When you unpack a connected vehicle, you will find an astonishing convergence of technologies. This technological convergence, taken in concert with the existing time-battled complexities of the automotive supply chains, has created a combustible concoction of intellectual property and licensing issues. These issues are foreign to the automotive ecosystem and its traditional mode of operation. But they are poised to unsettle the industry in 2020 and well beyond.

Intellectual property issues will dominate the autonomous and connected vehicle landscape, particularly those relating to standard essential patents (SEPs)—patents essential to practice a technology. Owners of wireless communication patents are seeking increasingly to expand their SEP licensing strategies—once previously confined to the telecommunications industry—into the automotive industry. This licensing activity has raised competition, contractual, and constitutional questions about SEPs.

SEPs have garnered intense scrutiny and conflicting positions from various arms of the US and international governmental communities. Recently, the US Patent and Trademark Office, the US Department of Justice, and the National Institute of Standards and Technology issued a joint policy statement opining on whether remedies available for the infringement of any SEP, whether subject to fair, reasonable, and nondiscriminatory terms (F/RAND) commitment or not, should diverge from traditional remedies available to patent owners.

Issues in question:

  • Whether SEP owners should be free to choose at which level of the automotive supply chain they offer licenses for SEPs (e.g., finished product makers or manufacturers of components), or whether they are obligated to licenses to any willing licensee regardless of the level of the supply chain in which the potential licensee is situated.
  • Whether SEP owners should be able to offer use-based licenses and charge different rates depending on the end use made of the SEP (even if technology covered by the SEP is the same) or whether the technology covered by the SEP fulfils exactly the same role in any standard-compliant product regardless of its end-use because the function of the technology covered by the SEP is defined by the standard.
  • Whether FRAND determinations of prospective royalty rates may be decided as a matter of law, or if those determinations are constitutionally mandated to be decided by a jury.
  • Whether anti-lawsuit injunctions are an appropriate form of relief for a court to issue pending FRAND rate determinations.

Auto and technology innovators alike are following this issue closely and should be both aware of the current landscape and on alert of potential implications in the coming year.