Is widespread litigation inevitable with the standardisation of autonomous vehicles?

With the autonomous vehicle market predicted to grow from $54.23 billion in 2019 to $556.67 billion by 2026, the development of new technology in this sector shows no signs of slowing down.

As car manufacturers race to develop more sophisticated models, there is an increasing utilisation of technology created and owned by communications and software companies, which raises significant concerns around the licensing of this technology and the likelihood of disputes.

The communications and automotive sectors have traditionally approached developing technology very differently. Standard setting organisations (SSOs) have been instrumental in developing communications standards, enabling companies to declare any patents which cover SEPs in exchange for agreeing to license any SEPs on FRAND terms. Despite this agreement to license on these terms, there have been numerous long-running disputes where technology implementers have been unable to agree licensing terms. By contrast, the automotive industry has not been restricted by interoperability and has often taken a more collaborative approach with original equipment manufacturing (OEMs) and suppliers working closely together through a reliance on agreements and licences.

To date it seems as though OEMs want to continue as usual, focusing on traditional manufacturing and supply chain models. The question is whether they will have this choice. With the increasing need for standardisation and interoperability alongside the development of autonomous vehicles, the choice may not lie with the OEMs. There are growing concerns that the automotive industry may start to see the kind of large-scale litigation which has dogged the communications industry.

Litigation in Europe

This year German courts have seen a spate of disputes between communications companies and OEMs, including Nokia against Daimler and Broadcom against Daimler and BMW, suggesting that autonomous vehicle litigation is fast becoming a reality in Germany.

 In March, German car manufacturer Daimler filed a complaint with the European Commission (EC) against Nokia, requesting “clarification on how essential patents for telecommunications standards are to be licensed in the automotive industry” and emphasising the need for access to licences on FRAND terms for the development of new technology in the autonomous vehicle sector.

This is not the first time that Daimler has been involved in litigation with a communications company. Earlier this year, chip manufacturer Broadcom filed complaints against both Daimler and BMW for patent infringement relating to autonomous vehicles, following similar disputes with VW, Audi and Porsche.

What about the UK?

In contrast, UK courts have not seen the same level of litigation. One reason for this is likely to be the difficulty to obtain an injunction in the UK, and perhaps it is due to the greater level of clarity surrounding SEP licensing provided by Mr Justice Birss in the judgment in Unwired Planet v Huawei and the subsequent findings of the Court of Appeal in the UK.

The Court of Appeal upheld Birss’s findings that a global licence between a SEP owner and an implementer may be FRAND. The Court of Appeal also found, in a departure from Birss’s findings, that more than one set of FRAND terms can exist. In addition, the Court of Appeal clarified that in Huawei v ZTE, the Court of Justice of the European Union did not lay down mandatory procedural steps but rather outlined a positive obligation to notify the implementer before commencing proceedings. These findings were welcome news for SEP owners. They not only offer SEP owners the flexibility to choose which FRAND licensing terms should be applied, but also demonstrate that the UK courts will take a practical view of the SEP owner’s behaviour when it comes to commencing proceedings in UK courts.

The outlook

It is too early to predict whether the litigation as seen in German courts will be replicated in the United Kingdom. It may be that the clarification provided by Birss and the Court of Appeal will encourage communications and automotive businesses to work collaboratively and in so doing reduce the need for litigation. In the event that court proceedings cannot be avoided, it is clear that the UK courts present an efficient forum for SEP owners seeking global licences.