Protecting Automotive and Mobility Innovation in 2018

By Salvador Bezos
March 16, 2018

As autonomous vehicle and mobility technology continues to make headlines, federal legislation is making its way through Congress with the goal of removing government hurdles for the development, testing, and rollout of innovations in this space. Although this legislation primarily implicates R&D activity, IP portfolio managers at automotive OEMs and suppliers should be aware of several proposals that may ultimately impact patent filing strategies and information compartmentalization best practices in order to reduce risks from disclosure requirements that are part of the current legislation.

By way of background, on September 6, 2017 the House passed H.R. 3388, titled the “Safely Ensuring Lives Future Deployment and Research in Vehicle Evolution” (SELF DRIVE) Act, by voice vote. This bi-partisan Act provides a federal framework for the development and manufacture of autonomous vehicles. Supporters believe this framework will ease the regulatory burden on automakers and suppliers to roll out life-saving autonomy and life-enriching mobility technology. Opponents have expressed a concern over federal preemption of safety standards without an adequate consumer protection framework in place.

A competing Senate version (S.1885) was reported by the Senate Committee on Commerce, Science, and Transportation on November 28, 2017, titled the “American Vision for Safer Transportation through Advancement of Revolutionary Technologies” (AV START) Act. The Senate bill’s key provisions generally line up with the House bill. And while the Senate version has stalled as the 115th Congress resolves a host of other contentious issues in Washington, it is a capital time for OEMs and suppliers in the autonomous drive and mobility spaces to consider the IP implications of this framework and their interactions with both their customers and competitors.

Both versions of the bill include language preempting states and localities from adopting their own laws on the design, construction, or performance of “highly automated vehicles” or related systems or components. The bills also provide language to permit manufacturers to test such vehicles and systems as with other kinds of vehicle testing. To the extent that this regime change ultimately has an impact on patent filings on this space, it would serve to turbocharge an already rapid acceleration of patent activity in that space. A 2016 study by Thomson Reuters found that between January 2010 and October 2015, more than 22,000 unique self-driving inventions (including inventions in the areas of autonomous driving, driver assistance, and telematics) were published from patent applications.

Interestingly, according to the numbers in the study, a seemingly disproportionate number of filings originate with OEMs rather than suppliers. It is against this backdrop that innovators in this space must consider the business implications of disclosure requirements in the SELF DRIVE Act, and how to safeguard their innovations in view of those requirements. Patent portfolio managers at OEMs and suppliers should closely follow these disclosure requirements as they evolve and regulations are promulgated over the coming years. Specifically, the SELF DRIVE Act tasks an advisory council with presenting recommendations to the Secretary of Transportation regarding, in part:

the development of a framework that allows manufacturers of highly automated vehicles to share with each other and the National Highway Traffic Safety Administration relevant, situational information related to any testing or deployment event on public streets resulting or that reasonably could have resulted in damage to the vehicle or any occupant thereof and validation of such vehicles in a manner that does not risk public disclosure of such information or disclosure of confidential business information

One can assume such information would likely include information about vehicle performance that would normally be fully relegated to the cloud, away from the eyes of competitors. Depending on how this framework is ultimately structured, elements of this technology that would normally be subject to trade secret protection could become accessible not only to competitors, but to customers such as the OEM clients of suppliers. Suppliers should consider that some of this information may ultimately need to flow to NHTSA not only directly, but possibly through their OEM clients. In other cases, supplier agreements require the involvement of a backup (competitor) supplier to minimize the risk supply chain disruption, and may exacerbate the risk of such confidential information needing to flow through a competitor to satisfy regulatory requirements. The Senate AV START bill includes similar language, so it is reasonable to expect that some version of this requirement will be present in the final legislation.

Additionally, given the expected ubiquity of self-driving vehicles in the not-too-distant future, with the potential of risky software vulnerabilities, both bills provide a requirement for manufacturers to develop a cybersecurity plan. This plan is required to have a process for “voluntary exchange of information pertaining to cybersecurity incidents, threats, and vulnerabilities, including the consideration of a coordinated cybersecurity vulnerability disclosure policy or other related practices for collaboration with third-party cybersecurity researchers.” Again, depending on the extent to which self-driving vehicle technology manufacturers and suppliers are required to disclose information that would normally be highly proprietary in order to comply with these requirements as written, alternative IP protections should be in place to avoid risk of copying by competitors or customers.

In short, it is incumbent upon portfolio managers and other practitioners in this space to develop a plan now that addresses:

  • any need to accelerate and expand patent application filing and acquisition in back-end and cloud-based applications supporting self-driving vehicle technology, which may not normally be a high priority given enforceability (detectability) concerns or the availability of trade secret protection;
  • developing information silos that allow the exchange of sufficient disclosure in satisfaction of these requirements without the need to divulge the most valuable IP to customers/OEMs or even competitor backup suppliers in certain agreements; and
  • the need to keep abreast of (and perhaps direct) advisory council policy and regulations promulgated to meet disclosure requirements, while ensuring the safeguarding of confidential IP.

Understanding that these legislative changes are in the pipeline, many OEMs and suppliers are likely to begin taking steps early to have compliant solutions in place and educate their engineering teams on such requirements. However, given the impact these activities may have on IP protections, portfolio managers should be aware of and involved in the process in order to ensure effective safeguards against inadvertent disclosure of key IP.

The Author

Salvador Bezos

Salvador Bezos is a Director in the Electronics Group of Sterne, Kessler, Goldstein & Fox, where he provides services in the preparation and prosecution of patent applications before the United States Patent & Trademark Office.

For more information, or to reach out to Salvador, please visit his Firm Profile Page.

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