IP Up in the Air: Report from the Airbus IP Seminar

The AmeriKat's view from an 
Airbus 380 landing in Heathrow
from D.C.

As many readers know, the AmeriKat loves airplanes. Loves being in them, looking at them, watching them from the ground and from the sky. If she spies a captain located near her in an airport, she pounces on them to discuss what planes they fly (much to their delight, she imagines). So it was with a heavy heart that she could not attend the Airbus IP Seminar held in early December (see Kat post here). Instead, she sent her Kat friend, Nicholas Round (Bristows), who flew in an A320 down to Airbus’ university in Toulouse to see where A320s are made and, more importantly, listen to the panel sessions on IP issues in Aerospace. Over to Nicholas for his report:

"Brands session

The day started with a session on brands and a consideration of whether principles that apply to the FMCG (Fast Moving Commercial Goods) sector were equally applicable to aerospace. It was clear from the debate that the big divide between the industries was the predominance of B2C (Business to Consumer) contracts in FMCG and B2B (Business to Business) contracts in aerospace. Where B2C predominates, and consumer experience is key, creating and sustaining brands is essential.

Particularly desirable is the creation of “iconic” brands. When the panel discussed this it was observed that, to become iconic, it is necessary that the brand “takes a point of view” and because of this it is often not universally liked. This factor makes the brand stand out from others and helps it become iconic. By contrast, brand values sought in aerospace often relate to safety, reliability or confidence – all areas which are universally admired.

IP in aerospace

The next session considered IP protection strategies and it was noted that patent filings in China have increased markedly in recent years. The panel also discussed collaboration in the aerospace sector – something which has been a feature of the industry for over 100 years. The reasons for collaboration are multiple. Examples included:

a) Concentration of costs and risks in the industry can be mitigated

b) Technology convergence means it is sensible to share know-how

c) There is a need to get ahead of disruptive technology – this is easier through collaboration.

It was agreed that collaboration required alignment of purpose. This could be more easily achieved, for example, with universities where the common goal was to advance knowledge. Obviously where competing commercial goals occur it is more difficult to agree the terms of the collaboration.

It was commented that there have never been “patent wars” in the aerospace sector (unlike, for example, the telecoms sector) but the panel wondered if this would continue to be the case in view of the need to adapt to new issues such as the high levels of Chinese IPRs being generated or the multiple start-ups now in the market.

How to adapt filing strategy

A new tool that derives statistics on US patent filings was considered here. It was prompted by a feeling that there was a lack of consistency in the way patents were prosecuted in the US. This was borne out by the statistics which revealed such gems as 10% of examiners account for over 50% of the US patents granted. One of the panel suggested that the differences were such that it could be thought that the USPTO consisted of 8000 different patent offices. The “points system” used for examiners was considered – this is where examiners must achieve a certain number of points per week but adopt different strategies for getting these points. Some grant patents more quickly, some create office actions etc. Given the disparity in approach the advice was that, by considering the statistics, there were clearly advantages (statistically speaking) of filing patents with certain art categories/types. This would ensure they were put before examiners where there was a higher chance of the prosecutions being dealt with more swiftly.

Standard essential patents in aerospace

In this session the panel explored the extent to which SEP and FRAND considerations were already within, and would in future be a factor, in the aerospace sector. This topic has particular prominence in view of 5G being on the horizon and the IoT (Internet of Things) becoming an almost daily object of conversation. Competition and IP law appear to come into conflict when considering this area and it was competition law that was first addressed. It was pointed out that, to some extent, the whole process of standardisation – i.e. forcing companies to do the same thing – was anti-competitive as it does not allow variation. However, the benefits, particularly where interconnectivity of devices is involved, are clear. Furthermore, standardisation in aerospace was explained as:

i) Guaranteeing global operations at proper levels of safety; and

ii) Facilitating a degree of competition – i.e. by allowing different suppliers of parts to operate on the same market.

In relation to point ii) it was noted that licensing of IP is also beneficial in creating a bigger market for a product. This can benefit the innovator as much as the licensee.

The ECJ’s guidelines in ZTE v Huawei were discussed and the impact these should have both on non-practising entities (colloquially “Patent Trolls”) and patent-blind practitioners (termed “Patent Gremlins” for this discussion) was considered. It was noted that Huawei v ZTE featured two Chinese companies (thus cutting across the stereotype of western innovators and Chinese copiers). An open question considered in this session was the extent to which rights should be exhausted. This was both a territorial and supply chain issue.

Virtual and Augmented Reality

The session considered how virtual and augmented reality was being used in aerospace and issues of IP that related to this use. Interesting examples of such use were in construction, where it was suggested that augmented reality goggles could provide 30% time reduction and 60-70% defect reduction, and in training, where time duration of the training was said to be reduced by 60%. A commercial use of virtual reality is in the cabin configuration choice for aircraft: customers can now “experience” the finished airplane before it has been constructed. It was noted that other aspects of reality were being “virtualised”, for example touch, heat, and scent were in consideration.

The IP issues of the discussion were open questions on how creators can best protect aspects of virtual reality (for example how might new virtual senses be best protected) and how creations produced with virtual reality assistance may be protected (for example creations made using artificial intelligence).

Technology centric M&A

The importance of IP in Technology centric M&A transactions was emphasised in this discussion. The need to consider IP in all its forms (including know-how/trade secrets) and at an early stage of due diligence was highlighted. Several Do’s and Don’ts were provided by the panel, key of which appeared to be: 

• Do decide why you want to make the acquisition and make sure that you acquire the value that accords with your reasoning 
• Do make sure you know what you are going to do with the IP that you acquire 
• Don’t assume that a deal, once it has progressed from a primary stage, is necessarily good for your company – act on the due diligence that is conducted.

IP in the supply chain and Research and Technology

These sessions both stressed how new technologies and new companies (particularly small start-ups) were both challenging traditional IP protection strategies. For example, 3D printing has IP associated with the powder used in the printing, the machine used to do the printing, and the instructions provided to the machine. The key strategic decision is how to protect all of these areas of IP in a cost-sensible manner. Speed in choosing and gaining protection for key IPR was also highlighted.

Collaboration in the aerospace sector was also revisited. The benefits of external collaborations were considered including: gaining additional funding; leveraging skills; creating a healthy ecosystem for new technology; and building a talent pipeline to supply future employees. The Open Source licensing terms were discussed and thought favourable for positive use in collaborations. “You don’t have to own everything!” one panellist sagely noted."

The next event IP Seminar will be at Volvo at their headquarters in Gothenburg, Sweden on 8-9 October 2019 (cue the AmeriKat saying that her favorite (practical car) is a Volvo). This event will tackle the IP challenges faced by the automotive industry, how the industry is dealing with new entrants who are not from the automotive sector (i.e. software, AI, IOT, etc) and the role such entrants will be playing in the future. Watch this space for more details.