred the traditional market leaders into action.