In the automotive sector, IP litigation is not the norm. I attribute this relative lack of litigation within the sector to the history of automotive: the sector traditionally produced tangible, physical products, most often through a sophisticated ecosystem of interdependent tiered suppliers, and litigation would simply be bad for business.

Perhaps just as importantly, automotive companies have historically been fairly insulated from the threat of Patent Assertion Entities (PAEs). Instead, PAEs, or patent trolls, tend to focus on industries where patent law can be broadly applied—like a patent on hyperlinking (where nearly every business could be a possible target). And yet, things are rapidly changing for the auto industry, and I suspect, many other old guard sectors that are experiencing a period of rapid innovation.

These days, innovation and competitive advantage in the automotive sector is becoming more and more about features like WiFi, voice-recognition software, GPS, self-driving technologies and sophisticated seats. Cars are evolving into computers on wheels, with the “connected car” becoming what Forrester called the “distinct fourth environment for computing.” Before long, the automotive sector may be as desirable a target to PAEs as e-commerce or financial services, as is supported by the numbers.

Since 2004, RPX has documented a compounded annual growth rate of 21% in the number of PAE lawsuits against automotive companies. The number of lawsuits filed against automakers by patent trolls rose from 17 in 2009 to 107 in 2014.

So, what can automotive industry legal leaders do to protect their organizations from patent trolls that want only to profit from broad ranging suits that are about payouts and payoffs—a “cost of business” that has given other industries nothing but grief and expense? Adapt and prepare.

Forget the Alice “halo effect”

Ever since the Supreme Court's 2014 decision in Alice Corp. v. CLS Bank, the U.S. patent office has gotten tougher on software patent applications. This is generally a good thing, but it's hardly a cure-all to the PAE problem (a common misconception outside IP circles). Alice applied to a specific set of circumstances and the “halo effect” that may have initially slowed litigation is showing evidence of wearing off.

After Alice, there was almost an overcorrection in the courts and administrative agencies, and now it's swinging back around. Those same courts and administrative agencies are beginning to narrow their view of how expansive Alice should be. And smart people are working around Alice, figuring out how to write a better patent and modifying claims to see what happens. With patents written in view of Alice, we're back to square one. Without Alice to rely on or the illusion that PAEs won't target automotive companies, it's time for us to take action, as a community, to protect ourselves.

Be wary of where patents might land

Over 80 percent of patents litigated by patent trolls are acquired from operating companies. When businesses get acquired, go bankrupt, or need ways to generate revenue, trolls take advantage of those opportunities to expand their patent portfolios. In a market where suppliers are facing price pressure and consolidation, selling patents to PAEs can seem like a good way to generate cash flow, but that has consequences for the industry as a whole. Being aware of the market at large isn't an add-on to our daily responsibilities, it *is* one of our daily responsibilities.

Be proactive

PAEs are able to thrive because organizations tend to be reactive, rather than proactive, about protecting themselves. When a patent suit hits, a company can either spend money to settle or spend money to fight the battle in court. Either way, it's expensive, and trolls bet that settling will seem like the lesser (or at least cheaper) of two evils. The problem is that settling just adds fuel to the fire, which is why the patent troll problem has been getting worse.

Automotive companies may not feel the pressure now, but they likely will before long. The smart approach is to protect your company from PAEs, before it's too late. Organizations such as LOT Network, a nonprofit community that immunizes members from PAE suits by cross-licensing any patents from members that fall into the hands of PAEs, offer clear protections from patent trolls, and should be considered almost a “must-do” for any business that is rapidly innovating through technology adoption and development. At least, we consider a must-do. Our company is proud to be the first Tier One to join LOT Network alongside many of the industry's OEMs.

Awareness and education can take a number of forms, and sometimes these steps can be a tough sell in industries that have not dealt with a ton of PAE suits. I have experienced this first hand. In sectors such as mine, there can be reluctance at first to tackle a problem that has not yet become pervasive, and since patent troll suits don't yet seem like a direct threat, working to prevent or circumvent them can seen unnecessary. However, when corporate legal leaders look around at the market and see how many businesses from how many industries are working to fight patent troll threats—today and tomorrow—the case for preparing a defensive strategy becomes easier.

Erin Wiggins is General Counsel of TS Tech Americas, and a former patent litigator.