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Driverless cars raise a diverse array of legal issues, one of which will almost certainly be the intellectual property (IP) rights that industry players create and assert to assist them in establishing their market position, and differentiating their products. The auto industry has always been a hotbed of IP disputes. The advent of driverless technologies could well lead to a spike in scuffles caused by jockeying for dominance in this new area, as well as the convergence of technologies.

The aesthetic aspects of the driverless cars will be protected much in the same way as traditional cars, by trade marks, design rights and copyright. The look of the driverless cars that are currently under development are very different from one another, but as these develop from the concept phase to production, the differences are likely to become smaller. As ‘classic’ driverless models emerge, these so-called “soft” IP rights will be used to keep the competition from coming too close.

Meanwhile, the software involved will attract copyright, which protects the source code but not its functionality (so a rival software provider cannot be prevented from developing the same functionality by different means).

Patent rights

The first skirmishes are most likely to break out over patent rights. As a new technical field there will already have been a patent land-grab to cover the fundamental technologies. A number of the main players in the auto industry are known for their prolific patent filing strategies, and the industry has previously seen high-value patent litigation following the adoption of new technology. For example, when sat-nav equipment became widely used, TomTom brought patent infringement cases against Microsoft and Garmin in an effort to establish market dominance.

One of the most interesting aspects of driverless car technology is likely to be the interaction between competing patent rights and the need for standardisation. Aside from navigational technologies, driverless cars will need to have a common way of recognising road layout, obstacles and other vehicles.

The safety and environmental benefits of the technology stem from the cars’ ability to communicate with each other. Full compatibility between all cars, and common standards for the underlying technologies, will be required for the system to work properly.

Instructive parallels can be drawn with the digital telecoms industry, which in its infancy was dominated by a small number of pioneer companies whose technologies were incorporated into the GSM standard. As with driverless technology, having a common, strandardised way of communicating was key. The companies concerned had to make a commitment to license others to use their patent rights.

Although the GSM standard was incredibly successful, the concentration of such fundamental patent rights, often in the hands of a small number of companies, has led to competition law concerns. The owner of one such patent could theoretically bring competitors to a standstill by obtaining an injunction for patent infringement in the courts. This dominance gave the patent holders a very powerful weapon to extract royalties from other adopters of the GSM technology. Some also believe that it created a very high hurdle for new market entrants.

Framework for licensing disputes

The courts and regulators have recognised these competition risks and are now developing a framework to resolve these licensing disputes, but not until nearly three decades after the GSM standard was born. Even now, global patent and anti-trust disputes continue to rage in the mobile phone industry. Perhaps the driverless car industry can build the right lessons into its development early on.

According to a study of 2013 patent filings by Thomson Reuters, General Motors invented more driverless technologies than any other car manufacturer that year, and more than doubled its total patent portfolio. Toyota and Hyundai made similarly significant advances. Some of these patents directly relate to driverless functionality, but many more were filed in the fields of telematics, heads-up displays (‘HUDs’) and driver assistance. Google, which has made the most high-profile investment in driverless car technology, still only has a handful of granted patents directly relating to driverless functionality (though they too have many more in related fields).

Judging by the Thomson Reuters data, car manufacturers appear to be taking an incremental approach to driverless technology, and their patent filings reflect this. By contrast, Google are almost alone in pursuing full automation. If full automation receives legal, regulatory and public approval, Google’s technology would be well placed to form the basis of any industry standard. Whichever company’s technology comes out in front, the other players will be left with little option but to adopt that technology and secure a licence from the patent holders or risk being shut out of the market.

A mechanism to avoid disputes would be an important tool to ensure that the new technologies are widely adopted. There is also a balance to be struck between leveraging a patent portfolio and hampering the growth of a new industry that it is in your interests to encourage. Famously, Tesla recently promised not to assert its patent rights against competitors in an attempt to stimulate overall growth in the electric car market.

One thing appears almost certain: with so many big players jostling for position in such a rapidly developing industry, it is only a matter of time before the first patent infringement lawsuit is filed.

Dr Tess Waldron also contributed to this piece.