How Toyota Is Using Patents To Slow The Growth Of Hybrid Vehicles
from the what-a-shame dept
Slashdot points us to a WSJ story about how Toyota has purposely built up a patent thicket so thick that basically no one can build hybrid vehicles without paying up:Since it started developing the gas-electric Prius more than a decade ago, Toyota has kept its attorneys just as busy as its engineers, meticulously filing for patents on more than 2,000 systems and components for its best-selling hybrid. Its third-generation Prius, which hit showrooms in May, accounts for about half of those patents alone.Defenders of the patent system often say that there's no problem: others should just "invent around" the patents. But when companies create a patent thicket like this, that makes it effectively impossible. The end result? We all lose. This makes it that much more expensive and difficult for others to innovate, because they need to allocate money to Toyota, rather than to their own innovations. It slows down Toyota as well, since it's devoting so much time and effort to lawyers. And it massively slows down the market. Rather than competing on innovation and a better product, the focus is on patents. And since it slows down competitors it means Toyota doesn't need to innovate as fast either. In the meantime... not only does the economy suffer, but so does the environment.
Toyota's goal: to make it difficult for other auto makers to develop their own hybrids without seeking licensing from Toyota, as Ford Motor Co. already did to make its Escape hybrid and Nissan Motor Co. has for its Altima hybrid.
Of course, we can't just blame Toyota for this. It's the system that created such a scenario. In fact, Toyota recently went through a long and arduous patent battle with someone else over patents held by that guy -- resulting in Toyota having to pay a tax on every hybrid it makes. So, perhaps it's no wonder that it's trying to gobble up as many patents as possible around hybrids, if only to have the necessary "stockpile" for future patent battles against competitors. Once again, it's the entire patent system that's leading to this questionable result that harms everyone... except the lawyers, of course.
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Filed Under: hybrid vehicles, patent thicket, patents
Companies: toyota
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So what is the alternative?
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Re: So what is the alternative?
My view is that strong patents make strong economies.
For one writer's take on poet laureate Robert Frost's immortal words "good fences make good neighbors," see http://bit.ly/d60wyFor one writer's take on poet laureate Robert Frost's immortal words "good fences make good neighbors," see http://bit.ly/d60wy
If you know and respect the boundaries of my land (real property) you'll keep off the grass voluntarily and I'll have no need to sue you for trespassing. If, for your own convenience, you choose to cut across my lawn to shorten your path between your home and work, I'll ask you to desist. If you are honorable, you will do so. But if (heaven forbid) you're dishonorable, I may need to avail myself of the judicial system. Society encourages resolving our dispute that way rather than my using a shotgun to make you look like Fearless Fosdick. (See http://bit.ly/GmtrB)
To operate the "levers" of the legal system, I'd need to get a lawyer. But that expedient would be necessitated by your choice to disregard my rights and trample the grass.
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wow, I thought the 1st gen Insight was the 1st...
I sit corrected. I take it Honda pays Toyota and has been
since 1999. I'll bet that burns the suits up in the Honda boardroom.
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Agree with patents in this case
While I am against of abuse of patents, I think that is not really the case here. Toyota was researching and building hybrid cars, when almost everyone else was building SUV's. They took a big risk doing what they did and should be allowed to profit from it.
There may be some abusive patents in the portfolio, but I suspect the vast majority come from genuine innovation on Toyota's part.
If anything, I think the whining about Toyota's patents is coming from american car companies that had plenty of chances to innovate and be prepared for this, but chose not to. They are now paying the price.
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Agree with patents in this case
While I am against of abuse of patents, I think that is not really the case here. Toyota was researching and building hybrid cars, when almost everyone else was building SUV's. They took a big risk doing what they did and should be allowed to profit from it.
There may be some abusive patents in the portfolio, but I suspect the vast majority come from genuine innovation on Toyota's part.
If anything, I think the whining about Toyota's patents is coming from american car companies that had plenty of chances to innovate and be prepared for this, but chose not to. They are now paying the price.
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Re: Agree with patents in this case
DB, at least there's now two people to stone, hope that helps ;)
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Re: Agree with patents in this case
So what is the proper use? What is the intent of the patent system? Is there a way to use a patent system to meet its intent?
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Re: Re: Agree with patents in this case
I'd say the real sticking point on patents is how long they are in effect. As it stands, patents are valid for 20 years which for any sort of technology patent is a really damn long time. If anything, reduce the length of patents to force a patent holder to bring their patent to market or risk losing it without getting the benefits of the patent.
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Re: Re: Re: Agree with patents in this case
This would be an excellent solution to solve the patent conundrum.
On the other hand if the government just got out of the business of protecting business models who knows what would happen. Maybe cooperative development with competitors so R&D costs are reduced, better ideas are produced, and no-one can rip-off because they are all invested in the research as well.
This is what I see the future becoming. Not giant corporations spending billions of dollars on research that another giant corporation is already conducting.
The amount of waste that IP law produces in my mind is staggering and that doesn't even consider the court costs.
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Re: Re: Agree with patents in this case
This should eliminate all the stuff that could be easily recreated given the description of the invention.
Ultimately, IP law should enrich the public domain.
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Re: Agree with patents in this case
GM created and patented the catalytic converter, and the other companies licensed that under RAND terms. It would take some research to know if they were forced to license, and/or forced to keep it reasonable.
Now, if the patent thicket is full of the kind of crap that we love to hate, because the PTO has lamely granted obvious/prior-art things, well, that's a different story.
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Re: Agree with patents in this case
Patents shouldn't last forever. But a company that innovates should be allowed to profit.
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Re: Re: Agree with patents in this case
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In this case, Toyota really did invest for more than a decade while everyone else stood idle. Also, if Honda has been paying on those patents since 1999, they'll be coming up on expiration soon (relatively). Not sure how "thick" the thicket is, but Toyota should get something for their trouble.
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Re:
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Ford and Hybrids
Sadly, big business is being put ahead of the environment in our community where Ford and Pan Am Railways is partnering to pave over an aquifer and unload Fords over a sensitive aquifer that provides water to 15,000 people.
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Re:
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What is more hilarious is that Mike claims the market has been slowed by patents, and yada, yada, yada, and yet all he is doing is presuming this is the case, rather than noting that the number of hybrid models per year has been doubling over the last two or three years. Perhaps Mike does not understand either the word "massive" or the word "slowing."
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Re:
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Older: "Whats your Contribution to Society?"
Today: "Whats Society's Contribution To You?"
Seems Patents and relaxation of Copyright partially facilitated that change, and created some sort of a method of economic exploitation.
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Re:
How about this instead:
Older: "we can limit people's access to goods and jack up profit margins WAY up while abusing our customers and our supplier"
Today: "we can't hold back efficiencies for much longer without government intervention"
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Honestly, you do not need lawyers to solve this problem, you need Engineers. When you are developing something new there are an unlimited number of paths you could choose to solve your problem. Patents represent paths you cannot go down without paying - every other path is still available for free. By tying up a bunch of tech in patents Toyota is forcing its competition to pay or innovate. Patents foster innovation by forcing folks to work around them. Just using someone else's work is not very creative or innovative.
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Re:
Also, the real problem is that people are patenting everything but breathing air, and the patents are so broad that anything you do is violating their patents. Don't kid yourself, no company today's wants to compete on innovation and creativity if they don't have to. Lawsuits are cheaper.
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Without patents consumers get to pick among everything being produced and companies will naturally produce what consumers want in the proportion that each variance is demanded at the most economically efficient prices for each variance of a product.
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Now, Ford was forced to develop another alternative because of Toyota's patents. Had Ford been able to copy, they would have copied Toyota's Prius and called it something else, maybe a Ford Fantasy. Consumers would then have a choice between the same product by two producers. The price would have been driven to the marginal cost of production, and consumers would have "won" by paying less for essentially one choice.
However, because Ford was forced to develop another alternative, they developed the Ford Fusion hybrid, which is running rings around the Prius according to nearly every reviewer that has driven the hybrid Fusion.
Now, do consumers win because they get a cheaper Prius, or do they win because a better car was designed around the patents on the Prius? I argue for the latter.
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Re: Re: Re: Re: Re:
Since Toyota is blocked by Ford's patents, they will have to develop their own, unique, competitive technology. May the best, unique technology win, because that is win consumers win, not when companies copy each other.
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Re: Re: "Lawsuits are cheaper" ?
Gee, I dunno about that. These days, as reported by the survey conducted biennially by the American Intellectual Property Law Ass'n, it may cost millions of dollars to take a typical high-tech patent lawsuit through the numerous stages of a court battle.
As I say in another comment in this overall thread, if you act honorably and respect my right to the invention as defined by the claims of the patent, I won't have to sue to keep you off my property.
For further discussion, see ya on Twitter. @TechLaw_Elman
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"harms everyone... except the lawyers, of course."
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Not necessarily for "future patent battles"
I'll suggest that one other use of this stockpile is for the purpose of trading, or to put another way, cross-licensing.
"I have patent A, you have patent B. Instead of paying royalties, I can let you use A if you can let me use B..."
It does however, tend to create a barrier of entry for companies that has not yet created their patent stockpile.
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System working as designed.
I think its just fine they make money on those patents now.
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Re: System working as designed.
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Not Toyota's Issue
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NOT "Effectively Impossible"
This is a great example of where patents - and a desire to avoid paying a competitor to license their system - actually spurred innovation. Now Ford has a product which many analysts believe represents a solid evolution and restatement of hybrid technology, on a platform that is reviewing extremely well (and with better crash tests, mileage and expected quality!) than the present Camry hybrid. Boy those Toyota patents sure stifled innovation. Wait...what???
Look, I agree in general that the hyper-patenting trend of slapping one (or attempting to) on every little thing, not to protected your investment, but largely for the purposes heading off competitors can negatively impact innovation in some cases, even though it is surely a legal practice. But this is a really poor example that is readily refuted.
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Re: NOT "Effectively Impossible"
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consider the alternative
but this is more of a problem in biotech. between trials and testing, it takes somewhere between .5 and 1.5 billion to bring a blockbuster drug to market (the anti-patent people say it's .5, the pro-patent say it's 1.5). then you have marketing on top of that. in most cases, when a generic drug is released, even if the doctor writes your prescription for the brand name drug, you have a right to demand the generic from the pharmacist (so the brand is always marketing for itself and the generic). but once a drug has been discovered to have a specific effect, that's it. it's trivial to manufacture the drug from there. the result is that whenever a generic gets released, the profits erode somewhere between 50 and 90% (also debated by the anti/pro-patent crowd). if the generic doesn't have to pay for R&D, and by law, is allowed to pull a bait and switch, there's no reason to develop drugs. this and toyota's situation are EXACTLY what patent law was designed for.
the real problem is the obviousness standard because it's always going to be subjective. it's an even bigger joke because obviousness will come up in court cases where the court must decide what kind of education/experience is held by a person of "ordinary skill in the art," and it's almost always 5-10 years and 1 or 2 degrees more than what the examiner had. to "fix" this, some people in power thought that if a patent has not been filed explicitly covering something, it should be patentable, regardless of how simple or non-technological it is. the side effect was that ridiculously obvious and mundane things would get patented. these people are becoming a minority, so most of the other problems have been fixed, but we're still clearing out the bullshit patents from the system.
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Innovation vs. Litigation
No, it just makes so only the largest mega-corporation could ever produce such a good without getting the crap sued out of them. In your patent friendly world only people with a team of lawyers could ever hope to innovate and produce successfully.
In this way Patents lock in business models of those who can protect/fight for their concepts in extended legal battles. What does this have to do with innovation again?
Keep in mind the most innovative car business started in people's back yards. I guess that it just plain off limits in the new patented world.
Have you examined Ford Patents on Hybrid versus Toyota? Are they really that different and innovative compared to each other or did they just take an idea that has been running on every diesel train in the nation and applied it to a car?
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Re: Innovation vs. Litigation
However, all your lovely preamble statements are merely dodging the question. Here is a lovely example of a highly innovative field (hybrids), where patents have driven competitive companies to design around existing IP, ultimately coming up with better solutions. The system not only worked, it worked exactly as Thomas Jefferson envisioned it. To then try to say, well it only works for big companies with lots of lawyers is nonsense. There are many inventive and innovative companies, however, if you focus is only on the few examples of when patents do not work and not on the tens of thousands of times they do, you quickly get the wrong impression.
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Not just for countersuing anyone who sues them for patent infringement, but to ensure that no one else grabs patents on something they want to make to avoid being sued for patent infringement (since people can't apply for and then sue on patents that Toyota already owns). No, I don't blame Toyota one but, but to the extent that they initiate lawsuits against others who allegedly infringe, that's where I would blame Toyota and to that extent I would get upset with them (to the extent that they just grab patents to counter sue anyone that sues them first or to just make sure that they are the ones who own the patents on designs they might develop so no one else owns those patents and sues them, then I don't blame them).
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Literally Limit Patents (To less than one per day)
I would like to see patents collected in secret and a list of 12 - 365 top candidates for patents to be created. A set of engineers would then describe the -task- those patents were to accomplish and colleges around the country would have a year to try and duplicate any patents that they find. Other corporations would also have time to file. ANY duplication of the patented process would thus invalidate the patent as obvious to other skilled practitioners.
I imagine this process would probably take 2-3 years to complete. A year for collection. A year for public competition to duplicate the effort. Then the time required to examine the efforts towards the patents to ensure that they aren't getting too close or duplicating it.
Limiting patents to 10-20 years. Limit copyright to 20 years. Also, any period of greater than a year when either is unavailable would automatically and irrecoverably revoke the rights on the basis of abandonment.
Trademarks, now those should exist until abandoned. (Thus the name Mickey Mouse attributed to that cultural icon would be a trademark. However just Mickey in a generic artistic setting, or attributed to say a moose would not infringe.)
Obvious names wouldn't be protected (EG: Fido the dog), nor would concepts and contexts that had become part of popular culture. The test for that would be to ask a representative sample of plaintiff and defendant selected target audiences about samples of the 'original' and 'copied' work to determine attribution of influences. A scholarly examination of the surveys would, if audiences are selected properly, determine any cultural source works and the degree of material which should actually be tested for unattributed inspiration, or mutual discovery.
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Compulsory Licensing
Compulsory licensing in certain fields of research (environmental engineering, medical, etc.) that are in line with government agendas would foster considerably more competition (the alternative source of innovation as opposed to "working around" the claims of the patents), which is good for both the market and the consumer.
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Re: Compulsory Licensing
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Re: Compulsory Licensing
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Patent working as it should
It would be absurd if the patent system were gutted so more companies could profit more by building Toyota-like hybrids. Frankly, I think this technology is environmentally irrelevant considering its carbon footprint measured from production though disposal. They use less gasoline, and provide decent economy for their owners, but not *that much less gasoline than, say, Toyota's current 4-banger in the Corolla.
That being said, I *do worry if patents are slowing the release of environmentally relevant technologies, such as Hydrogen Fuel Cell vehicles.
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No.
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Re: No.
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Re: Re: No.
However, I disagree with your assertion that overly broad patents are in the minority. I would request a citation, but I'm too lazy to look one up to bolster my own assertion. I will note that many of the complaints levied against the patent system involve overly broad/generalized patents, and I don't believe that people are cherry-picking examples; bad patents are granted every day.
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Re: Re: Re: No.
The first issue (the second you mention) is the the issuance of "bad patents." Since "bad" is a relative term, I believe what you mean by a "bad" patent is one that does not meet the requirements for a patent; i.e., they are not enabled, the inventor did not actually have possession of the invention, the claims are worded in a way that leads to vagueness of scope, or the patents were anticipated or obvious by some sort of prior art or knowledge.
I believe fewer patents are being issued today that would be considered "bad" by the above definition than a few years ago, but they are still being issued. They are not issued "every day," because patents are only issued in the United States on Tuesday, but the odds are good that each group of patents issued contain some that would meet the definition of "bad."
Fortunately, we have multiple systems that permit addressing "bad" patents. Re-examination is foremost of these systems. While re-examination is not cheap, neither is it all that expensive as compared to the supposed benefit of invalidating the claims of a patent.
As for your other comment regarding breadth, I have noticed that many of the frequent complaints about overly broad patents are for the same patents. That likely means one of two things. Either there are few "overly broad" patents, or if there are more than a few, the other "overly broad" patents are not used in litigation or in an injunction.
I also point out that too many people point to James Watt and the steam engine and the Wright brothers as examples of "overly broad" patents that "stifled innovation." Well, if you have to reach back two hundred years for examples, then the problem must be less significant than some people allege. If "overly broad" patents are issued "every day," there should be thousands of current examples to pick from, but people keep focusing on patents nearly a hundred years old and more than two hundred years old. Very strange.
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Lawyers & Thicket Costly: Benefits to All with Diesel
Diesels, the 2008 and newer versions, offer low emissions and mpg efficiency. Additionally, weight and toxic chemicals are less than comparable hybrids.
MINI's new diesel is rated at 60 mpg
Rather than encourage Toyota to slow progress and benefits to the driving public, consider the Diesel alternative
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Re: Lawyers & Thicket Costly: Benefits to All with Diesel
Regardless, there are competitive options available, as you noticed. A monopoly on a particular invention does not mean a monopoly on high gas mileage technologies. In fact, in many cases the alternatives were developed as options to avoid existing patents increasing choices for consumers. Once again, the patent system does what it is supposed to do.
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patent thicket
Come on now. If you bought a house, would you apply for title? Of course you would because it would be something of considerable value and you would want to protect your investment. If we could not protect our property, why would anyone go through the trouble of building or creating? Very simply -they wouldn't. Look at where any country without a patent system or a weak one is economically.
Patent reform is a fraud on America...
Please see http://truereform.piausa.org/ for a different/opposing view on patent reform.
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Re: patent thicket
Though it has not been discussed, one could also point out that Toyota has not been afraid of licensing their patents, and apparently, though figures have not been released, the terms are reasonable given the number of companies that have licensed Toyota's hybrid patents. Also of interest is that the number of hybrids per year has been increasing at a very fast rate, though that may slow with the condition of the economy. I can see Mike's next headline:
How Toyota is Using the Economy to Slow the Growth of Hybrid Vehicles
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In a dynamic economic system, patents are a good thing
Consider the originator of such a product. Why take the risk to invest in an innovation unless the originator can reasonably expect a reward that outweighs the risk?
Consider the subsequent adopter of the innovation. If he could reap the rewards of marketing the improved product in an established market without sharing the burden and risk of the originator, then his expected reward is greater than the originator's. In such an economy, everyone would be incentivized to play "after you Alphonse," and one would expect a lower rate of innovation than in an economy supported by a viable patent system.
For a more comprehensive demonstration of this proposition, accompanied by evidence a viable patent system encourages innovation, read The Invisible Edge by Blaxill & Eckardt (March 2009) http://bit.ly/HoLub
And follow me on Twitter @TechLaw_Elman
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Slowed Growth is Not Just Toyota's Patents
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Re: Slowed Growth is Not Just Toyota's Patents
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