Vroom in the Automobile Industry Fueled by Intellectual Property Rights

 The transportation industry majorly contributes to employment numbers and the GDP of a nation. In the EU, it accounts for 5% of their GDP, and in the USA, it accounts for 7.7% of their GDP. Since the transportation industry plays a dominant role in a nation's growth and development, businesses must safeguard their interest in this industry. In this article, we shall discuss the various alternatives that businesses should consider while seeking protection under various forms of Intellectual Property Rights (IPRs).

 

Trademarks

In simple terms, a trademark refers to a word, symbol, letter, sign, or a combination of words or designs that enable the identification and differentiation of products or services of one from those of others. The rights under trademarks are afforded by domestic Trademark Laws, federal laws (where applicable), and common laws. The registration of such marks affords the proprietor of such rights to exclusively use the mark for the defined products or services in the particular place where the registration has been sought.

 

Particularly in the transportation sector, a trademark may be utilized to reserve rights over several products or services belonging to a single entity. The same shall deem useful to protect the parent brand and the subsidiaries. Consider the example of the famous automobile giant originating from Japan, namely, Toyota, where Toyota is the prime brand and the other subsidiaries like Lexus, Ranz, and Daihatsu are safeguarded by trademarks.

 

Copyright

Copyright is vested in original works of authorship fixed in a tangible medium of expression. Like, any IPR, Copyright Protection can be availed under domestic copyright legislation or common law. However, only registered copyright can avail of the remedies enlisted in the respective legislation.

 

In the transportation industry, several crucial elements may be safeguarded via copyright. The same includes website content and display, software source code, and instruction manuals.

 

Patents

A patent may be obtained by inventors of new and useful inventions that are non-obvious to the person skilled in the art. Such rights give the inventor the exclusive right to use the invention while excluding others from making, using, selling, offering to sell, or importing into the jurisdiction where such protection has been obtained over the patented subject matter for a limited time.

 

Patents are significant and pivotal in the transportation industry since they provide an edge in the market and an advantage for first-move makers. Developing a patent landscape in such an industry can also aid the R&D process to converge strategic efforts in an invention's development.

 

Industrial Designs

An industrial design is a property right that is available to someone who has invented any new, original, and ornamental design for a product. It safeguards the aesthetics of a product and not its utilitarian features. Furthermore, Industrial Design Registration provides the proprietor with the exclusive right to the three-dimensional (3D) shapes and configurations and two-dimensional (2D) features of a product or service. Therefore, it may be utilized to protect either the entire product or a segment of it.

 

In the transportation sector, it can be used to complement Patent Rights over an invention by safeguarding the look and feel of the automobile or a part of the automobile.

 

Trade Secrets

Trade secrets include the ideas, know-how, and other significant information valuable to the business, like the names of trusted contractors or suppliers or information on the internal operation of a business that sets apart one entity from others. Such information should not be publicly available or known to others.

 

In the transportation sector, such confidential information is safeguarded by the mode of entering into legally binding agreements of non-disclosure. Where two entities are involved in a collaborative effort, it may also be beneficial to cross-license or exchange trade secrets under mutual circumstances.

 

Uber's Resolve to Protect Intellectual Assets

Uber has been utilizing IPRs since 1996 as a strategic tool to maintain an edge in the market while also building a niche. It has safeguarded several visual manifestations of its brand in the form of logos and icons. In 2016, it changed its logo to depict flexibility and brand fluidity. It also utilized the protection under utility Patent Law to safeguard its business methods.

Initially, patents registered in favor of Uber dealt with the dynamic adjusting of prices for availing its services, diagnosing a location related to on-demand services via the use of portable computing devices, and providing information related to the position of goods in transit to a computing device.

 

Later on, Uber's patents were observed to be filed on aspects based on splitting the fare for an on-demand service, optimizing the selection of drivers for requests of transportation, providing notifications to devices based on real-time conditions related to an on-demand service, and assistance related to trip planning and implementation.

 

However, tracing the recent developments, Uber's patents are more focused on autonomous vehicles with features like advancing remote assistance to an autonomous vehicle, an autonomous vehicle operated with guide assistance of human-driven vehicles, an autonomous vehicle with independent auxiliary control units, an intelligent lens masking system, etc.

 

Conclusion

As seen from the discussion hereinabove, innovation in the transportation industry is ever-evolving and focuses on developing a more efficient, safe, and consumer-friendly approach. Therefore, industries, companies, and start-ups need to be aware of the significance of safeguarding their innovative products and processes while also building on their brand value and image by securing IPRs to boost the commercial value of their inputs in the automobile industry.

Patent Thickets: An Intertwining Web of Inventions

What are Patent Thickets?

In the words of Carl Shapiro, an American economist, a patent thicket is "a dense web of overlapping Intellectual Property Rights that a company must hack its way through to commercialize new technology." Some industries face the issue of patent thicketing more than others since few are regulated by fewer or single patents. For instance, the pharmaceutical industry usually has a product coming from a single patent that protects a molecule. However, in some other industries like the telecommunication industry, there are intertwined technologies protected by several patents. Consider a cell phone covered by at least 2,50,000 patents, including LCD, antennas, processors, batteries, etc. In such complex environments, it is necessary to gather access to all surrounding technologies to enable the protection of that individual cell phone.

Origin of the Defensive Strategy

Earlier in 1856, a group of entities jointly acquired a dominant position by patenting sewing machines, forming the first patent pool in the world that continued until 1877. Then, a company named Draper acquired an authoritative patent position for loom temples and consequently began a long-term practice of employing aggressive use of patent thickets. Since then, entities have formed multiple patent thickets in the last 150 years.

One of the earliest sectors to have adopted this strategy of 'mutual non-aggression' came to be witnessed in the semiconductor and computer industries leading to software companies obtaining several 'defensive' patents.

Even though the origins can be traced to 1856, it was in the 1970s that the term 'patent thicket' came to be used in common parlance when Xerox dominated the photocopier industry. These defensive thickets substantially decreased Research and Development (R&D) incentives for many upcoming inventors; however, they came as an advantage to those who became a part of it, reduced the transaction costs, and created a vertical monopoly.

 

Do Patent Thickets Prevent Innovation?

• Patent thickets significantly disrupt innovation since the smallest components are owned by individual proprietors or independent companies that make the process of obtaining patents an uphill battle.
• They increase the scope and number of patent litigations.
• They complicate the process of negotiating licensing agreements due to an increase in the number of parties to a single transaction.
• They weaken the inventive drive since they also encourage patent-ification of all small and, therefore, innumerable inventions and products.
• They increase the cost of a patent transaction since newer patent holders are encouraged to seek prior approvals of proprietors of all small components incorporated in the invention.
• They reduce the scalability of profits.
• They potentially decrease the incentive to innovate.
• The cost of the end product is ultimately heightened with patent thickets.

 

Thickets: A Burden on Common Man

Five of the top ten selling drugs in the United States of America include Humira, Enbrel, Keytruda, Revlimid, and Imbruvica. A total of 584 Patent Applications have been obtained after their initial Food and Drug Administration (FDA) approval. For example, on Humira itself, there are additional patents on the autoinjector device and a separate patent for the 'firing button' on the device. It is a typical case of patent thicketing.

The cost of these transactions is ultimately borne by the common man. Therefore, they heavily obstruct medical aid at reasonable prices. It also means they are a welcoming step for anti-competitive practices hindering the ability to negotiate.

 

Furthermore, it also promotes the evergreening of certain patents and creates a monopoly in the hands of a few. Again, let us take the example of Humira. The patent covering Humira had expired way back in 2016; however, the other 132 drugs thicketing the drug expire not before 2034. It implies the entry of biosimilars and generics as well. Yet, in the case of Mayor and City Council of Baltimore v. AbbVie Inc, 7^th U.S. Circuit Court of Appeals, No. 20-2402, it was held that AbbVie did not block competition by erecting a thicketed fence.

 

Conclusion: Resolving the Issue and Untangling the Web

The following solutions and approaches can be adopted to prevent patent thicketing:

1. Patent Pools: A patent pool requires "an agreement between two or more patent owners to pool their patents and license amongst themselves or to a third party on pre-determined licensing terms." This strategic outlook was also first adopted amongst the sewing machine entities resulting in the creation of a 'Sewing Machine Combination.' Since a patent pool may enable innovation in the early stages of a new invention being developed and harnessed, in the later times, it may lead to a serious threat of the creation of cartels that operate on supremacy and monopolization by regulating the market process, controlling demand and supply, etc. To prevent this, the USA has implemented a broad parameter, i.e., in the USA, the entire patent pool system has been brought under one parameter - blocking (essential) or complementary patents belong to a pool, while substitute or competing patents are to remain separate.

 

2. Proactive Role of Courts: Courts should take proactive measures and stringent steps to accord protection to the IPRs of individual inventors. Therefore, the specialized knowledge of experts should be used to understand and adjudicate patent-related matters.

 

3. Tougher Scrutiny to Grant Patents: The Patent System was introduced and implemented to inspire innovation and creativity, thereby enabling the growth of the economy while granting a monopoly for a limited time in return. However, the ordeal of granting patents way too easily for trivial innovations and unsubstantial products or processes has made the patent system discourage breakthrough innovations and ideas. The examiners and registrars should pay great attention to the state of the art and the knowledge of a person skilled in the art before deducing whether or not a patent shall be granted.

 

4. Cross Licensing: Cross licensing agreements that license present portfolios and future inventions reduce transaction costs. To quote a few examples, Intel entered into many broad cross-licenses with other companies such as IBM, agreements between Microsoft and JVC, which came into being in 2008, and the agreement between Hewlett-Packard and Xerox to amicably settle their outstanding patent disputes.