It's a new dance in the auto industry as traditional players get used to changing rhythms and new partners
In his opening comments for the second panel of the day at IAM’s IP in the Auto Industry event which was held yesterday in Detroit, Autoharvest founder and CEO Jayson Pankin summed up the pace of change that the sector has experienced. “This industry has gone from a slow waltz to a fast tango,” he said before adding, “and when you do a fast tango you can trip.”
From the forces of convergence, to the rise of autonomous vehicles, to the auto giants’ zeal in growing their own portfolios and defending their turf, there are few sectors that have been as dynamic in IP terms. And that is one of the reasions why the conference room yesterday was packed to the rafters with close to 200 delegates drawn from the traditional auto manufacturers and their supply chain partners, new kids on the block from the high-tech sector and a whole host of third party advisers who see the potential in the industry.
The entrance of tech companies both as partners and also competitors in areas like autonomous driving has undoubtedly forced the auto incumbents to quicken their step; and as Microsoft’s Micky Minhas pointed out, this has involved not only a convergence of technologies, but also different cultures. He drew a parallel between the confluence of traditional wireless players and the giants of Silicon Valley in the mobile space in the late 2000s.
No one who reads this blog needs reminding how that turned out, but Microsoft’s recent deal making also shows how parts of the industry are becoming more collaborative. Earlier this year the windows giant announced a new patent agreement with Toyota which was the first for its new auto licensing programme. Toyota North America’s Frederick Mau insisted that the deal was about than just a licence; instead, it was “one more step in a collaboration with Microsoft to create better vehicles for our customers", he said.
That deal was also another example of the IP value creation pivot the software pioneer has made, with a move away from a royalty based approach to licensing. “It has only been in the last few yeas that I have been involved in true win-win deals for both sides,” Minhas stated, offering the 2016 deal with Xiaomi as a leading examples of the change in Microsoft's approach.
Delegates were left under no illusion that it’s all going to be about apple pie collaboration, though. As Pankin’s comment reflected, sometimes you can lose your footing. Ford’s Bill Coughlin revealed that he receives a message at least once a week from the owner of one standard essential patent that it claims the auto giant needs. He admitted that “the tough negotiations are still to come”, as the auto industry and parts of the tech and wireless sectors continue to work out what sort of return patent owners can expect from having their IP become integral to the vehicles coming out of Detroit and other manufacturing centres.
Coughlin raised the difficult choice that car companies face when deciding who to partner with, particularly when it comes to third party developers. As he pointed out, an auto giant doesn’t necessarily want to get together with “someone who wants to eat your lunch”, before adding: “It’s an exciting and scary time for the traditional auto company.”
Coughlin’s colleague Frank MacKenzie pointed to one possible cause of future disputes. “If you look at those in the market, not all are going to succeed and for those that don’t, they still own a patent portfolio and they’re going to want to monetise it,” he said. “To the extent that happens I think there will be litigation.” For all those involved in the patent market that's a tune which has inspired what have become very familiar dances over the last few years.