Intellectual Property Litigation in Auto Industry Sees Marked Increase
Industry is Abandoning History of Restraint against Competitors

Contact: Barbara Fornasiero 248.651.7536 or 586.817.8414; barbara@eafocus.com

ANN ARBOR – Prior to 2000, intellectual property disputes between intra-industry participants within the automotive industry (defined as the top 162 auto suppliers and 12 largest OEMs) were rarely litigated, with only two cases in 1999. The litigation landscape has changed dramatically in this decade, however, according to intellectual property attorney Steve Oberholtzer, Managing Partner of the Ann Arbor office of Brinks Hofer Gilson & Lione, one the nation’s oldest and largest intellectual property firms. Mr. Oberholtzer says his firm’s review of available data shows that automotive patent and trademark infringement cases filed in the United States by industry participants against each other tripled between 1999 and 2007 with an even greater spike in 2004. Mr. Oberholtzer notes that while the number of litigated cases appears small, the impact is not.

“The effect on the industry is significant and far greater than the number of cases suggests,” affirms Mr. Oberholtzer.” He cites a combination of several factors as the impetus for such dramatic change in long-standing industry behavior.

“The initial driver is that technology has integrated highly sophisticated electronics and control systems with parts made of advanced materials and tools using proprietary methods. This in turn has increased investments, which justify the risk and expense of IP litigation, especially in an environment where domestic manufacturers are losing market share and competition for remaining business is of critical importance,” explains Mr. Oberholtzer. “Suppliers are abandoning previous restraint and using every tool available to secure business. Excluding a competitor through patent procurement and infringement litigation is increasingly deemed to be a matter of survival.”

Also contributing to the rise in IP litigation is the newer reality of auto suppliers performing up to 40% of all automotive research, a role once performed almost exclusively by OEMs. As OEMs push R&D to their suppliers, ownership of patentable technology has dispersed and OEMs have less control over enforcement in court. At the same time, a supplier with many competitors and few potential customers has strong incentive to patent new technology that provides a competitive advantage, notes Mr. Oberholtzer.

“The marketplace is aiming to compete on a basis other than price, and developing and protecting intellectual property is one of the best ways to differentiate,” offers Mr. Oberholtzer. “Every indication is automobile manufacturers and suppliers will continue aggressive pursuit of IP rights in 2008 and beyond; a return to the practice of avoiding litigation when rights are infringed is highly unlikely.”

Founded in 1917, Brinks Hofer Gilson & Lione is based in Chicago with four additional offices across the country serving the intellectual property needs of clients from around the world. The firm is one of the largest IP law firms in the country, with more than 170 attorneys, scientific advisors and patent agents specializing in intellectual property litigation and all aspects of patent, trademark, copyright, trade secret, unfair competition, intellectual asset management, and technology and licensing agreements. Brinks routinely handles assignments in fields as diverse as electrical, chemical, mechanical, biotechnology, pharmaceutical, nanotechnology, Internet and computer technology, as well as in trademarks and brand names for a wide variety of products and services. For more information, visit www.usebrinks.com.

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