SEP licensing in the automotive sector: shifting gears too quickly?

Abstract

... The licensing of standard essential patents (SEPs) has, for a large part of the last three decades, occupied an integral position in the development of information and communications technology (ICT) standards. But while much of the focus has been on SEP licensing in the telecommunications sector, the emergence of the Internet of Things (IoT) and increasing use of connected technology by cars make the automotive sector the next major battleground for technology owners and implementers. The ‘smartphone wars’ might have left several major telecom companies financially drained but have certainly made these companies highly experienced at both asserting SEPs and defending against their assertion.1 Automobile manufacturers have, on the other hand, benefitted from the collaboration between suppliers and original equipment manufacturers (OEMs), without being restricted by concerns surrounding the licensing of proprietary technology.2 The introduction of autonomous and connected vehicles brings with it interoperability needs that will likely change the status quo. With features such as access to the internet, streaming of music and real-time traffic updates offering enhanced functionality, cars will require connectivity to not just the internet but also the OEM servers, nearby cars and other users of roads.3 In other words, cars will become part of the IoT, further necessitating the implementation of technologies previously unheard of, as far as the automotive industry is concerned.4 More specifically, a lack of acquaintance with the licensing of patents of the nature of SEPs might prove to be a stumbling block for car manufacturers. Add to it the complexities involving a long supply chain, multiple stakeholders and enormous financial stakes, which will challenge companies to address a wide range of crucial licensing questions5—the same questions that have attracted a significant amount of debate, as well as a series of patent infringement cases involving SEP holders and automobile manufacturers, in the USA and the European Union (EU).