When startups enter hot sectors like the electric vehicle industry, they’re often competing against older players which have patented some of the foundational technology. What does that mean for the younger companies? Richard Howson, patent lawyer at Kilburn & Strode in London, explained to our climate-focused newsletter, Sustain, recently.
First off, one of the main things in people's heads when it comes to patents will be Tesla, which has criticised the whole system. What’s their situation?
Elon Musk has made anti-patent statements, but they’re not necessarily borne out by what Tesla is actually doing. Tesla does file patent applications and it does get patents granted. It's not always the community-spirited sharer of technology that Musk might suggest.
What do people want to patent?
The technology you're trying to get a patent for, firstly, needs to be new. It needs to be different to what came before. Secondly, the new bit needs to have solved a technical problem in a way that hasn’t been solved before.
Suspension, for example, has been around for ages, so you’re not likely to get many breakthroughs in relation to suspension. That means that the parts that an EV shares with a conventional vehicle aren’t going to see much patent activity.
But there will be things around motor generators, the electrical machine that moves the car forward and recovers the electricity, and also batteries. We are seeing massive activity related to batteries, around how much energy batteries can give, how much energy you can recover when the vehicle slows and the battery management and control systems.
What does that mean for startups?
If you’re established, something like Volkswagen group, you know what’s out there and what patents your competitors have. You know that the suspension system you’ve been building for years is fine patent-wise and then you use that same one in an EV. But if you set up an EV company from scratch tomorrow, you don’t have any of that, and you don’t know which patents you could infringe. You’d risk infringing patents all over the place, and you also wouldn’t perhaps have the money to hire someone to go through the patent risks.
That makes what Tesla has achieved even more remarkable, because there are so many patents out there and the freedom to operate as a new starter would normally mean a lot of work on patent risk. It would sometimes be a barrier to entry that you can’t get over.
How legally sensitive is the EV world?
The automotive sector traditionally, by comparison with pharmaceutical companies, doesn't end up in court very often over patent disputes.
Companies typically find ways of negotiating and avoiding that. As an example, if you're Tesla, and I'm Volkswagen, and you find that you might infringe on my patents, you would ask me to give you a royalty-free licence and then in return Tesla might allow Volkswagen to use your technology in some other way. So if you've got useful patents and I've got some, we can come to an understanding before we have to go to court. There are some practical ways to avoid suing each other.
If you're a new entrant into the space you don’t have that negotiating power, so you’re in a really weak position.