Understanding the IP Anatomy of the Automotive Nervous System

December 15, 2021

With more new vehicles incorporating advanced technology, the next generation of buyers may be updating their vehicles as often as their smartphones. This appetite for new features and software-defined demands has made the nervous system of automobiles—the muscular, operational components of a vehicle—increasingly complex. And with that evolution comes systemic challenges, including those related to changing standards, commodification of components, and diminishment of differentiation. In light of those challenges, companies and counsel within the automotive industry space are more closely monitoring the risks of patent assertion, data privacy and security issues, as well as those associated with the growing prevalence of open-source software in automotive systems —and developing the proper intellectual property (IP) strategies to address these risks.

  • Car infrastructure has changed to mirror the complexities in the world around us, with technologies such as centralized computers, V2V/V2X communication, Global Positioning Systems (GPS), cameras and video capabilities, light detection and ranging (LiDAR), hardware and software sensors, battery storage, and more. Everyone from suppliers to manufacturers plays a role in creating these infrastructures.
  • As a result of these new complexities stemming from an expanded set of players and the cost of such technologies, commodification of certain components is taking place, as is the conversion of designs. While traditional OEMs continue to produce batteries, displays, auto sub-systems, sensors, chips, and other components, no one party can afford to do the research and development in all these different areas and effectively manufacture them, leading to the commodification in some designs and components, particularly in chips. This has dramatically impacted the automotive market, with chips now being used across various products (e.g., in consumer electronics as well as cars) in a way that was almost unheard of previously in the automotive industry.
  • This commodification has led to cars looking more and more similar, with automobiles in general becoming more like consumer electronic devices, such as mobile phones. With many companies implementing the same features, players with large patent portfolios have the ability to assert patents against the industry and collect licensing revenue. As products become less differentiated and more of a commodity, there may be less customer interest in new autos and more price competition.
  • When it comes to securing the personal driver data collected by cars (e.g., location history, driving events, camera images from inside and outside the car, calendars, contacts, phone call log, infotainment preferences and use history, voice assistant logs), there have been many global initiatives, such as the Preserve Project, attempting to address the security and privacy of inter-vehicle and intra-vehicle data collected from automobiles. While helpful, the creation of international standards such as UNECE WP.29 from the World Forum for Harmonization of Vehicle Regulations and ISO/SAE 21434 from the International Organization for Standardization have also created compliance risks for companies. Additionally, increased analytics collection lends to increased liability associated with storage and ownership, especially in light of how many people have access to a car’s data points.
  • Open-source software can be complicated for adopters who don’t understand the open-source development model or who don’t properly confirm that an open-source license matches their intended use of the open-source software, including any issues related to using the software with proprietary code. Even if a company or user thinks they've complied with the provisions of the license, the license will sometimes have provisions, such as the obligation for a copyleft licensee to share any open-source code they’ve distributed with requesters. Companies not prepared to deal with those requests within the parameters of the license could be exposed to additional legal risks.

There are two type of players in the automotive market: pioneers, who are the first to market with new platforms and autonomous, connected hardware, software and interoperability features; and market followers, who may independently innovate on one or more of these aspects, while in some cases reverse engineering or copying other features. There are opportunities and risks associated with both paths as the technology-driven market continues to evolve, but both types of players should leverage the whole range of IP protection (utility and design patents, trade dress, trademark, copyright, and trade secrets) to protect their differentiation in their key markets.

If you are interested in The IP Anatomy of the Automotive Nervous System, as part of our Morgan Lewis Automotive Hour Webinar Series, we invite you to subscribe to Morgan Lewis publications to receive updates on trends, legal developments, and other relevant areas.