Solutions to challenges in patenting IoT technology
The point in time when the number of connected devices outnumbered the number of people on the planet corresponds to the birth of Internet of Things (IoT).
The path so far and the road ahead: The number of IoT devices increased 31% year-over-year to 8.4 billion in 2017 and it is estimated that there will be 30 billion devices by 2020.
Future Potential and Market Coverage: Needless to say, this technology is expected to dramatically change not only how we work but also how we live. With the cost of technology required to control these devices going down and increasing internet connectivity through smartphones, IoT is expected to be an all-pervasive technology in the next 10 years. The technology is so diverse that it has applications in almost every field – Consumer applications, Enterprise applications, Medical and Healthcare, Automation and control, Transportation, networks to name a few. The global market value of IoT is projected to reach $7.1 trillion by 2020.
McKinsey study: A McKinsey study estimates the potential economic impact of the Internet of Things to be $2.7 trillion to $6.2 trillion per year by 2025 with applications in Healthcare, Manufacturing, Power, Urban Infrastructure, Security, Vehicles, and Agriculture.
- Resource Management in a Wireless network saw the bulk of patent-related activity in the IoT domain.
- The patent distribution (owners) in this domain is very fragmented. LG holds the largest patent portfolio (around 5%) and, is closely followed by Ericsson and Qualcomm.
- The US geography has seen the maximum patent filings and is closely followed by the big Asian markets of Japan, Korea, and China.
In terms of high patent portfolio quality as well a good patent filing activity, Qualcomm turns out to be the leader in this domain. As is clear from the above, IoT has been a hotbed of innovation with a large number of firms investing hugely in this domain.
Obtaining a patent in IoT domain, however, is not a cakewalk. There are several challenges faced by firms that operate and innovate in the IoT domain. These challenges can be broadly classified into the following four categories:
Challenge #1: Claim scope
IoT systems involve multiple devices working together to achieve a particular goal. As a result, there can be many different ways in which the same invention be claimed in a patent application, for example:
- Device or apparatus claims that cover the IoT device itself (e.g., components controlled by a controller/processor).
- Method claims that cover the way the IoT device operates/functions.
- Method claims that cover the way IoT devices communicate with each other or with other types of devices (e.g., routers, servers).
- Software-styled claims that cover the software-implemented processes performed by the IoT device.
- Software-styled claims that cover processes performed by a remote server (e.g., “in the cloud”) that communicates with the IoT device.
- System-level claims that cover multiple IoT devices interacting with each other (e.g., watch and phone; hub and beacons; router and WiFi devices).
However, due to cost reasons, most patent applications may be limited to two to four independent claims.
Solution: Keeping in mind patentability requirements, cost of obtaining the patent and value proposition from the invention, we suggest the following approach to address the aforesaid tradeoffs.
# Solution 1: To figure out the best type of claims for each particular innovation, consider the following factors:
A. What is the business model of the company?
- For sellers of the actual IoT device, it is preferable to prioritize device claims and method claims that cover how the device operates.
- If the company only sells software, software-style claims can be prioritized.
- If the company is a backend service provider, the server side “in the cloud” processes can be prioritized.
B. Where does the point of novelty lie?
- If the invention deals with how the IoT device operates, it might not be possible to have a viable claim for server-side functionality.
- If the invention is software-implemented, consider software-styled claims.
C. What is the relative licensing value for each type of claim?
It might be possible to license a software claim across multiple different industries (e.g., for operation on multiple different types of devices).
D. Who is the potential infringer?
The general rule of thumb is to choose a claim that you can assert against your competitor (as opposed to your customer or end users).
# Solution 2: Accounting for unexpected prior art(s):
Because there’s a huge amount of innovation in the IoT space right now, it’s possible that during patent prosecution, the invention might encounter prior art that’s currently unknown (e.g., unpublished patent applications). Therefore, the claim strategy should take this into account. For example:
- Several backup positions can be built, either as dependent claims or in the specification.
- To begin with, a focused claim set can be relied upon, and broader claims can then be pursued in a continuation application
Challenge #2: Joint/Divided Infringement
- IoT technology is interactive and often implemented by system components in multiple different locations, and as such an inventor could end up with more than one party infringing the patent rights: The various components that create the IoT system could be sold, owned, and operated by different companies.
- Divided infringement deals with the question of whether there can be infringement liability when the infringement is split among multiple parties, actors, or devices.
- Although the current rule, established in Akamai v. Limelight, is that there may be infringement liability when the steps of a method are performed by multiple parties, if a single defendant “exercises ‘control or direction’ over the entire process such that every step is attributable to the controlling party”, this is obviously a really high bar to meet.
Solution: Overcoming the issues of divided infringement
- Typically, the issues of divided infringement can be overcome by carefully drafting claims from the perspective of only one device in the IoT system.
- But drafting that type of claim may not be possible, depending on the state of the art and whether the invention is even patent-eligible. If that’s the case, it should instead be preferred to claim the components that would most likely be sold or operated by the competitors.
An exemplary case of divided infringement in the IoT domain is discussed next.
Smart-City: How joint infringement could occur?: A Real-life Example
For a real-life example that shows how the various claim strategies to overcome joint infringement might play out, we can look to smart city schemes. Broadly, “sensing cities” use smart sensors as municipal infrastructure. In patenting the sensing city, one could claim:
- The smart sensor itself. However, that likely wouldn’t capture the big picture idea of how it’s being used. And the smart sensor by itself might not be novel, and therefore not patentable.
- The “cloud” perspective (which describes how the data from the sensors is used). However, it might be much more difficult to detect infringement, because you’re basically claiming a software process running on a private server.
- The whole system (which covers the sensors and the servers operating together). However, you might end up with a divided infringement problem where one entity owns or operates the sensors, and another entity aggregates or processes the data.
Sometimes overcoming this problem may require compromise – maybe you simply can’t claim the invention from the perspective of a single device. However, in most cases, a smart drafter can find a way to craft independent claims that don’t have a divided infringement problem, and that’s usually a strong approach.
Challenge #3: Subject-matter eligibility post-Alice v CLS Bank Decision
Patenting inventions directed to the IoT domain has become more challenging in wake of the Alice decision. IoT broadly involves convergence of many technologies, the chief among them being:
- Real time analytics [Big Data algorithms]
- Machine learning [Deep learning algorithms]
- Commodity Sensors [The generic ones]
- Embedded systems [Well known Technology]
Essentially, IoT employs the above-mentioned technologies in their current state of the art and does not intend to induce improvement in their functioning. IoT enables the aforesaid technologies to connect and exchange data (speak with each other), thereby creating opportunities for more direct integration of the physical world into the computer-based systems. This results in efficiency improvements, economic benefits, and reduced human exertions. Since the underlying objective of IoT ecosystems is concerned with achieving economic benefits and process optimizations, there is a high chance of an invention directed to IoT being characterized as an abstract idea without producing any technical improvement/tangible result.