INTELLECTUAL PROPERTY RIGHTS IN AUTOMOTIVE INDUSTRY by-Yuvraj Singh
The most critical component of all corporate giants’ success formula is their Intellectual Property and its effective and strategic preservation, implementation, and monetization. Intellectual property has become an inherent and necessary component of the vehicle industry. Intellectual property has become one of the business’s most critical and valuable assets. Intellectual Property (IP) is a term that refers to property that has been generated by the human intellect. Patents, Designs, and Trade Marks constitute the majority of industrial property. One such famous example is the renaming of Toyoda to Toyota in order to make the identity and brand more memorable and prominent. In India, a product’s patent is granted based on three criteria: innovation, originality, and industrial use. India, as a common law system, observes not only codified law but also common law doctrines, and so enables for trademark infringement and passing off actions. The Trade Marks Act, Section 135 states about the relief in suits for infringement or passing off. But as in this dynamic society with the proliferation of patent holder or innovations there has been many cases which constitutes an end to the peace. A design patent entitles the owner to prohibit anyone from manufacturing, distributing, or selling a design patent for a period of 14 years from the date of award. There are few cases discussed below where we can see the dispute between automotive companies over patents. The trade secret comprises of three requisites i.e., commercial value, secret, and reasonable steps. The concept of a trade secret is founded entirely on confidentiality. Globally, a growing percentage especially in the automotive companies are collaborating with new customers to create self-driving vehicles, and the competition to possess intellectual property and defend diverse technological achievements in
1 Student at Bennett University
this domain is heating up. Patent application filings in this field are at an all-time high, as automotive sectors strive diligently to enhance their patent portfolios.
Keywords: Intellectual property rights,Automotive industry, Litigation, Patent, Technologies.
1: THE SIGNIFICANCE OF IPR IN AUTOMOTIVE INDUSRTY
The worldwide companies have been undergoing a fundamentaltransformation as a result of the rapid innovation, application, and dissemination of information technology across all sectors of technology. The most critical component of all corporate giants’ success formula is their Intellectual Property and its effective and strategic preservation, implementation, and monetization. Intellectual property has become an inherent and necessary component of the vehicle industry. Intellectual property has become one of the business’s most critical and valuable assets. Even though research and technology advance at a rapid speed and competitiveness among automobile manufacturers and suppliers remain tough, intellectual property will be more critical than ever. Whereas the majority of automobiles on the market have comparable features, designers must ensure that the patented technology they generate are not simply cloned. While innovation is vital for India’s automotive industry, there must be no cloning. Advanced automotive elements should not be crushed by restrictive methods, but rather develop for the industry’s benefit. It is to say that Intellectual Property Rights can now be used by all manufacturers to ensure that innovation occurs and that a regulatory framework prevents the loss of exclusive technology in favour of inferior replicas.
Intellectual Property (IP) is a term that refers to property that has been generated by the human intellect. Patents, Designs, and Trade Marks constitute the majority of industrial property. Copyright protection is applicable to artistic works such as poems, books, music, paintings, and computer software2. For better understanding the importance of IPR in automotive industry can be done through discussing the patents, trademark, design, and trade secrets.
A trademark is something that assists in identifying and separating the goods and services offered by a business or entity from those offered by competitors. Thus, trademarks in the Indian automotive sector assist in differentiating one automobile company’s product from that
of competitors. Possessing Trademarks enables automotive manufacturers to prevent competitors in the Indian automobile industry from utilising identical or confusingly similar Trademarks. The value of branding is frequently emphasised in this business. The world revolves entirely around branding and promotion. As your brand is well-established in the market, it strengthens your position and enables you to improve product sales. Numerous major organisations devote additional work to developing their product’s trademark, name, design, and branding manual. One such famous example is the renaming of Toyoda to Toyota in order to make the identity and brand more memorable and prominent. Numerous considerations have been made in developing the logo, and it does not end there.
Automobiles have seen a flood of patent filings in both Indian and foreign jurisdictions. Tata Motors, M&M Limited, TVS Motors, BMW, and Ford are among the automotive sector’s top IP tycoons. The incorporation of software applications into the vehicle industry has heightened the impact of intellectual property on this industry. This is a significant factor in the increased trend in filing a patent application. A patent is an exclusive right awarded for an invention, which is a commodity or a technique that introduces a new method of doing something or solves a technological problem in a novel way. A patent protects the inventor’s invention for a specified length of time, often 20 years3. Patenting technology that are only improvements to existing ones has become a new trend in the market. The automobile business is more utilitarian in nature, which explains why we have seen more international applications than Indian ones. In India, a product’s patent is granted based on three criteria: innovation, originality, and industrial use.
IPR is a fundamental requirement for participating in both local and worldwide competitive trade, as without the dissemination and execution of IPR information, building an inventive environment is truly impossible. It is critical for policymakers to incorporate IPR into the fundamental educational system and to promote IPR registration through incentives for innovators and creators.
3Lalit Ambastha, Role of Intellectual Property in Auto Industry (2009), https://www.patentwire.co.in/wp- content/uploads/2019/05/Role-of-IP_Auto-Industry.pdf.
2: THE IPR LITIGATION IN AUTOMOBILE SECTOR
India as a common law system observes not only codified law but also common law doctrines, and so enables for trademark infringement and passing off actions. The Trade Marks Act, Section 135 states about the relief in suits for infringement or passing off4. Infringement of a trademark is a violation of the authorized proprietor’s exclusive right for using the mark. Infringement of a trademark occurs when a person who is not an approved user, uses a similar mark to the trademark registration without the registered proprietor’s consent. Furthermore, it is crucial to highlight that the Indian trademark law, which is generally supported law principles, safeguards the rights and dignity of a former user against a registered proprietor.
In the case of BayerischeMotorenWerke Ag vs Om Balajee Automobile (India)5, the High court granted an interim injunction to plaintiff in order to restrain the defendant for infringement of trademark. The BMW is a German automotive business founded in 1916. It is best known for making and marketing automobiles, particularly luxury cars and motorbikes. Plaintiff filed its first BMW trademark in 1917 and has subsequently acquired many registrations in classes 7, 8, 9, 11, and 12, achieving the position of being well-known in a variety of jurisdictions worldwide. The BMW company started its business in Indian market in 1987 and has used the aforementioned brand constantly and extensively since then.Om Balajee Automobile is described as a producer and distributor of a diversity of electric vehicles, particularly E-rickshaws, and has been operating under the DMW brand. The Plaintiff became aware of the same in 2016 and filed the present claim.
The Hon’ble High Court pronounced the judgement while deciding the question of law. While deciding the infringement of trademark question the court relied on another judgement of KavirajPanditDurga Sharma vs. Navaratna Pharmaceutical6, the Supreme Court stated that “comparison of two marks is conducted to discover if the plaintiff’s mark’s essential elements are present in the defendant’s mark.” Therefore, in this present case the court held that Defendant’s trademark DMW was physically and phonetically identical to the Plaintiff’s (BMW) and was, prima facie, a dishonest imitation with the intent of unfairly exploiting the
4Section 135, The Trade Mark Act,1999.
5 CS(COMM) 292/2017.
61965 SCR (1) 737.
Plaintiff’s name and reputation. Therefore, the court also held that the defendant action amounts to infringement of trademark violation under S.29(4) of Trademarks Act7 and restrain the defendant from using the identical trademark DMW for any goods or services.
Historically, there were few cases of patent litigation in automobile industry as compared to other sector. But as in this dynamic society with the proliferation of patent holder or innovations there have been many cases which constitutes an end to the peace. Patents on configuration are issued in conjunction with novel, original, and ornamental designs incorporated inside or implemented to manufactured goods. They are more affordable and simpler to acquire than utility patents. A design patent entitles the owner to prohibit anyone from manufacturing, distributing, or selling a design patent for a period of 14 years from the date of award. There are few cases where we can see the dispute between automotive companies over patents.
In case Brighto Auto Industries v. Raj Chawla8, Brighto Auto Industries, a partnership entity involved in the manufacture of different goods including rear view mirrors, filed the petition. The Plaintiff filed a petition for the cancellation of a registered design for rear view mirrors under class I of the 1911 Designs Act. The plaintiff also contended that the registered design was not novel or unique. The issue in this case was that whether the design patent was new or not? The court made a distinction between “new” and “original” and relied upon the case of Dover Ld. v. NurnbergerCelluloidwar the court held that ‘New’ meant to a shape or design that was entirely new in and of itself; ‘original’ referred to a shape or design that was both old and new in its applicability to the specific subject. The term ‘original’ implies that the individual has created something, that through intellectual exertion he has generated an idea previously unconceived, that a particular pattern, shape, or adornment may be rendered relevant to the particular product to which he proposes that it be applied”. The High Court pronounced that the defendants’ asserted originality was insufficient to qualify the design as
7Section 29(4), The Trade Mark Act,1999.
8 1977 RLR 158.
novel. The Court determined that the disputed design was only a variant of an earlier existing product on the market and ordered its cancellation9.
There are certain vital elements which needs to be fulfilled for a valid patent10:-
• Industrial designs are unique on a national level, and hence publishing or usage of the design outside the nation prior to registration does not invalidate the design.
• Unless proven differently, all industrial designs are valid.
• To be eligible for registration, the design must be fresh and novel. The claimed innovation should not be basic or cheap.
• A product’s functional elements cannot be registered as a design.
In recent litigation of Jeep Wrangler v. Mahindra thar, the parent company of Jeep has filed a lawsuit against Mahindra thar for infringement of design patent. Jeep has moved to the court as the Indian company reportedly prepared to launch the Thar’s next version in Australia. But the Mahindra stated that they are having a huge demand of thar in India and they have no immediate plans to launch in Australia. Therefore, it becomes useless for both the companies to have litigation. Further, they also stated that they will provide with 90 days prior notice before launching it in Australia. The issue was because of similarity in the vehicle design. But they have come to a decision of not selling it in abroad countries without the prior notice to parent company of Jeep11.
Trade Secret Litigation
Trade Secret refers to any type of confidential information relating to any commercial operation that is not part of public property or knowledge. The trade secret comprises of three requisites i.e.commercial value, secret, and reasonable steps. The concept of a trade secret is founded entirely on confidentiality. When this level of confidentiality is breached, TS is compromised. Confidential information is a vast and rapidly evolving field. The TS is a matter of public policy, and Article 39(1) of the TRIPS agreement mandates contracting
9 (27 R.P.C. 498).
10DESIGN INFRINGEMENT IN THE AUTOMOBILE INDUSTRY (NOVEMBER 10,2015), BANANAIP
11Amaan Ahmed, LEGAL WRANGLE-R: WHY JEEP HAS TAKEN THE NEW MAHINDRA THAR TO
COURT IN AUSTRALIA (MAY 12,2021), https://www.firstpost.com/tech/auto-tech/legal-wrangle-r-why-jeep- has-taken-the-new-mahindra-thar-to-court-in-australia-9615061.html.
states and private individuals to safeguard their “Undisclosed information.12” When information is conveyed to an employee, the employee is endowed with the maximum good faith regarding the commercial activity. As a result, the employee’s performance should not be used as a springboard to determine the success or failure of the strategic planning in a market. Thus, despite the fact that one employee can “Make or Break” a corporation’s business plan, despite having signed into a contract, the employee’s commitment remains one of the enterprise’s greatest problems in protecting their trade secret13.
In Tesla, Inc. v. Alex Khatilov, a trade-secret theft lawsuit against a computer engineer who had worked for the firm for less than three days, serving as a timely warning to firms that the discovery of unlawful use of protected knowledge demands immediate action to prevent harm was filed by the Tesla. Tesla contends that a freshly hired software engineer stole 26,000 files of data, or programs, that automate a wide variety of business processes. Additionally, Tesla’s Complaint contends that it takes great precautions to safeguard the secrecy of Tesla trade secrets, including imposing new workers to sign privacy and non-disclosure agreements. Khatilov’s non-disclosure agreement barred him from using or disclosing proprietary materialincluding technical data. Moreover, the defendant signed an Internet Usage Agreement that forbids “without written consent, transferring, copying, downloading, or deleting trade secret, or firm important information without the consent of the firm.” Tesla sued for Trade Secret Misappropriation and contract breach based on the governing agreements. The apex court granted a preliminary injunction against the defendant. It was observed in this precedent that how much it is vital for keeping trade secret as confidential14.
• guarantee that confidential and/or proprietary information is protected;
• limit the individuals who has access to such information;
• act quickly to mitigate the harm if someone attempts to misappropriate proprietary or secret information.
Considering numerous new innovations being created for the automobile platform and numerous new firms competing to generate those technologies, the automotive sector faces
12Article 39(1), Trade-Related Aspects of Intellectual Property Rights.
13R Vigneshwaran, An Alarming Need for Trade Secret Legislation in India (2018), Amity Journal of Management Research, https://amity.edu/UserFiles/admaa/5a140Paper%207.pdf.
14Tesla, Inc. v. Khatilov, Case No. 4:21-cv-00528-YGR (N.D. Cal. Jan. 22, 2021)
an increased danger of trade secret challenges. Automobile manufacturers should therefore adopt or upgrade their trade secret policies and plans to mitigate these threats.
3: ROLE OF IPR WITH RESPECT TO AUTONOMOUS VEHICLES
Intellectual property is vital for autonomous car development. Companies are developing new patents on automobile systems, copyright protection for increasingly linked operating system platform, and trademark protection for newly established self-driving car brands. Autonomous technology is a game changer in the transportation system. Globally, a growing percentage especially in the automotive companies are collaborating with new customers to create self-driving vehicles, and the competition to possess intellectual property and defend diverse technological achievements in this domain is heating up. Patent application filings in this field are at an all-time high, as automotive sectors strive diligently to enhance their patent portfolios. The driverless vehicle is a simple definition of an autonomous vehicle (AV). As such, it is a vehicle that can operate autonomously and execute functions based on its perception and sense of its environment. As per the International Society of Automotive Engineers, there are five stages of progress, ranging from Level 0 (no automation) to Level 5 (Full autonomy)15.
Automobile manufacturers and suppliers have dramatically boosted the number of patents filed in the US and overseas during the last several years. patent protection for these ideas may be insufficient, this is because the autonomous vehicles require suppliers and automakers to build or enhance their technology outside the scope of their usual development. Rather than that, trade secret protection may be a more acceptable method of protecting autonomous vehicle technology’s intellectual property. As a result, businesses must determine what type of IPR should the automotive companies undertake. Patent protection enables the applicant to disclose the invention’s knowledge, but trade secret protection requires the applicant to keep the invention’s data confidential. This can be illustrated through the case of Alice Corp. v. CLS Bank Int’l,16, the court stated that patentability on subject matter and determined that the patent’s claims were ineligible for
15 Allison Zeweng, Intellectual Property Considerations for Protecting Autonomous Vehicle Technology (2019), http://mttlr.org/2021/03/intellectual-property-considerations-for-protecting-autonomous-vehicle-technology/.
16 134 S. Ct. 2347 (2014).
patent protection because they addressed an abstract idea, more precisely, the claims detailed an underlying economic practise. As a result, the majority of self-driving car start-ups maintain trade secrets regarding their technologies and hardware data. Deciding for trade secret protection can give a company a major competitive edge, as it enables the entity to continue enhancing its products by allocating resources directly to their growth. The disadvantage of trade secret protection is that, because the trade secret must be kept hidden, this might “result in onerous security measures, ‘need to know’ protocols, and constraints.” Additionally, trade secrets are susceptible to reverse engineering “because competitors can occasionally reverse engineer analytics software.” In general, both patents and trade secrets will almost certainly be essential in the development of self – driving technology, and businesses should weigh the advantages and disadvantages of each type of protection when determining the most effective method of safeguarding their IP rights17.
The Intellectual Property Laws that regulate breakthroughs such as autonomous driving technology, particularly Patent Laws, have been examined and interpreted in recent years in an attempt to bring computer-related ideas into the protected fold. According to S.3(k) of the Patent Act, it defines what are not inventions and cannot be granted patents18. Thus, any computer program per se algorithm cannot be deemed as patentable. But in case of FeridAllani v. Union of India, the court reaffirmed earlier established norms on the examination of patentability of CRIs depending on the existence of “technical effect” and/or “technical contribution.” Although the invention is relied on a computer programme, it is patentable if it displays a “technical effect” or “technical contribution.” Additionally, the Hon’ble court stated that the term “technical effect” should be read in light of judicial pronouncements, parimateria clauses, and practises of foreign patent administrations19. While addressing the patentability of Computer related inventions, the court noted that the words ‘per se’ were inserted into Section 3(k) to ensure that real inventions based on computer programmes are not denied patents.
The companies who are introducing these autonomous vehicle technology files many patents for the new inventions. This invention will benefit them to assure that innovators receive an appropriate return on their research and development investments; facilitates the formation of
17BANERJEE DIPIN, Patentability of Computer Related Invention (2020), https://www.lakshmisri.com/insights/articles/patentability-of-computer-related-inventions/#
18Section 3(k), The Patents Act, 1970.
19(2019 SCC Online Del 11867).
business collaborations, the attraction of investment partners, and the expansion of small enterprises and innovation-based start-ups and in contrast to copyright, patents are only safeguarded after they have been explicitly registered with the Patent Office. In contemporary period, automotive patent filings in India have increased significantlywith a large portion of those for autonomous driving technology filed by international leaders including such Daimler, Toyota, Nissan, and Bosch. Nissan issued a series of patent applications in India in 2017 relating to self-driving vehicle technology. Thus, it can be concluded from the above discussion that the Intellectual property rights plays a vital role in automotive industry because it is like an incentive and protection to the inventions and innovations of the owners who would be contributing their research in public interest for some money.
The Indian automobile industry must recognise that intellectual property rights are critical components of today’s globalized world and are capable of defending the business against a highly competitive market force. This would ultimately result in a new future for Indian industry and would contribute to the strengthening of the economy through the addition of new innovations. The analysis done in India are consistent with global trends, however the amount of patent lawsuits in India increased significantly only after 2007. The Delhi High Court has been the most active in terms of patent litigation, followed by the Bombay Court and the Madras Court. The Delhi High Court has developed a reputation for hearing patent issues and has aided in the shaping of Indian patent law. Managing IP issues will benefit the entire economy, not just the car sector. As the IoT expands in scope, 5G networks are deployed and an increasing number of devices are interconnected to one another, comparable difficulties will arise in these areas as well. If the auto sector is successful in coming up with a solution now, this might serve as a model for successful IP licencing in the electronic era.
In the dynamic society with the increase of advanced technologies there has been a trend driving towards the IPR litigation risk. It can be concluded that due to proliferation of patent in automotive technologies, entry of new players and relations and convergence of technologies on the automotive platform has led to an ending peace of IPR in automotive industry.
• BayerischeMotorenWerke Ag vs Om Balajee Automobile (India), CS(COMM) 292/2017.
• KavirajPanditDurga Sharma vs. Navaratna Pharmaceutical, 1965 SCR (1) 737.
• Brighto Auto Industries v. Raj Chawla, 1977 RLR 158.
• Dover Ld. v. NurnbergerCelluloidwaran, (27 R.P.C. 498).
• Jeep Wrangler v. Mahindra thar.
• Tesla, Inc. v. Alex Khatilov, Case No. 4:21-cv-00528-YGR (N.D. Cal. Jan. 22, 2021).
• Alice Corp. v. CLS Bank Int’l,134 S. Ct. 2347 (2014).
• FeridAllani v. Union of India, (2019 SCC Online Del 11867).
• https://gowlingwlg.com/getmedia/c8d76566-da7e-43b6-94c9-636eb126f467/ip-and- the-automotive-sector.pdf.xml?ext=.pdf
• https://www.mondaq.com/india/trademark/127680/trademarks-law-in-india- everything-you-must-know
• http://mttlr.org/2021/03/intellectual-property-considerations-for-protecting- autonomous-vehicle-technology/
• https://auto.economictimes.indiatimes.com/news/industry/the-future-of-autonomous- vehicles-in-india-steering-the-legal-issues/64985989
• https://www.lakshmisri.com/insights/articles/patentability-of-computer-related- inventions/#
• https://news.bloomberglaw.com/ip-law/insight-the-future-of-automotive-trade-secret- litigation
• https://www.southcentre.int/wp-content/uploads/2014/12/RP59_Transition-Period- for-TRIPS-Implementation-for-LDCs_EN.pdf
• https://www.butzel.com/resources-alerts-Protecting-Trade-Secrets-in-the-Automotive- Industry-Federal-Court-Grants-Teslas-Temporary-Restraining-Order-for-Trade- Secret-Theft.html
• https://www.bananaip.com/ip-news-center/design-infringement-in-the-automobile- industry/
• https://www.firstpost.com/tech/news-analysis/legal-wrangle-r-why-jeep-has-taken- the-new-mahindra-thar-to-court-in-australia-9615061.html.
• https://www.patentwire.co.in/wp-content/uploads/2019/05/Role-of-IP_Auto- Industry.pdf