- Sakshar Law Associates
Intellectual Property issues surrounding the Automobile Industry
Updated: Dec 17, 2022
In the past decade, the mobility sector has evolved exponentially with new and impressive innovations hitting the market every now and then. Today, there are many different features in cars, such as automatic brakes, push-button start, remote start, parking cameras, and many more. The better and innovative the features, the more popular and desirable the car. Most cars today, including the cheaper options, offer certain similar features which bring their manufacturers to ensure that the new technologies developed by them are not being emulated by other manufacturers. Therefore, there is a need to protect new elements through intellectual property rights protection, which can strike a balance between innovation and due credit given to innovators.
However, even though the automobile industry in India is witnessing a boom, many significant disputes have arisen with respect to industrial designs, patents, and copyrights of companies where each manufacturer of advancement wants to claim its sole propriety. A report by the Federation of Indian Chambers of Commerce and Industry (FICCI) has estimated that the automobile industry bore financial losses worth Rs. 10,501 crore due to counterfeiting activities in financial years 2013-2014. This brings us to the issues with respect to intellectual properties which are common within the automobile industry.
Many companies and manufacturers try to override IP laws by intentionally imitating or fraudulently copying the patents of others. Counterfeiting auto components amounts to intellectual property theft which can amount to the infringement of copyright, designs, patents, and even trademarks.
In today’s world where the market is filled with competitive products, consumers often buy cheaper alternatives, which becomes a problem, because if such alternatives have counterfeited the features of some other vehicle, then it leads to financial losses to the actual manufacturer. There are many other loopholes, such as red tapeism, overpriced litigations as well a grey economy which could lead to a further loss of revenue for a brand, which can discourage manufacturers from entering the market or further innovating new products.
This is why there is a need to incorporate stricter IP laws in order to make the market conducive to the growth of innovations, knowledge, and transfer of technology not just within India but also between India and multinational companies. Apart from this, new technologies have resulted in automobile manufacturers working outside the industry in collaboration with software engineers who can design software for new cars.
This data is of worth and needs to be protected; hence IP and other compliance issues need to be navigated accordingly. The ambit of IP rights is very wide in the automobile industry and it is important to understand the basics of it.
Copyright and Design Rights
Design is the most attractive feature of a car and becomes a distinguishing feature from other cars in the market. It can thus act as a trademark through which consumers can identify its origin. According to the Designs Act, 2002, when a design is registered, the proprietor has copyright in it for 10 years from the date of registration. If the design is unregistered, one can still claim copyright in that design. This was cleared by Delhi High Court in the case of Microfibres Inc. v. Girdhar and Co. (2009), where it was held that if the design is an ‘original work of art’, capable of protection under the Copyright Act, there is no requirement of registration in claiming copyright. With the growth in electrification of vehicles, investing in making new and innovative designs can be very expensive, and registering the design would help in safeguarding the same.
By granting a legal monopoly of sorts, patents protect and encourage the development of new technologies. According to the Patents Act, 1970, patents that are granted last for 20 years from the filing date of application. For these years, the patent is the sole authority that can exploit or license the patent to a third party, to the exclusion of all others. Globally, patents in the automotive industry have been filed in respect of AI-integrated vehicles. Due to the convergence of automobiles and computer technology, there has been an increase in licensing rows, particularly in respect of Standard Essential Patents (SEPs). With the increasing popularity of electric vehicles, the need for many parts used in automobiles is being eradicated. Resultantly, many companies worldwide have filed a lot of patents for manufacturing components for electronic cars. The patent system is still adapting to these new changes, hence, there is a need as well as scope for the further development of the patent system in India to protect the automobile industry.
In the automobile industry, there are some widely recognizable and valuable trademarks that have a substantial brand value. Registered trademarks provide their owner with a powerful right as trademarks can last indefinitely. In recent years, manufacturers have wanted to register trademarks with the aim to widen and extend the scope of protection. For example, Jaguar had sought to get its Land Rover Defender model registered as a 3D trademark. However, the UK Intellectual Property Office refused to warrant protection because it found the shape to be non-distinctive.
Intellectual Property is one of the most valuable assets that an automobile company owns. Since innovation and technology are rapidly evolving, there is fierce competition among automotive suppliers and manufacturers, and the protection and enforcement of IP will prove to be indispensable. Long ago, automobile companies focused more on safety features such as airbags and seatbelts. But in today’s time, much smarter inventions can be seen in vehicles, the secure evolution of which would require a major role of IP.
The Indian automobile industry has paced with the impact that intellectual property has had in their business field. But compared to the US and European Auto Industry, India is still way behind. Keeping a long-term vision for growth in mind, the Indian automobile industry should go hand in hand with the increased incorporation of IP. Hence, identifying, recording, and registering one’s own IP should be the goal of every automobile company. The Indian automotive sector must realize that IP is the very essence of the present economy and has the capability to hold this industry against a competitive and strong market force. This would ultimately be a step towards a brighter future in the Indian automobile industry with increased participation in making the economy stronger through the contribution of new and innovative technologies.
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