PATENTS IN THE AUTOMOBILE SECTOR: Need for smart patenting technologies for smart automobiles

Inventions in the field of automobiles have come a long way from the steam-powered automobiles to electric and driverless vehicles paving the way for the future. These days the decision to buy a car does not merely depend on the kind of engine it has, the mileage, the aesthetics, etc. but it also depends upon the technology that comes with the car. Whether the car has Bluetooth support, park assist, rear- view camera, a voice personal assistant, ABS, traction control systems, etc. Thus, accordingly the subject matter of patents in the automotive sector is moving away from the traditional field of mechanical engineering to computer software integrating the various cutting-edge features that come loaded with an automobile.

In India, patents in the automotive sector have been filed by both the Indian as well as foreign applicants. A compilation by an author of the leading Indian automobile manufacturers who have been granted patents has revealed that the number of patents being granted to them have increased and the top Indian patent applicants have been Tata Motors, M&M Limited, and TVS Motors.[1] However, substantial number of patents being filed by the Indian automobile manufacturers fall under the category of mechanical engineering in areas like arrangement or mounting of propulsion units, transmissions systems, instrumentation for vehicles, arrangements in connection with cooling, air intake, gas exhaust, or fuel supply of propulsion units in vehicles, etc.[2] That being said, it is pertinent to mention that the Indian automobile manufacturers are also undertaking research in the field of computer technology for automobiles in addition to improving upon the mechanics of the automobile. Globally the trend in patent filings in the automotive sector has been towards AI- integrated vehicles, vehicle control system and ancillary vehicle system.[3] In respect of patents for manufacturing more environment sustainable cars, the list is dominated by the traditional car manufacturers such as Audi, Daimler, General Motors etc. whereas in the realm of self-driving technology, the leading patent applicants have been the tech companies such as Google, Apple, Uber, etc.[4]

This inevitable integration of computer technology with automobiles has brought a change in the patenting strategy of the automobile manufactures. They will now also have to tackle the obstacle with respect to patentability of computer related inventions, which in India is guided by Section 3(k) of the Patents Act, the IPO’s CRI guidelines and the 2019 decision of the Delhi High Court in Ferid Allani v Union of India.

The convergence of computer technology and automobiles has also introduced a host of new players in the automotive sectors as can be seen from the patent filing trends. Earlier patent disputes in the automobile sector were sparse as the patentees were themselves the automobile manufactures or their suppliers. However, the proliferation of computer technology in the automobile sector has led to an increase in licensing rows which is only going to escalate in the future as automobiles become ‘smarter’. Further, adding to the hurdles of automobile manufacturers are Standard Essential Patents (SEPs) in the communication sector. Communication technologies such as Global Positioning System, Long- Term Evolution, 3G, 4G, 5G, Near Field Communication, etc. comprise several SEPs that are held by major communication companies such as Nokia, Ericsson, etc. For automobile manufacturers to be able to deploy these technologies in their vehicles, they will also have to negotiate for the licenses on FRAND terms with the holders of the SEPs. This aspect has been brought to the forefront due to the ongoing dispute between Daimler and Nokia. Nokia has filed as many as 10 infringement suits against Daimler alleging infringement of several of its SEPs due to Daimler’s refusal to obtain license for using Nokia’s technology. Nokia’s patents for 3G, 4G and 5G technologies form part of the Avanci patent pool with which other car makers such as BMW and Volkswagen have already concluded licenses to some degree or another, whereas such a licensing deal has not been reached with Daimler. Daimler’s major contention has been that it is not the car maker themselves that should be required to obtain the license. On the contrary, it should be the manufacturer of the connectivity modules who should obtain the license from Nokia. Nokia seeks to charge a royalty fee per car manufactured by Daimler; however, the royalty fee would be too high in that case. Whereas if the license is granted to the auto- parts manufacturer, it would considerably bring down the royalty fee. In one of the 10 infringement suits, the Mannheim Regional Court in Germany on August 18, 2020 handed a win to Nokia.[5] The Court held that Daimler use of Nokia’s SEP for connected car technology (European patent EP2981103B1) was unauthorized and therefore it had infringement upon Nokia’s patent.[6] The Court observed that Daimler had been unwilling to conclude the license on FRAND terms and accordingly ordered Daimler to now stop using Nokia’s technology in their cars and pay damages. The Court also posted the requirement of a security bond of a staggering 7 Billion Euros, should Nokia seek to stop Daimler from selling its vehicles in Germany. In another similar dispute, Sharp Corporation won a patent infringement suit against Daimler filed before the District court of Munich.[7] The Court in its decision dated September 10, 2020 held that Daimler had infringed Sharp’s patent for LTE standard compliant car products (European Patent EP2667676). The Court ordered Daimler to pay damages and should Sharp seek to prevent Daimler from selling its cars in Germany, it will be required to pay a bond of 5.5 Million Euros.

The advancement of the automotive industry towards a more connected experience has certainly brought about a paradigm shift from purely mechanical improvement in the automobiles towards software and telecommunication improvements. This is a turning point in the automotive industry and the automobile manufacturers must rethink their patenting strategies to keep up with the developments and increase their research and development in the technology segment as well.

[1] https://link.springer.com/chapter/10.1007/978-981-13-8102-7_19

[2] Id. 1 [3] https://www.inquartik.com/inf-automotive-patent-trends/ Trivia: Founder of Daimler, Mr. Karl Benz patented what is regarded as the world’s first production automobile in 1886 and even named it the Benz Patent-Motorwagen (or “patent motorcar”). That patent document is now part of UNESCO’s Memory of the World Programme, which also includes the Gutenberg Bible, the Magna Carta, and Johann Sebastian Bach’s Mass in B Mino. [Daimler official website: https://www.daimler.com/en/] [4] https://www.forbes.com/sites/oliverwyman/2017/05/17/google-racks-up-more-patents-than-most-automakers-on-connected-and-self-driving-cars/#6a06d40b41ef [5] Case number 2 O 34/19 [6] https://www.nokia.com/about-us/news/releases/2020/08/18/nokia-reaches-patent-milestone-as-german-court-rules-against-unauthorized-use-of-its-inventions/ [7] Case number 7 O 8818/19 The article was originally published on www.lexology.com on November 04, 2020 and can be accessed here.