Over the next five years (2023-2027), Toyota faces a staggering $96.7 million in maintenance fees due to the U.S. Patent Trade Office (USPTO) if it chooses to maintain all its U.S. patents, or about $19 million per year. Renewing all U.S. patents over the next five years would cost GM and Ford roughly $12 million per year and Hyundai and Honda approximately $10 million annually. As U.S. patent holdings continue to grow, so do the fees for these top automotive brands. Compared to previous five-year renewal costs, Ford and Toyota would each see their U.S. patent maintenance fees more than double, and Hyundai’s would nearly triple. In the context of these figures, those faced by GM and Honda seem modest, with costs to maintain their current U.S. patent portfolios rising approximately 30% in the five years ahead compared to the last five.

In this analysis, we turn our focus to many of the world’s largest automotive original equipment manufacturers (OEMs), whose massive U.S. patent portfolios dwarf that of Tesla and represent millions of dollars of shareholder value for the brands that most effectively manage these IP investments. As we profile unique patent lapse trends and portfolio management decisions of these top OEMs, Tokyo, Japan-based Honda, the fifth largest car company in the world based on revenue, emerges as a leader in strategic patent lapsing. This comes as no surprise; Honda has received accolades over the last few years for its innovative approach to patent lapse analysis, deploying artificial intelligence (AI) to save nearly $3 million in renewal fees annually.

Honda dominates the “Big 5” U.S. patent portfolios

Volkswagen and Toyota have spent the last five years trading places as they vie to be the world’s largest automotive manufacturer based on vehicles sold, but when it comes to patent portfolio size or renewal costs, Volkswagen does not even make the top five list with its current portfolio containing approximately 6,400 U.S. patents. Based on UnitedLex’s analysis of patent renewal costs over the last 10 years (2012-2021), the Big 5 brands include Honda, Toyota, General Motors (GM), Ford, and Hyundai.

Honda’s historical embrace of strategic patent lapsing has earned it residual benefits as we look forward to the next five years. While costs for many are set to grow substantially, Honda has positioned its upcoming costs over the next five years to be only slightly higher than what it

spent over the last decade. The other Big 5 brands, however, now face staggering increases in looming costs. If Honda were to maintain its lapse rate going forward, it could expect to save $18.5 million over the next five years (2023-2027) or more than $3 million annually.

Is Hyundai asleep at the lapse wheel?

The tenth largest car company in the world based on revenue, Seoul, South Korea-based Hyundai appears to be the Big 5’s worst all-around performer when it comes to strategic patent lapsing. The company could do far more to increase the fiscal success of its U.S. patent portfolio and IP efforts to deliver tangible value to its shareholders.

With an average lapse rate of 14%, Hyundai performs below the industry average and has been lapsing at a flat to slightly decreased rate over the last decade, missing out on opportunities to save shareholders money.

In the last five years alone (2017-2021), with a patent lapse rate of just 14%, Hyundai spent $16 million in maintenance fees to maintain its U.S. patents. As the coming tsunami of patent maintenance fees approaches, however, Hyundai faces more than $54 million in total renewal costs due over the next five years, more than a 3x increase. If Hyundai maintains a constant patent lapse rate moving forward, this represents an approximately $3 million to $8.5 million increase in spending per year.

For this growing automotive brand, patent lapse and transaction strategies provide logical next steps to not only protect the company legally but also to protect shareholders’ investments. A brief investigation turned up no publicly available information from Hyundai about any efforts to license or otherwise generate revenue from its patent portfolio.

Will a mirage of protection justify a tsunami of costs?

The rising costs of old-fashioned patent portfolio management strategies are rapidly approaching, and holders of large U.S. automotive patent portfolios are unequally prepared. To date, only Honda has been publicly credited with leveraging AI to wrangle its U.S. patent portfolio, and the associated savings and shareholder value shone through in this analysis. Others need to follow suit to shed their least valuable patents and protect shareholder value.

While many OEMs point to robust patent portfolios as a valuable tool to ward off costly litigation, little evidence exists to support this argument. Litigation among OEMs is not commonplace, and this is well known in the industry.

Analyzing litigation data for Hyundai, which faces the largest increase in costs over the next five years, suggests only two cases of litigation have been brought against Hyundai by operating entities within the last five years, and both were related to design patents. Similarly, Honda appears to have only been involved in one litigation with an operating entity over the last five years, and Honda was on the offensive, asserting nine of its patents related to wheel design. Since maintaining a large patent portfolio does not protect an automotive manufacturer from non-operating entities, the defensive benefits of comprehensively maintaining patents appears to be little more than a fallacy.

To read the entire article and review the full analysis, visit, The Costly Impact of Non-Strategic Patents.