20160525_A2_CLE_Diving_Into_the_Patent_Pool

www.brinksgilson.com
Craig Buschmann
May 2016
Diving Into the (Patent)
Pool - A Comparative
Review of Automakers’
Licensing Strategies
Photo credits: Motor Trend, Inside EVs, and KBB

Craig Buschmann
 Experienced in a broad range of mechanical and electromechanical
technology in the fields of aerospace, automotive, traditional and
green energy, medical devices, semiconductors, and sporting
goods.
 Counsels clients and prepares opinions relating to patentability,
invalidity, enforceability, infringement, and clearance issues.
 Litigates patent, trademark, trade dress, trade secret, and unfair
competition claims in court.
 Advises clients on strategic patent portfolio development,
landscape analysis, and drafts U.S. and foreign patent applications.
 B.S. Mechanical Engineering from University of Michigan
 Previously worked with Johnson Controls, Inc. – ASG in Plymouth,
MI and with Schlumberger (Oilfield Services)
2

Rubrics for the Day
 Patent Pool
– What is it and some reasons to create or join one
 Tesla
– Technology and Licensing Strategy
 Toyota
 Ford
 Questions?
3

Rubric #1 - Patent Pools
 Collection of patents
– Contribution of patents may be from
a single company or multiple
companies
 A Few Reasons To Form
– Defensive Strategy
• Fragmented IP market
• Blocking patents
– Network Effects/Technology
Standards
– Increase Supply & Demand
 Antitrust Concerns?
– Must not suppress competition
– Control an industry
4
Image credit: IP Watchdog

Rubric #2 - Tesla
Photo credit: Motor Trend

Tesla
 Why do we care?
 First significant new US auto manufacturer since Chrysler founded
in 1925
 Model 3 launched March 31, 2016
 Fastest launch of any automobile ever, and competitive with some
of the most iconic consumer product launches
Chart credit: Bloomberg

Since you’re wondering – 1956 Citroen DS
Photo credit: Wikipedia

Tesla
 Goal  Develop an almost entirely new and solely
electric vehicle (EV) market
– Examples: Tesla Models S, 3, and X
 Tesla’s Existential Challenges
– Change a culture accustomed to internal combustion engines
(ICE)
– Create a network of charging stations to increase utility of Evs
– Culture & Network  Positive Feedback Loop
– More awareness and demand for EVs increases demand for
charging
– As charging stations increase, easier for consumers to
rationalize buying an EV

Tesla
 Tesla’s Strategy (in part)

Tesla
 Tesla’s Strategy – Patent License Pool
– Promise to “not initiate patent lawsuits against anyone who,
in good faith, wants to use our technology.”
– Created limited, open-source patent pool for Tesla’s patent
technology as of the date of the announcement
 Technology in the Pool
– Vehicle Components
– Battery Charging
– Energy Storage
– Power Optimization Technologies

Tesla
 Effort to encourage
other companies to
adopt Tesla
ecosystem
– Reduce
technological and
capital barriers to
entry for competitors
– Network effects 
charging, repair
knowledge,
distribution, etc.

Tesla
 Why encourage competitors for your company?
– Accelerate change in ICE-centric culture
– Increase size of EV market, both supply and demand
– Establish EV standard of a sort  assure consumers that
they won’t be stuck with Betamax/HD-DVD technology

Tesla
 Well established strategy with historical precedents
– Early stage, major new technologies
– E.g., textiles,
– Bessemer steel production, personal computers, wireless
communications, etc.

Tesla

Rubric #3 - Toyota
Photo credit: Inside EVs

Toyota
 Toyota mature, large company
– Does not face same existential concerns as Tesla
– Size allows Toyota to create new markets and explore
multiple strategies
– Single-handedly created hybrid electric vehicle (HEV)
market with the Prius
 Nonetheless, Toyota second to announce alternative
fuel technology patent pool

Toyota
 Toyota’s Preferred Alternative Fuel Technology
– Hydrogen Fuel-Cell Technology (FCV)
– Example: Toyota Mirai
Image credit: Toyota

Toyota
 Technology Divided Into Separate Pools
 Powertrain Technology Pool
– Fuel-Cell Stacks
– Hydrogen Tanks
– Control System Patents
– Royalty-free through 2020
 Hydrogen Production and Supply Pool
– Manufacture/production, storage, and dispensing of
hydrogen
– Hydrogen fueling stations
– Presently no expiration of royalty-free access for this pool

Toyota
 Why different pools/royalty conditions?
 Powertrain Technology Pool
– Perhaps hope to create FCV standard, akin to Tesla and its
EV strategy
– Less reliant on others to establish market (see HEV/Prius),
so limit duration of royalty-free period
 Hydrogen Production and Supply Pool
– Network effects – reduce cost for others to build and add to
hydrogen fueling network
– Toyota and its customers (and other FCV owners) benefit
from larger network
– Akin to Tesla’s strategy related to battery charging and
storage

Rubric #4 - Ford Motor Company
Photo credit: KBB

Ford Motor Company
 Ford also a mature, large company
– Also does not face same existential concerns as Tesla
 Third to announce alternative fuel technology patent
pool

Ford Motor Company
 Ford’s Preferred Alternative Fuel Technology
– “Traditional” Hybrid Electric Vehicle (HEV)
– Partially Electric Vehicle, e.g., plug-in HEV
– Example: Ford C-Max and C-Max Energi
Image credit: Toyota

Ford Motor Company
 Has not described entirety of pool
– Comments suggest pool relates to HEV and Partially
Electrified vehicles
– Mass-market technology for nearly 20-years
– Fee-Based Licensing Model
 Not attempting to develop a new market for FCVs or
EVs as Toyota and Tesla are doing
 Different market incentives for Ford
– No need for new support networks
– No need to create market for unproven (from a market
viewpoint) technology
– New source of revenue for Ford

Conclusions
 License Strategy Likely Reflects Several Factors
– Perception of Market and Technology  Nascent or Mature
– Need for Support Networks
– Need for Change in Cultural Norms
– Relative Strengths of Companies  Cash Positions, Peer
Competitors, etc.

Rubric # 5 – Questions?
 Associated article available at http://
www.law360.com/articles/777102

Thank You
26

20160525_A2_CLE_Diving_Into_the_Patent_Pool

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