Hybrid cars – the value of patent strategies in innovation

1. Hybrid cars – the value of patent strategies in innovation Mike Lloyd and Justin Blows, Griffith Hack

2. Contents • Why study hybrid car patents • Evolution of hybrid cars and hybrid car patents, and the dominance of Toyota • How to get around Toyota 1) – Lead user innovation • How to get around Toyota 2) – Use of alternative technologies • Use of Network Patent Analytics to rank patents and patent portfolios • Summary of lessons learnt

3. Background to study Griffith Hack wishes to show how patents support the development of clean and sustainable technologies (‘clean technologies’) Hybrid cars are an excellent example of a commercially successful clean technology, with good patent data available Summary details of all worldwide patents in which ‘hybrid’ and ‘car’ were found within two words of each other within the patent specification were downloaded from Thompson Innovation Patent data was extensively analysed to show the relationship between patent filing and clean tech innovation

4. What is a hybrid car? • Hybrid cars tend to feature: • A combination of petrol and electrical energy sources • Electrical energy partially collected during braking • Now in production in Melbourne • Hybrid cars are available or announced from Toyota, Honda, BMW, Audi, General Motors, Ford, Nissan……and even Porsche

5. 2010 Porsche petrol/electric hybrid

6. 1899 Porsche (designed) petrol/electric hybrid

7. 1906 Pieper patent for petrol electric hybrid car US patent 913,846

8. 1969 General Motors (GM) experimental hybrid

9. 1997 Toyota Prius/electric hybrid • Only about 60 made, due to their high price and marginal fuel consumption improvement

10. 2008 – Total sales of Toyota hybrids exceed 1.7 million 1994 – Toyota publicly commits to doubling fuel efficiency 1997 – First Toyota Prius released in Japan 2000 – Toyota Prius released in US Toyota start filing hybrid car patents in 1994

11. Toyota rapidly built up a patent lead over other car companies

12. Toyota have filed 43% of known hybrid car patent families filed by car companies Known hybrid patent families filed by car companies Toyota 43% Nissan 15% Honda 9% Other Japanese car companies 11% All US car companies 8% All European car companies 7% Korea - Hyundai and Kia 6% Chinese car companies 1% 0% 10% 20% 30% 40% 50% Percentage of known hybrid car patents filed by car companies

13. Car company patent filings have been supported by supplier filings Known hybrid car families filed annually 4000 3500 3000 Non-Japanese car companies Non-Japanese suppliers 2500 Japanese suppliers 2000 Japanese car companies 1500 1000 500 0 1990 1992 1994 1996 1998 2000 2002 2004 2006

14. Toyota dominates hybrid car sales Source: Hybrid cars.com

15. Toyota’s early filing lead has led to a self reinforcing patent/sales ramp up Toyota hybrid patent family filings and vehicle sales 1200 350 300 1000 250 800 200 Patent family filings (priority year) Worldwide hybrid car sales, 600 thousand 150 400 100 200 50 0 0 1991 1993 1995 1997 1999 2001 2003 2005 Family patent filings Hybrid car sales

16. Toyota’s patent strategy has been deliberate “The first-generation Prius held more than 300 patents on its hybrid technology. The second-generation Prius claimed 370 patents. Since then, the Prius nameplate has had more than 2000 patent applications filed across the world, with the third-generation Prius filing 1000 on its own” Bob Carter, Toyota US Division Group Vice President and General Manager, 2009

17. How to get around Toyota?1)Lead user innovation in plug in hybrids • “affordable plug-in hybrids are a decade away”, • Toyota, 2006, seehttp://www.calcars.org/calcars-news/508.html

18. “Lead user innovation” in practice..

19. Which in turn is leading to more patents..

20. How to get around Toyota? 2) Consider alternative technologies Captures and reuses energy from braking BMW, Honda, Toyota, Nissan, Ford, GM, Mercedes, Audi…… Electric motors assist conventional motor Honda, Toyota, Nissan, Ford….. Toyota, (Nissan, Ford and Mazda under licence from Toyota), GM in 2010 Electric motors in hybrid car can power car alone Plug in recharging of batteries Third party suppliers to Toyota hybrid customers, GM in 2010, Toyota in 2011 Pure electric (non hybrid) – no conventional motor Mitsubishi, Renault, Tesla Available from:

21. Patent citations But which patents are the best? Using Network Patent Analytics to rank patents and portfolios

22. US xxxx 199x US 3605019 1971 US 4630314 1986 US 5612948 1997 US 4679227 1984 US 4888767 1989 Other citations Other citations And 65 other patents.. US 5612948 1997 US 5612948 1997 US 5612948 1997 US 5612948 1997 US 5612948 1997 US 5612948 1997 US 5095535 1992 US 5195576 1993 US 5283780, 1994 Citations in turn lead to other citations.. US 5487069 1996

23. And so on, until we end up with a network of citations (this schematic shows a network of the most central 5500 patents in the hybrid car study)

24. This network in turn can be used to determine the most important patents…

25. Most central patents: Hybrid car patent study

26. An alternative patent network structure – stem cell patents

27. Top ranked hybrid car patents

28. Just who are Paice Corporation? • Paice Corporation was established in 1992 to develop hybrid drivetrains, i.e. before Toyota moved into hybrids. • Toyota has been held to infringe Paice’s 1992 US patent 5,343,970, the second ranked patent in our list of hybrid car patents. • Litigation between Paice and Toyota is continuing.

29. Top ranked hybrid car patent applicants * Top ranked applicant = 100

30. Lessons from IP strategies in hybrid car innovation • Hybrid cars have been around for over a century, but without major commercial success until recently. • This changed when Toyota chose to invest heavily in both drivetrain development and patents, leading to dominance in both patents and sales, and patent licenses to competitors. • Strategies to deal with Toyota’s patent suite include: • Patent licensing (Ford, Nissan, Mazda) • Alternative hybrid drivetrains (BMW, GM, Honda) • Plug in conversions (A123 Systems and others) • Pure electric cars (Mitsubishi, Nissan, Tesla) • This data suggests that the patent system has encouraged technology investment by both Toyota and its competitors. • Hybrid car patents can be ranked in importance using Network Patent Analysis. This shows the success of the early patents filed by US drive train developer Paice Corporation.

31. Optimum innovation and IP strategies may depend on your current technology and IP position Toyota File early and file often Position in relation to leading technologies • Carefully review • infringement risks • Try to push technology • into new directions • Acquire or license from • technology leaders • Develop product • improvements not • supplied by main players, • but sought by lead users • Understand infringement • risks Suppliers of hybrid plug-in kits GM, Ford… Degree of industry engagement Paice Ahead of leading technologies File broad patents ahead of big players Behind leading technologies Primary: direct suppliers of primary products or services Secondary: suppliers to direct suppliers or consumers of products or services

32. Acknowledgements • George Mokdsi from Griffith Hack for the patent search • The results in this presentation was based on patent data retrieved from the core patent collections available through Thomson Innovation which is provided by Thomson Reuters. • Doris Spielthennerof Optimice for analysing the patent data using Network Patent Analytics