The automobile industry has in recent years and is continuing to experience tremendous change due to the fast pace of emerging technologies, disruptive market condition, entry of nonpracticing entities into the industry and operational overlap with interdisciplinary technologies like telecommunication, software and artificial intelligence. Amongst these challenges, the technological interjection is leading to requirement of vast and fast changes in patent protection and enforcement strategies while the IP licensing and collaborations will also require more attention than ever before.

While each of the above listed factors need elaborative discussion and consideration of their impact on the IP landscape, the current article intends to focus only on the analysis around interjection of interdisciplinary technologies in the automotive sector. To this end, the first and most interesting as well as important interjection is that of artificial intelligence, a technology that is entering and impacting every other technology sector, including medical & health care, robotics, etc. As far as the automotive sector is concerned, artificial intelligence has already percolated deep into the operations and functions therein and is expected to take over completely or at least largely in the coming future. As on date, the Indian market is already flooded with partially autonomous cars where drivers can defer control, to limited extent or in limited occasions, to the inbuilt computer processors while several other markets like Europe, Japan, US are conducting more and more field trials to launch their fully autonomous vehicles on road. While the most debatable issue around autonomous cars and vehicles operating under artificial intelligence remains to be “determination of liabilities”, issues around IP protection, licensing and enforcement also need much attention failing which a chaotic litigation landscape may emerge much like what the telecommunication industry experienced when 2G/3G/4G telecommunication technologies interjected with chip designing, mobile handset manufacturing, software and IT.

Amongst the various IP issues in the changing automotive landscape, shift of patenting jurisdiction may raise new concerns in future. while countries like Germany and USA were the major hubs for research & development in the automotive sector, the industry may witness an inevitable shift towards Korea and Japan owing to the rise of AI industry in these jurisdictions and the implementation of AI into the automotive industry. The cross-border implementation of technologies may also raise new concerns on foreign filing permissions outside the country where the invention first took place. From the specific context of foreign filing permissions, if a broader interpretation of word ‘vehicle’ is taken into consideration, drones and other surveillance mobile objects will fall under such broad bucket of vehicles. Needless to say, remote control of drones/surveillance objects

And providing them artificial intelligence may in turn raise critical questions of defense and security, thereby attracting stricter scrutiny or even rejection of the foreign filing permission requests. Under such circumstances, the only choice left with the automotive or AI stakeholders will be to either wait for the minimal time period prescribed under local laws for making applications outside the country or to set up local IP holding companies in whose name the patent applications can be made. The former option obviously puts the stakeholders in a risk of losing the first mover advantage which is one of the successful strategies to adopt in the AI industry or industries where AI finds implementation. Besides the foreign filing permission scrutiny, the increase of patenting activities in countries like Japan, Korea and China will affect the accessibility of patent documents in English language since there are hard to find patent databases which offer authentic English translation of patent documents coming from these countries. Needless to say, the machine translations have their own shortcomings and reliability issues. Nonavailability of English patent documents will then affect the patentability assessments at not just patent office level but also at the company level during the research & development stages.

The stakeholders in the automotive and AI industries also need to ponder on new strategies for IP protection in the new and emerged technical area where the automotive and AI technologies overlap. While the automobile manufacturers till now had focused on protecting IP rights around engines and fuel systems, the analysis and subsequently IP protection need to extend to autonomous or controlled working of engines. While AI stakeholders will continue to invent generic and evergreen software tools that may be implemented across industries, it will be worthwhile for the automobile manufacturers to conceive ideas for their industry as no one better than them would be able to understand the challenges of their own machines. This strategy works well with the ‘problem solution’ approach of accessibility of inventive step across jurisdiction, where if an invention is able to provide solution to an industry problem, it is deemed to have an inventive step. The pace, volume and quality of innovation may see a sharp increase if the stakeholders who are aware of the problems are able to propose solutions and the AI industry develops on demand basis. Similarly, for the AI industry, there is a huge debate amongst the IP practitioners around the patentability of the AI technologies owing to the fact that the AI inventions are software and algorithms. The recently proposed ‘two-hurdle’ approach for resolving the issues around patentability of AI inventions propose a ‘technical character’ in every AI invention, where the ‘technical character’ further has two dimensions of first the ‘technical implementation’ and second the ‘specific industry

Implementation’. Therefore, it will be helpful for AI stakeholders too to identify the overlapping areas in the technological intersections and have focused innovations in that area as against generic and broad innovations.

Lastly, the automotive stakeholders till date survived peacefully even in competitive markets without frequently litigating against each other. This may be due to more reliance on cross-licensing strategies and discrete markings of operational sectors, market areas and social class driven products. However, with the aforementioned technological overlaps, the litigation trend may drastically change and for the worst may be! Telecom, IT and software industries much like pharma sector have witnessed maximum amount of patent litigations than any other sections. As these technologies percolate in the automobile industry, the future may see more litigations with issues similar to the ones which arose in the telecommunication space. More specifically, when the cars will be “connected cars”, the telecom majors may be keen to explore licensing options with the automobile majors whose sophisticated and luxurious million dollar products, i.e. cars will be the new end products in the telecommunication supply chain. In the past few years, the telecom majors have carefully chosen the mobile phone manufacturers as their targets for litigation or for asserting their IP rights or as licensing targets, as doing so was most profitable for the telecom majors. Choosing chip manufacturers or interim vendors or software developers would not have resulted in the enormous licensing fee that the majors have been able to generate now when they enter licensing deals with the mobile manufacturers. The strategy here had been to base the royalty rates at final sale price of the mobile phones or electronic devices that implement the telecom technologies even though the technologies reside in only a small chip component of the final end user device. If the same strategy is applied in the automotive industry also, the telecom majors will require the automotive stakeholders to take licenses based on royalty rates on the final selling price of the manufactured vehicles. Needless to say royalty rates as less as 1% can add significant overhead to the automobile manufacturers. While there had been no cases till date involving telecom/AI major and automotive major on opposite sides, however, it is worrisome to apprehend such cases being launched at least before there is a clear and sensible jurisprudence in the telecommunication sector involving mobile/electronic device business where there had been several cases in the past and several currently pending before various courts around the world. There still remains several issues unresolved in the telecom sector and the last thing the automotive industry would want is seeing such itself tangling with the such unresolved but critical issues. The stakeholders from automotive industry must consider keeping tap on the jurisprudence in telecom sector and must also consider innovative licensing options or business models while in doing so the IP licensing landscape may inevitably see some changes.

While on the technology side the fast evolution of technologies in the automotive sector is quite encouraging, the changes in patent landscape in this sector may trigger some relevant issues that must be judiciously considered well in advance of the time when they will actually emerge so that the same can be handled in the most efficient and strategic way.