Why Do Automotive, Autonomous & AI Startups Need Patents

As the landscape of automotive changes from mechanical to software- silicon- and idea-based, a well crafted patent strategy becomes very important. At the recent LA Auto Show two new automotive companies Karma Automotive and Faraday Future said that they are interested in licensing their intellectual property and patents. Startups and new automotive companies are creating new ideas, designs and technology that could change the face of automotive and be profitable as long as the companies protect their ideas with patents.


Both Faraday Future and Karma want to develop great cars for consumers but are also developing things that are interesting for other OEMs, Jeffrey Hannah, director automotive SBD America told me at the LA Auto Show.


Since this is such a hot topic for the automotive industry AUTO Connected Car News contacted an expert on the subject— Alistair Chan patent attorney, engineer, and innovator to learn how a new automotive company or startup can use their IP and patents to their best advantage.


Why does a startup need a patent strategy?


For startups who are seeking venture capital, the investors want to see patents to know that the ideas are potentially protectable and can help prevent others from entering the market. Down the line, a patent strategy can generate revenue and the ability to cross-license.  Any company getting into a competitive area, especially designing a new product line should have a patent strategy/patent budget which can be used to protect their development investments and may eventually be used to generate revenue. Many parts, systems, technologies, and processes that go into a new drivetrain or any car system should be patented.


What can a startup do with their patents?


For startups attempting to enter the automotive marketplace it is inevitable that they will need to use technologies that have been previously patented by others.  To protect themselves, startups will need to have their own patent portfolio which they can use for cross licensing or to position themselves better in a licensing negotiation.


Should a startup or new automotive AI company show their ideas even before they are patented?


It’s very important to get started off with a patent strategy and patent filings before you ever go public with your product.  Many inventions, although innovative, are very easy for another company to replicate. It is also best to have patent applications on file before showing the inventions publicly in order to preserve foreign patent rights.”


What kinds of mistakes should a startup automotive company avoid?


Often as a company starts up they take on patent counsel that is either unsatisfactory or is too high priced, because they are in a scramble to find someone or it comes through the firm they are using for their financing or business set up. Startups need to choose their legal counsel early and wisely.  Numerous excellent patent attorneys exist that work at much fairer prices than large firms yet offer more personalized service and expertise due to their lower overhead.


What are the different types of patent strategies that you have seen in automotive and AI startups? 


There are different strategies that you can take when you are making a patent strategies such as just to protect your product or to make it broader around the space so it’s difficult for others to enter the space. It’s also important to see what is the industry going to look like in 5 or 10 years and how your patent strategy works in the future.


Patents have been very important revenue generators for some companies. Chan gives the example of Qualcomm. Qualcomm was in on the game very early with chips for CDMA. They also had a strong patent strategy for the technology. Today, much of their income comes from licensing their technology rather than building chipsets.


What’s going on with Paice and their hybrid patents? Paice is suing BMW over alleged patent infringement. Can you comment on their patent strategy?


Paice clearly has the world’s top portfolio of hybrid technology patents and with the support of the Abell Foundation has a business model for licensing those patents to generate revenue.  Paice early on had the foresight to patent the hybrid technology that they were developing. At the same time they shared their ideas with the industry knowing that they had a patent strategy to protect it.  Paice’s ability to share their innovative ideas helped the industry adopt the technology and eventually led most major players in the hybrid market to have to license their patents. BMW has been a holdout which may now be tested in the courts.


What should startups ask a patent attorney before hiring one?


They should find out if the attorney has experience in automotive, engineering  and startups and if the attorney understand their product or concept. In the case of AI it can be really tricky because the inventions may be software, hardware, applications, systems level, algorithms, or any combination of those.  Therefore, it is very important to find an attorney with a breadth of experiences, as well as an expertise in AI. They should also ask about costs, as a small independent firm is generally a fraction of the cost of using a large firm but can offer similar levels of service.


Why do like about being a patent attorney?


I enjoy learning about new technology, helping people and bringing new things to life.  I love seeing the commercialization of the products that I help patent and crafting an ongoing patent strategy for them.


If there is one piece of advice you would give to startup, new mobility, or automotive company what would it be?


Invest in a patent strategy early and continue with a directed patent strategy throughout the development cycle of your products.

About Alistair Chan

Alistair Chan is a Seattle-based patent attorney and founder of the Intellectual Property Law Firm Alistair Chan IP LLC with more than 20 years experience in patent law and over 12 years at an innovation company.  He has a PhD level engineering background in mechanical/aerospace/controls/AI engineering and is a named inventor on over 150 patents. He can be reached via email at ac@achanip.legal or on Linkedin.