Revolution.Aero Uplift: Protect intellectual property and beware ‘patent trolls’
Implementing a strategy to protect intellectual property (IP), including guarding against ‘patent trolls’, was the advice to delegates at Revolution.Aero’s Town Hall Special meeting. Three industry insiders shared their insights following Wisk Aero’s decision earlier this month to sue competitor eVTOL manufacturer Archer Aviation for the alleged theft of trade secrets and patent infringement.
“Disputes are more common in the US than anywhere else in the world,” according to Christopher Kao, IP litigation partner, Pillsbury Winthrop Shaw Pittman. “We routinely see as many as 10,000 patent litigation cases filed a year, although that has now settled down to about 5,000 cases.” To ensure your business avoids being snared in costly and lengthy litigation, Kao advises full and effective planning.
“The mistake that a lot of companies make – particularly early-stage companies – is that IP is considered on an ad hoc basis,” said Kao. “But it is important to set a strategy from the beginning that involves the iteration of what type of IP you want to protect via the trade secret route or the patent route.”
The form of protection needed depends on the type of IP firms wish to protect. If the technology can easily be reverse engineered when revealed to the public or competitors, it would be better to select patent protection rather than trade secret protection.
Trade secret theft
When accused of infringing a competitor’s IP – whether a trade secret or a patent – it’s advisable to conduct a full risk assessment, either internally or with the help of outside counsel, such as Pillsbury, he said. If accused of trade secret theft, it is important to analyse any partnerships that may have led to the accusation or the recruitment of competitors’ employees who may have divulged confidential information.
Unlike trade secret infringement, patent cases do not hinge on exploiting information gained from competitors. They assert merely that the accused company uses the technology described in a competitor’s patent. “It’s always worth examining whether the patent is still valid,” said Kao. “It may be that the ideas described in the patent are already well known in the industry and, therefore, you could argue the patent was invalid.”
Another strategy to respond to allegations of IP theft is to differentiate your product by designing a way around the technology you are alleged to have used inappropriately. “It can be costly to go down the route of manufacturing and design. But it may be better and more cost-effective option, if the alternative is being engaged in a multi-year litigation in the courts and spending money on that.”
The length of that litigation could vary from up to 18 months in some US states to up to two to three years in others.
Protecting now against the future action of ‘patent trolls’ is something Kao often advises clients. “Further down the road, you know a market is very mature when you not only see customer IP lawsuits but also non practising entities, or NPEs. These are known in the industry as patent trolls,” said Kao. Typically, investors with no industry involvement acquire the patents of failed innovative companies and wait until the market matures when they bring lawsuits against real businesses which are active in the market in the hope of making a profit. “One thing I advise in this market is, when you see smaller competitors who are failing, consider buying that IP yourself, so that you own it and it cannot be used against you later.”
It was too early to pick winners in the global air taxi market, although front runners were clearly visible, Kolin Schunck, research & intelligence analyst, Lufthansa Innovation Hub, told delegates. “We are in a phase where there are some promising front runners, such as Joby Aviation, Volocopter and Lilium,” said Schunck. But there are also companies such as Beta Technologies, which he described as being more reserved in the past about their use of announcements.
“I am not confident we will see one winner in the end because there are so many use cases,” he added. “Plus, there will be more than one player covering different geographies and uses.”
Schunck went on to describe patents as “a great proxy of innovation”. Patents offer a competitive advantage and Joby Aviation, for example, had built a strong portfolio, he said. “One of its strongest patents so far is a technology that protects against noise. Reducing noise will be a critical success factor for any eVTOL because it will be decisive [in deciding] when aircraft are allowed to fly across densely populated areas.”
Monitoring patent applications is a good tactic in an industry awash with innovation, according to Katharine Stephens, partner and co-head of the IP department at law firm Bird & Bird. “You can always look at what patent your competitors are applying for,” Stephens told delegates. “Then, you can either challenge their patents early on, or try to get them invalidated or work around them. But it’s always better to avoid patten infringement actions because these can be very expensive.”
The Town Hall Special online meeting – Intellectual property, patents and protecting ideas for manufacturers – took place on Tuesday April 20th April. You can watch the meeting here or listen to the podcast here. Meanwhile, next month’s Town Hall – The SPAC Revolution takes place on May 4th 2021.