United States: The Rest Of The Iceberg: The Looming IP Implications Of The Industrial Internet Of Things

Everyone at this point, even the most technology averse, has heard of the Internet of Things (IoT) or seen some of its products. From "learning thermostats" like Nest to "wearable technologies" like the FitBit, the average consumer sees devices moving toward more integration in unexpected places. And, like the proverbial iceberg, these consumer-facing technologies make up only the tip of a much larger wave of innovation, which is already reshaping how business, the economy, and society operates. That rising wave is greatest in the Industrial IoT.

The Tip

At its core, IoT is a simple concept. It's about inter-networking not just traditional computing devices, such as personal computers, laptops, or media centers, but also a host of other objects, such as thermostats, coffee makers, cars, lights, security systems, employee badges, watches, and toothbrushes—to name just a few that have been folded into the IoT world.

The advantage of having each of these devices talking to each other is the same as it was for inter-networking computers: efficiency, communication, and automation. Say you live in an IoT-connected house and wake up on a cold, snowy morning. Your smartwatch detects when you wake up through your movement and heartbeat. It sends a signal for the coffee maker to start and for the thermostat to warm up the house. Once you've enjoyed your coffee, your smart car uses that as a cue to turn on its engine so that you can hop in an already-warmed car and ride to work.

Before you leave though, the washing machine and dishwasher set themselves to do a load of laundry and dishes. The appliances and water heater talk to each other taking turns cleaning throughout the day, but with maximum efficiency because they know you won't be home until dark. With each of these devices connected together, they get the benefit of the information all the other devices collect, and so can do more with minimal additional expense.

The Industrial IoT

The Industrial IoT (IIoT) applies the same concept as the above consumer-facing example, only on a much larger scale and for more specific purposes. Instead of a coffee maker in your home, the same concept is applied to a fleet of coffee makers in office buildings across a whole city. Each one reports back to a central server on its inventory, allowing a beverage-supply company to efficiently plan its resupply route. Or as another example, the component parts in a fleet of construction vehicles each regularly report on their respective wear and tear, allowing the manufacturer to automatically bill and send out replacement parts just before they are needed, saving construction firms time and money in downtime from worn-out equipment.

IIoT systems tend to focus more on industry needs, with a specific efficiency in mind. So we see a wide variety of specific, and often purpose-tailored IIoT systems in particular industries. Compare this with the commercial IoT you see at home. Home consumers seek integration across a large swath of household objects. Without knowing precisely what functions they might like over the life of their IoT devices, consumers want to be able to enable whatever future feature they desire without needing to rebuy an entire system.

As IoT technology matures, disparate IIoT systems are merging towards each other similar to the consumer IoT world, leading to many potential conflicts. For example, GE Predix and IBM Bluemix are already in a collision course as each expands into the analytics space of the IIoT, and the permeating presence of the lighting industry seems destined to spark a wave of litigations as each player vies to upgrade the existing lighting solutions to IIoT-compatible LED systems.

Standards-Essential Patents

In the past, industries have recognized the problems that multiple competing systems can cause. This has been particularly acute in areas like telecommunications, where multiple devices made by different manufacturers must talk to one another. Telecommunication companies have typically relied on a standard-setting organization (SSO) to set interoperability standards to ensure compatibility. Standards will be just as important to IIoT because interoperability is its lifeblood.

Companies who help set a standard often have invested great time and money developing the technology on which the standard may rely, including securing intellectual property (IP) rights like patents to protect that investment. To address this issue, SSOs typically require that SSO members license any patents essential to practice the standard on "fair, reasonable, and non-discriminatory" terms (referred to as "FRAND" terms).

Sophisticated companies in each industry sector are keeping an eye on IIoT standard-setting efforts. While it may be frustrating to be limited to FRAND terms when licensing a patent to a competitor, having competitors adopt your technology and pay you a royalty will promote your profile in the industry. Further, if you don't participate in the standard-setting process, a competitor's technology could end up as the adopted standard, and you'd be the one paying license royalties instead of collecting them.

Large-Scale Litigation May Be Inevitable

While some industries may try to rely on technological standards and FRAND licensing terms to ensure ease of entry into the market, it's likely that other industries will rely on ecosystem "buy-in" to provide customer loyalty. Ecosystem buy-in is a species of "prospective cost" logic.

If a company has already outfitted its shipping fleet with trucks that use GPS locaters from System Y, then it makes more sense to buy the fuel monitors or load-reporting systems of System Y as well. Consequently, multiple "System Y" compatible devices will be used across the fleet, making it inefficient to switch to another system. At that point, the company has bought into the System Y ecosystem of products and won't want to pay "prospective costs" to switch.

These ecosystem efficiencies will, over time, create a handful of large, powerful default standards, which will perform analogous functions but will have separate competing families of products. If this sounds familiar, then it should. This same storm of factors was partially the reason for the explosion in litigation between tech giants, Apple and Samsung, in the on-going smart-phone wars. In a way, that was the first wave of large-scale IoT patent wars.

An important distinction for firms entering this expanding field, though, is that the smart-phone wars were constrained to mostly just phones. The technological players were well defined, and each knew who the others were likely to be. The wars were as much about carving out territory in the market as about placing entry barriers to new, disruptive firms that might challenge existing players.

IIoT seems destined to be much harder to control. By its nature, it is set up to encourage disruption, as tech companies move into industrial areas they have never touched before, and industrial companies start developing technologies that widely apply beyond their industry. Amazon's constantly morphing role in the American tech space, from online goods purveyor to Amazon Web Services provider, is just one example of the power of the IoT. As these industries are disrupted, it becomes harder, if not impossible, to predict precisely where the next major legal challenge will come. Therefore, companies have fallen back to the conventional patent practice of developing or acquiring defensive patent portfolios as an essential part of expanding into IIoT.

Conclusion

IIoT is already changing the way industry operates, and this new frontier has pushed its way into the world of intellectual property law. For pioneers in any field, monitoring and participating in any standards-setting efforts in their industry area becomes critical. Further, maintaining a comprehensive IP portfolio will be vital to protecting against the waves of litigation to come. Even with these legal hurdles, though, the IIoT is an area of massive opportunity and growth.

Originally printed in  IoT Central on April 19, 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Events from this Firm
23 Sep 2018, Seminar, Chicago, United States

Finnegan is a sponsor of the Intellectual Property Owners Association Annual Meeting, supporting the Women in IP Networking Brunch.

26 Sep 2018, Webinar, Washington, DC, United States

This latest series of webinars will explore emerging trends in the changing intellectual property (IP) legal environment in Europe and the United States.

26 Sep 2018, Webinar, Washington, DC, United States

This latest series of webinars will explore emerging trends in the changing intellectual property (IP) legal environment in Europe and the United States.

 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions