One of the most important lessons that many automakers learned this year is that it's smarter to take licenses on reasonable terms from patent pools than to waste money on infringement litigation. It's easier said than done to refuse pool licenses: if licensing is inevitable, a one-stop shop likely provides transactional efficiencies and serves to obviate litigation. Now, cellular standards are far from the only kind of patented technology that modern vehicles incorporate.
Electric vehicles (EVs) are a fast-growing market, and involve even more patented techniques than conventional cars. Elon Musk made his famous All Our Patent Are Belong To You pledge in 2014. The EV industry has come a long way since, and the need for transactional efficiencies in patent licensing has definitely increased.
Last week, patent pool administrator MPEG LA made an announcement (PDF) regarding its EV Charging License. Given this blog's frequent reporting and commentary on automotive patent licensing, I wanted to share some thoughts and observations on that pool.
MPEG LA's website explains that this pool relates to "technologies underlying worldwide standards for conductive AC and DC charging, connection, communication and safety used in equipment that provides electric charging in and to electric vehicles. Standards used in China, Europe, India, Japan and the US are included." In Europe, the Combined Charging System (CCS) is a particularly widespread standard. Other well-known standards are Japan's CHAdeMO.
Ten days ago, Tesla announced that it would now open its North American Charging Standard (NACS) "to the world." Tesla would like to see "charging network operators and vehicle manufacturers to put the Tesla charging connector and charge port [...] on their equipment and vehicles," touting the advantages it offers according to Tesla. As CNN explains, Tesla has previously "offered to allow other companies to use various Tesla-patented technology, but doing so meant companies had to abide by Tesla’s 'Patent Pledge.'" Whether or not one welcomes Tesla's initiative, there can be no doubt that EV charging is red hot--and it's closely related to topics this blog has covered before.
MPEG LA's EV Charging patent pool has the following licensors (and is encouraging more patent holders to join):
General Electric (more specifically: GE Hybrid Technologies, LLC)
Mitsubishi Heavy Industries, Ltd. ("MHI"), which is part of the Mitsubishi Group
It's not hard to imagine that those entities hold relevant patents. There is no lack of transparency: the patent list is available on the web, as is a list of the standards, and a cross-reference chart (PDF) that maps "illustrative essential claims" to specific sections of EV charging standards. As far as I can tell, this field is like codecs in the sense that any given patent may read on more than one standard because they all use a certain set of common or at least similar techniques.
Some of the essential patents cover charging in a narrow (strictly electrical) sense, such as certain safety mechanisms, while others read on the protocols for communication between an EV and a charging station, such as High-Level Communications (HLC).
MPEG LA's EV Charging Patent Portfolio License has now been fine-tuned "to make the License more effective in addressing the market’s needs now and in the future," the press release says. At least two aspects of "EV Charging 2.0" (that's what I call it, not a name used by MPEG LA) should make this offer more palatable to the automotive industry:
Normally, patent pools can extend licenses only at the car level. There are reasons for that, and there's no point in blaming pool administrators: it's the licensors' choice. This pool, however, is also prepared to license tier 1 (i.e., direct) suppliers, and we're not talking about "have-made rights" but freedom to operate in the sense that suppliers can sell their components (licensed on a per-unit basis) to any number of OEMs.
Automakers like to deflect royalty demands to their suppliers, but if their suppliers don't have access to a license, the car makers get sued. MPEG LA's EV Charging pool in its current form affords the automotive industry a degree of flexibility that I haven't seen from any other patent pool.
There are important differences between the types of chargers used on residential property versus the ones for commercial use. Interestingly, the EV Charging pool doesn't distinguish based on field-of-use restrictions. Instead, it's all about functionality: for example, commercial users will typically place higher demands on the data communication between vehicles and charging stations (not least with a view to charging in a financial sense). With MPEG LA's royalty rate being based on the licensed functionality, those who use a subset of the available functionality in a commercial setting will pay less than those who make more extensive use of the covered standards.
From time to time, I discover interesting pools that can promote licensing and help to minimize litigation. About two weeks ago, I discussed Sisvel's narrowband IoT patent pool, with which MPEG LA's EV Charging pool has in common that those pools are not just about collecting royalties on ubiquitous technologies but very much about spurring adoption.
EV charging is an interesting topic. I admit that I always DC-charge my car at home because I don't use it more than once or twice a day and it's best for the battery, but when I'm on the road, I obviously charge with AC.
The world needs more electric vehicles and more charging stations. MPEG LA's EV Charging pool has enormous potential. It is in the interest of both licensors and licensees to make it work. Some companies are patent holders and major implementers at the same time (which, by the way, also applies to many of the companies that made some MPEG LA codec pools, such as the AVC/H.264 pool, very popular). Patent-owning implementers should be particularly interested in the pool approach to EV charging patents (and in influencing developments through active participation).
For automotive patent pools, 2022 is the most eventful year so far. And there's more than a month left...
