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How auto companies make IP strategies that suit their needs

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At this year’s Autolex forum, counsel at Visteon, Uber, ZF and Nissan revealed how they choose between patents, trade secrets and open innovation

Gone are the days when automotive companies only considered patents in their intellectual property strategies.

With the advancement and use of black-box technologies such as artificial intelligence, trade secrets and open source collaboration have become much more important in the industry.

Speaking at the Managing IP Autolex conference on Thursday, September 3, in-house counsel at Visteon, ZF, Uber and Nissan explained that those extra considerations can be a challenge.

Dalpreet Saluja, chief IP counsel at Visteon in Detroit, said it is important to consider a few factors when working out whether to patent an innovation, keep it as a trade secret or put it out into the open source space for collaboration.

There are the matters of whether patenting makes sense for the type of innovation in question, for the business, and based on the industry.

“For example, if you’re talking about a company that provides embedded software, there may be multiple reasons why that company chooses to patent, but it may not make sense to patent because of detectability,” he said.

“Detectability is often the reason that a company might not file a patent application on a specific innovation, because you cannot usually enforce what you cannot see.”

He added that if IP strategy is also considered based on industry, there are some industries where patenting usually makes a lot of sense, such as consumer electronics, and others that might make less sense. 

“The automotive industry, for example, has never been very litigious – not a lot of operating companies sue each other.

“Patents are ultimately an enforcement mechanism, and it might not make sense to spend hundreds of millions of dollars on a portfolio that isn’t necessarily going to give the value it is intended to provide when you don’t enforce very much.”

He notes that when it comes to the issue of non-practising entity (NPE) litigation, there may be an argument to create a portfolio for defensive purposes – but that there are some holes to that argument.

“An NPE only needs to file one patent against you. You might have hundreds of patents, but if none of them are invalidating art, you really haven’t got the value that you wanted from your portfolio.”

Open innovation factors

Speakers suggested that open innovation and collaboration were becoming more important factors in their IP strategy analyses.

Chris Storm, IP legal director for Uber's emerging technology programmes in Pennsylvania, pointed out that these factors are often driven by business needs.

“I’m almost hesitant to say this in a room full of chief IP counsel, but we don’t control every aspect of our IP strategy,” he said.

“The business priorities define what we want to do, so if the company believes in an open innovation approach, for example, we need to optimise that.

“In terms of deciding what strategy we will take, we will look at whether the business wants to publish a lot of papers because they are recruiting students or people from other companies that believe in publication.”

He added that the IP department will stand behind that decision, and that this stance will ultimately influence decisions of whether or not to keep something as a trade secret.

Adding to Storm’s point, Colin Lamond, IP consultant at Nissan in the UK, said that collaboration is a key factor in open innovation that counsel must carefully consider.

“Open innovation involves collaborating with a lot of parties – smaller and perhaps more agile businesses and academics – and, as such, it becomes important to understand the needs of all the people involved.

“Chris mentioned publishing academic papers. If you’re involving academic researchers, they have their own requirements and timescales for conferences.  

“Smaller companies will also have their own needs when it comes to how they want to exploit technology out of joint collaboration projects. It is very important at the very beginning to understand the needs of their companies and also your own.”

Will Cosnowski, chief IP counsel at auto tech company ZF Group in Detroit, added that it is also important to think about the risks involved with open collaboration.

“You need to consider the barriers of confidentiality – is it complete or one sided? Will there be obligations to donate IP you invest in? If that is the case, is it worth making the investment? There could be other areas where you have to give a licence so your opportunities for injunctions are out.

“You’ve got to keep your eyes wide open and educate the business teams so they understand where the risks are and make a good business decision.”

Managing IP will be publishing more coverage from the Autolex forum in the next few days.

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