An Expert’s Look At The Current EV Landscape And Potential Disputes In 2023 – Patent

2022 was a transformative year for many American markets,
especially those being shifted by rapid technological advancement,
increased government oversight, and evolving consumer values. And
when it comes to the automotive industry, the EV landscape is going
through a complete metamorphosis, especially as we move further
toward Biden’s 2030 electrification goals. More and more
companies are entering into the electric vehicles race, opening the
door for patent battles, theft of trade secrets disputes, and
conflicts over systems security, especially as these vehicles’
wireless capabilities grow.

Let’s take a quick look at 2022’s EV litigation
landscape to learn more about what types of cases have been hitting
the courts and who has been involved in the disputes.

*Top five parties that are most common in the EV case list for
the year 2022. Source: Lex Machina, December 2022.

An Industry Insider’s Perspective

To make sense of this data, we asked WIT IP Panel member and
automotive industry expert, Lawrence Achram, to opine on the state of the
industry as we enter 2023. Here’s what he had to say:

WIT: After looking at this data, do you feel that 2023
will see a similar landscape in terms of case type?

Lawrence Achram: I expected to see IP issues
showing up in the top five (it came in at number 6 with 60 cases)
given the explosion of patent filings in the EV space and the
larger manifestation of the forecasted convergence of telecom into
vehicles. EVs and autonomy are a natural fit given the necessary
connectivity in the vehicles. Even beyond EVs, vehicles, both on
and off-road, are going to be one of the most extensive examples of
the “internet of things” out of necessity. This means
that the large portfolio of telecom and connectivity patents that I
tried to warn my contemporaries about a few years back is going to
come to bear. So, though it wasn’t in the top five this year, I
expect to see it there for 2023.

WIT: How do you feel increased vehicle connectivity will
affect the industry?

Lawrence Achram: IOT automotive experiments
have been interesting so far, but there is a regulatory backdrop
that must stabilize. The dilemma for automakers remains: they need
connectivity to be able to manage vehicle software today, but they
would like to monetize the cost of the cell system to recover costs
(they have been installing cell service in new vehicles and it only
makes sense that newer vehicles would move to 5G.)

Unfortunately, this requires the customer to pay for an
additional cell service contract- something they have been
reluctant to do. Thus far, the automakers’ service offerings do
not seem to generate enough additional value over the
customers’ individual smartphones to entice subscriptions.
Pricing for a limited feature set is surprisingly high.

Possible solutions could include baking the price of the service
into the vehicle price. The carriers could also reinvent their
engagement with the customers to incorporate an additional vehicle
phone with shared connected services for the family. But the
problem is that the automaker is then acting as a reseller, and I
have not seen discussions about consolidating services.

Even so, there are potential points of conflict that will need
to be watched.

Data and vehicle network security are still concerns. For
example, most traditional automakers have been reluctant to perform
mission-critical software updates partially for fear of data
corruption, but they are more worried about the difficulty of
hardening the on-board network to protect it from hackers. To date,
most mission-critical updates were being done by hardwire. 5G
reliability, speed, and reduced latency improve the success of OTA,
but security issues remain.

It will be interesting to see how many IOT features will be
offered voluntarily by the automakers and if customers will be
willing to pay for them. It is likely that many will become
regulatory requirements. The robustness of these features will be
something to watch for potential conflict.

WIT: What do you expect to see more of in
2023?

Lawrence Achram: Recently, I noticed that NPE
activity has been picking up. I have long advocated for a more
proactive strategy among automakers and their suppliers to try to
make deals with bulk licensing rather than be reactive when suits
are brought.

If I were to make a suggestion to lawyers, it would be to
consider prompting their clients to make deals to head off
conflicts, recommend cooperative development to capture rogue
patents to control the future risk of litigation, and turn the NPE
relationship into one of collaboration.

WIT: What issues do you feel with continue to affect the
industry as we head into 2023?

Lawrence Achram: One topic in particular that
has been top of mind is that of product quality and performance.
For example, the recent holiday cold snap that hit a large part of
the United States exposed potential weaknesses in EV charging. The
frigid temperatures showed that some of America’s
electrification stations could not withstand the subzero temps and
if this issue isn’t mediated on a nationwide scale, the
country’s electrification goals could be hindered.

And worse, several major auto OEMs have had severe quality
issues with no solution. Sending a “do not drive” notice
to customers without a solution opens the door to potential class
action litigation. A vehicle that does not perform to expectations
or is disabled could be the catalyst.

The Essential Role of Experts

Turning our attention to impending conflicts, let’s look at
the vital role that experts play in preparing for complex
litigation involving automotive tech.

When it comes to intellectual property, battles over patents for
EV components including charging station technology, battery
technology, wireless technology, and more will likely ramp up as
automakers attempt to prepare for heightened connectivity and
increased EV adoption. With this many players in the space trying
to create proprietary systems to achieve the same goal, protecting
innovation is essential. Here, experts can step in to address
patent pools, damages analyses, EV software, and more in order to
help form a strong IP litigation strategy.

Mergers, acquisitions, and impending partnerships will also be
an area to watch as companies band together to improve
manufacturing operations and take a larger stake in the market.
M&As in this sector hit a historic high in 2021, but that also
means the risk of litigation regarding these mergers are more
likely to grow. Collaborating with an expert can help those
involved in M&A transactions understand the contracts,
finances, and due diligence associated with acquisitions.

Lastly, conflicts surrounding supply chain issues are likely to
increase, especially as automakers attempt to reconcile the quality
issues Mr. Achram mentioned above. As the adoption of electric
vehicles becomes more widespread, it is now more important than
ever to ensure that the charging infrastructure is stable and
vehicle components are functional. If these issues continue, class
actions will likely begin to pop up, and having an expert on your
team that understands the manufacturing, sourcing, and design of
these systems can put you ahead of the curve in a complex
conflict.

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