Patent Licensor’s Driverless Car Patents Could Run Out of Gas

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By Malathi Nayak and Tommy Shen

Patent-licensing company Acacia Research Corp. is sitting on patents that underpin emerging autonomous vehicle technologies being developed by companies such as Alphabet Inc.—a money-making strategy that hinges on plenty of driverless cars hitting the road before the patents run out, Bloomberg Law data show.

As companies race to build the world’s first commercially viable self-driving cars, courtroom clashes are expected over intellectual property. But Acacia could have a tough time winning significant damage amounts without any commercial driverless cars on the market for it to assert its patents against, industry sources said.

Self-driving cars probably won’t be available to consumers until 2020—the same time some of Acacia’s patents are expected to expire. That could be an obstacle to Acacia successfully monetizing the patents through a litigation campaign against car companies, industry sources told Bloomberg BNA.

“Fully autonomous vehicles don’t exist commercially at this point,” Matthew Rappaport, president of patent analytics and software firm IP Checkups, said. “Part of the challenge is that in order to successfully assert patents, there needs to be significant amount of damages, and without a commercial product, damages might be limited.”

Court records show little activity from patent-holding companies directed at the driverless car market. But the nascent market has already seen two prominent technology companies, Alphabet Inc.'s Waymo and Uber Technologies Inc., locked in a trade secret theft and patent infringement dispute.

Oft-cited Patents

Acacia’s 49 patents applicable to autonomous vehicles represent less than 1 percent of a Bloomberg Law data set of over 6,300 patents covering self-driving car technology. But they stand out, as they have been cited 3,020 times in more than 1,060 patents belonging to companies including Alphabet’s Google, Uber Technologies, Honda Motor Co. Ltd. and Ford Motor Co., according to Bloomberg Law data.

In patent applications, inventors often cite references to other patents as prior art that informed their invention. Patent examiners may also insert prior art citations into applications if they form the foundation of a certain technology. Multiple citations are considered one measure of patent value.

Google’s 346 patents have been cited 2,383 times in other companies’ patents. Google has the most autonomous vehicle patents in the Bloomberg Law data set, with its name on 5.5 percent of those patents. The sample set, which covers granted and pending patent applications filed in or after 2001, does not include the entire autonomous vehicle patent universe but covers critical technologies such collision prediction and sensors.

Acacia’s oft-cited patents have expiration dates ranging from 2017 to 2029. The oldest patent in its portfolio was filed in 2002, well before the autonomous vehicle development boom. The patent does not mention autonomous vehicles specifically but covers technology for advanced vehicle-to-vehicle and vehicle-to-stationary object communication. A patent filed in 2015 involves technology that guides a person to a spot by entering the phone number of a location in an autonomous vehicle.

Acacia declined to comment on its automotive patent portfolio, which is held by its subsidiary American Vehicular Sciences LLC.

When to Strike?

Through a 2012 agreement, Acacia acquired more than 350 automotive patents that cover safety, diagnostics, and navigation technologies from David Breed, an engineer who invented technology used in airbags. Breed is president and general manager of Florida-based Automotive Technologies International Inc., a research and development company specializing in next-generation safety products.

The American Vehicular Sciences portfolio includes 49 patents that relate to autonomous vehicles alongside conventional automobile technology patents. The deal came after Breed began talks with Acacia and other patent-holding companies as he was looking to license his patented automotive technologies, the inventor told Bloomberg BNA.

Acacia’s best bet could be to strike just as commercial autonomous vehicle products launch—or to go after companies that are offering certain driverless vehicle features in cars already available on the market, legal experts said.

The market for self-driving cars will gradually accelerate after the first commercial autonomous vehicle is expected to be made available in 2020, according to Mike Ramsey an analyst with research company Gartner Inc. By 2021, 10 percent of new vehicles will have autonomous driving capability, compared with less than 1 percent in 2017, according to a recent report from Gartner. Moreover, the adoption of autonomous driving technology will peak between 2030 and 2045.

“The timing of when autonomous vehicles really begin to hit the market is of course a relevant fact,” said Joe Siino, president of Via Licensing Corp., which builds and manages wireless technology patent licensing pools. “But it is also possible for the patents to apply to connected vehicles, which are not quite yet autonomous.” Some patents could be implicated sooner, he said.

Litigation Woes

But even with strong patents, the road to making money by asserting them is often a rocky one, as Breed’s experience with Acacia attests.

In 2012, Acacia launched a series of lawsuits against well-known auto companies for alleged infringement of patents covering technologies such as vehicle diagnostics in conventional cars. Since then, it has filed 61 complaints, including some cases that were refiled when they were transferred between courts.

American Honda Motor Co., Mercedes-Benz USA LLC, and Toyota Motor Corp. settled some cases with Acacia, court records show. However, Toyota was also successful in invalidating patents for some of Breed’s inventions through the Patent Trial and Appeal Board’s inter partes review process, which lets parties challenge the validity of patents asserted in infringement lawsuits.

All told, Breed and Acacia went 50-50 on settlements totaling around $10 million, leaving Breed with approximately $4 million after paying attorneys’ fees, he said. But Breed was unhappy—not only with Acacia’s licensing and litigation efforts, but the entire U.S. patent system.

“I have been so discouraged and upset with the way Acacia does business that I have stopped working with them,” Breed said. Meanwhile, Breed is looking to China, which he says has “a much stronger patent system.”

His research companies, ATI and Intelligent Technologies Intl. Inc., are developing mapping and airbag systems and have stepped up patenting efforts in China, where many clients are based, he said.

“The U.S. patent system is pretty much destroyed” due to major changes wrought by Congress’ 2011 passage of the America Invents Act and recent Supreme Court decisions curtailing patent-eligible subject matter, Breed said. Although his companies file U.S. patent applications to defend against potential lawsuits, “Our U.S. patents are essentially worthless,” he said. And, he no longer initiates litigation.

“I would not dream of suing anybody anymore as the costs are just horrendous and the odds of winning are close to zero,” Breed said.

What’s Ahead

But even given the precarious nature of patent litigation, there is little doubt that more lawsuits will come once there is a robust autonomous vehicle market to support them. More companies making more driverless cars that more consumers are buying means more profits and intellectual property to fight over—raising the stakes for everyone.

Already, automotive and technology companies have been filing and acquiring numerous driverless car patents that are likely to be at the center of future litigation. As for Acacia, Breed says he has no knowledge of the licensor’s plans to further litigate his autonomous car-related patents, which he no longer owns.

Early disputes over driverless car-related technology have already arrived in court, as evidenced by the high-profile trade-secrets fight between Waymo and Uber over allegedly stolen sensor technology in the U.S. District Court for the Northern District of California.

Gartner’s Ramsey called that ongoing case the “opening salvo,” with patent-holding companies like Acacia possibly waiting in the wings to launch their own complaints.

“There probably will be more groups combing through patents, licensing, and buying them in attempts to make sure that anything that comes out of the industry that is expected to produce large revenues in the future can be monetized,” he said.

To contact the reporter on this story: Malathi Nayak in Washington at mnayak@bna.com; Tommy Shen in Washington at tshen@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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