The Role of Standard-Essential Patents for the Auto Industry

The escalating integration of info and interaction technologies in motor vehicles is generating new difficulties for licensing patents in typical, and for negotiating royalty payments for conventional-necessary patents in individual.

Most market industry experts forecast dramatic variations in the automobile business because of shifting shopper choices, new enterprise models and emerging marketplaces. The sector also seems to be established to be greatly impacted by new sustainability and environmental coverage modifications, as perfectly as by approaching restrictions on safety issues. These forces are predicted to give increase to disruptive technological innovation developments, these types of as driverless motor vehicles, electrification and interconnectivity.

Forecast scientific studies posit that the intelligent automobile of the in close proximity to long run will be continuously exchanging facts with its atmosphere. Automobile-to-X or automobile-to-car or truck interaction systems will empower conversation between vehicles, roadsides and infrastructure, although mechanical factors will before long be embedded into computing techniques within just the web infrastructure. The car marketplace is just one of the very first sectors to count on Online of Matters (IoT) technologies, which connect products, devices, structures and other items with electronics, application or sensors. Interconnectivity throughout numerous car or truck components and models relies on the specification of technologies requirements these as 4G or 5G, Wi-Fi, movie compression (HEVC/VVC), Digital Video Broadcasting (DVB) and Around Subject Conversation (NFC) or the wireless charging Qi common to title a number of (figure 1).

Determine 1: Connectivity specifications implemented in automobiles

Even so, lots of of these expectations executed in cars are subject matter to an escalating amount of typical-essential patents (SEPs). The integration of hugely patented standardized technologies creates economic dangers for automobile companies as royalty premiums that can be regarded FRAND are nonetheless debated in several instances also yielding SEP litigation. While to start with businesses have commenced to established up licensing plans for e.g. 2G, 3G and 4G SEPs (e.g. AVANCI), quite a few businesses in the automotive supply chain still have no entry to SEPs. Additionally, lots of of the automotive marketplace corporations that adopt requirements matter to SEPs have tiny experience with negotiating a SEP license and restricted info about the SEP ownership scenario. Comprehension the overall SEP landscape is, even so, critical for the easy adoption of connectivity specifications, maintaining profitability, and shielding the potential to offer new items, components, devices, or full vehicles with ample access to third-social gathering patent legal rights.

Figure 2 demonstrates the variety of declared for 3G, 4G and 5G that mention a vehicular software with a sharp increase given that 2018 primarily driven by 5G declared patents that seem to significantly look at the software of 5G in cars.

Determine 2: Quantity of declared patents that mention a vehicular application as to declared requirements (IPlytics, 2021)

Normal environment in the vehicle sector is mainly connected with both environment de facto benchmarks inside of the manufacturers’ manufacturing lines or ratifying protection specifications set by laws. Even so, in the information and interaction engineering sector, regular environment goes outside of the specification of compatibility benchmarks and can be described as the joint improvement of innovative technologies. Companies meet in common-setting functioning groups and present their progressive know-how proposals for assortment and incorporation in remarkably elaborate standardised systems. Not only do improvement and use of specifications vary involving the automobile and interaction industries so way too do the patent licensing mechanisms. Patents in the automotive sector are typically licensed on vertical levels. A Tier 1 manufacturer would not commonly request licensing costs from an initial tools manufacturer (OEM) but would fairly include these expenses into its ingredient rates. This will allow suppliers to assure that their factors are free of charge of 3rd-party legal rights. When it will come to license negotiations, royalties are mostly dependent on a one element enhanced by an creation – licensing prices have consequently had only a marginal influence on vehicle selling prices so much. The licensing of patents in the conversation field, by distinction, focuses on the conclusion device and thus targets OEMs. For that reason, royalties are a great deal better by comparison, particularly for producers which do not have a patent portfolio to cross-license.

This prospect is previously sparking curiosity among SEP house owners with regard to asserting their SEPs against car suppliers, as businesses from the telecommunications field view to see what transpires future. When the European Courtroom of Justice (ECJ) and the U.S. Office of Justice (DOJ) have set clear regulations for SEP licensing and the use of injunctive relief, there are no concrete guidelines on how to determine fair, acceptable and non-discriminatory (FRAND) licensing terms for SEPs. The interpretation of existing circumstance legislation differs radically between jurisdictions ? meaning that while injunctive aid is out of the dilemma in some countries, it is fully possible in other people, these types of as Germany, wherever infringing suppliers are frequently obliged to offer ideal security payments even just before the initiation of courtroom proceedings. This has created legal uncertainty and unpredictable charges for quite a few car suppliers.

Related Specifications for Connected Autos

Long term systems will permit devices or automobiles to trade facts, immediately integrating the actual physical globe into laptop-primarily based techniques. Interconnectivity of these unique systems and communication across several equipment count on the popular specification of standards. So, standardisation also requirements to continue to keep up with the technological rate. Therefore, new working groups are staying fashioned to deal with the standardisation of the latest technological achievements for related vehicles. A person of the most active group is the 5G Automotive Association (5GAA) a global, cross-field organisation of corporations from both automotive and telecommunications industries. The aim of the 5GAA is to develop conclude-to-finish options for potential mobility and transportation products and services to steer clear of incompatibility. In other terms, the group specifies the implementation of connectivity expectations (e.g. 4G/5G) creating sure that the whole potential of the standardized systems is utilized for the automotive software. In fact, when searching at the quantity of contributions submitted and authorised at the distinct 5GAA working teams at 3GPP (determine 3) the most important contributors involve handset, chip or community maker this sort of as LG, Huawei, Samsung or Qualcomm, network provider this kind of as Orange, Vodaphone or AT&T exact as automotive providers these kinds of as Volkswagen, Standard Motors, Robert Bosch or Continental.

Determine 3: Variety of authorised 3GPP contributions at the 5GAA doing work teams (IPlytics, 2021)

Connectivity requirements for autos are on the other hand not only formulated at the 3GPP which is the team to produce expectations established by ETSI, but also across other criteria establishing corporations. Determine 4 reveals that supra national businesses this sort of as ETRI or CEN as effectively as national companies these as DIN, BSI or NEN but also private criteria corporations these as IEEE, SAE or ASTM are set connectivity expectations for the vehicular application.

Figure 4: Selection of typical specs printed that explain a connected automobile application as to expectations corporation (IPlytics, 2021)


Very similar to the cellular mobile phone business ? the place we noticed a transition from feature telephones to smartphones, and wherever new business products, platforms and sector participants transformed the way that income were dispersed among the providers ? we will most probably before long notice shifts and earnings redistributions within the auto sector. The existing trajectory details towards ever-increased connectivity, from now applied internet-based mostly infotainment methods to much more state-of-the-art driver support programs to entirely driverless systems. Connectivity in vehicles has the opportunity to basically modify the automotive value chain.

To cope with these challenges, car or truck suppliers will need to face the complicated licensing environment of the telecommunications sector and make certain that they not only have the suitable IP strategy in place but also a seat at the table when technology requirements are designed. This contains a much more in depth monitoring of patent filings, SEP declarations, as very well as patent pooling but also expectations producing routines further than the recognised natural environment of rivals and suppliers in the vehicle sector. Specifications which are created and established these days may perfectly turn into the basic technological innovation system for rising technologies and apps in the potential.

The licensing of SEPs seems established to grow to be a key issue for the whole auto sector. Senior administrators and administrators of car producers and auto suppliers need to bear in head some crucial things to consider:

  • Long run technologies that help connectivity for motor vehicles will increasingly count on patented technology benchmarks (e.g., 4G and 5G, Wi-Fi, NFC, RFID and Bluetooth, among some others).
  • The selection of SEPs is dramatically escalating and desires to be regarded as when utilizing connectivity technologies. It is anticipated that patent holders will actively monetize their SEPs or in some cases also implement their SEPs in this fast-shifting, superior-financial commitment atmosphere.
  • IP gurus must not only think about information retrieved from patent submitting details, but also have an understanding of much more closely the implementation of expectations as well as the choices in licensing programs and patent pools. Having said that, not all declared patents are important and not all essential patents are declared. Patent declaration knowledge demands refinement, filtering and SEP dedication.
  • IP specialists require to be informed that though the marketplace for 5G and other connectivity style systems is relatively new, it is now time to be pondering about what the business enterprise will need to have two, five and 10 a long time in the long run, and hand in hand with this, what the patent portfolio will need to have to help it.

An IPWatchdog mentioned webinar (October 12, 2021, 10:00 am EDT) will go over these difficulties and The Position of Normal Important Patents for the Auto Field in extra depth.


Tim Pohlmann

Tim Pohlmann

is the CEO and founder of IPlytics. He earned his doctoral degree with the optimum difference from the Berlin Institute of Technology, with a dissertation on patenting and coordination in standardisation. He then went on to get the job done as a write-up-doctoral researcher and guide for the Legislation and Economics of Patents Team at CERNA, MINES ParisTech.

In his work as an economist and specialist, Dr Pohlmann was confronted with the challenge that requirements databases these types of as people of the European Telecommunications Specifications Institute and the Institute of Electrical and Electronics Engineers have no real, meaningful relationship with complete world-wide patent databases. He realised that if we are to maintain tempo with the upcoming technology revolution, then as IP gurus, we require to rethink – even revolutionise – how we strategy both equally patent and criteria information, to give organization-completely ready know-how for actionable decision earning throughout our organisations.