Protecting Innovation in Cyber-Physical Systems
This is a summary of the lecture by Robert Matthezing, Bettina de Jong, and Johan Krebbers, about patentability and IP management👉 Strategic and operative handling of IP to maximize value. for Cyber Physical Systems from the joint CEIPI European Patent👉 A legal right granting exclusive control over an invention for a limited time. Office Diplom Universitaire IP Business Administration
Cyber-Physical Systems (CPS) are revolutionizing industries, blending the physical and digital worlds to create intelligent and interconnected solutions. From smart grids to virtual power plants, these systems rely on a complex interplay of hardware, software, data, and communication technologies. As innovation👉 Practical application of new ideas to create value. in CPS accelerates, businesses face the critical challenge of protecting their intellectual property👉 Creations of the mind protected by legal rights. (IP) and securing a competitive edge.
This lecture is part of the certificate course IP in digital technologies
https://ipbusinessacademy.org/certified-university-course-ip-in-digital-technologies
and part of the university diploma (distance learning) IP Business Administration
https://ipbusinessacademy.org/ceipi-epo-university-diploma-in-ip-business-administration-du-ipba
In this lecture, IP experts Robert Matthezing, Bettina de Jong, and Johan Krebbers delved into the intricacies of IP management for CPS, offering valuable insights into patenting strategies, trade secret protection, data management, and the evolving landscape of digital innovation. This post summarizes the key takeaways from their lecture, providing a roadmap for navigating the IP maze in the age of CPS.
The Rise of Digital Patents
The lecture began by highlighting the growing importance of digital technologies in the patent landscape. Data indicates a significant surge in patents related to the Fourth Industrial Revolution, with artificial intelligence (AI) playing a central role. In the U.S., over 18% of patent applications in 2020 were related to AI, permeating over 42% of all technologies in international patent classification. This proliferation underscores the increasing convergence of AI with various industries and the need for businesses to adapt their IP strategies accordingly.
Investment in digital transformation further fuels this trend. In 2022 alone, the U.S. witnessed a staggering \$1.8 trillion investment in digital transformation, a 17.6% increase from the previous year. This massive influx of capital underscores the economic significance of digital innovation and the importance of securing IP protection for related technologies.
Patenting in the Smart Grid Arena
The lecture then focused on patenting trends within the smart grid sector, a prime example of CPS in action. Using the Cooperative Patent Classification (CPC) Y04S, a search revealed a substantial increase in patent families related to smart grids, reaching nearly 120,000 in 2022. However, excluding China, recent data indicates a decrease in smart grid patent applications, suggesting a significant contribution from Chinese companies in this area.
Interestingly, the lecture noted that transmission system operators (TSOs), key players in the smart grid ecosystem, are not typically prolific patent filers. This observation hints at the diverse IP strategies employed by different stakeholders in the CPS landscape.
New Business Models and IP Strategies: Virtual Power Plants
Cyber-Physical Systems are spawning novel business models, such as virtual power plants (VPPs). VPPs aggregate distributed energy resources to monitor, optimize, and trade power, balancing supply and demand in smart grids. These systems rely heavily on technologies such as sensors, data analytics, communication networks, and predictive algorithms.
The lecture highlighted distinct IP protection strategies among VPP stakeholders. Suppliers of CPS actively pursue patenting alongside trade secret protection. In contrast, integrators, TSOs, and distribution system operators (DSOs) primarily rely on copyright👉 A legal protection for original works, granting creators exclusive rights., trade secrets, and confidentiality agreements, with limited patenting activity.
The core technologies underpinning VPPs, including digital communication, computer technology, electric machinery, and measurement, are prominently featured among the top 10 fields for patent applications at the European Patent Office (EPO). This highlights the patentability of these technologies and their strategic importance in the CPS landscape.
Software Patentability: Dispelling the Myth
A common misconception is that software is not patentable. The lecture emphasized that software is indeed patentable, particularly when it produces a technical effect or impact.
Article 52 of the European Patent Convention (EPC) excludes programs for computers and mathematical methods “as such” from patentability. However, established jurisprudence at the EPO dictates that software is patentable if it exhibits a technical effect or solves a technical problem.
The lecture provided an example of a granted European patent (EP3812105B1) held by Deutsche Telekom, which claims a computer-implemented method for controlling welding performed by a welding robot. The method involves using machine learning and machine vision to analyse image data of the welded workpiece and adjust the welding process accordingly. This example illustrates how software can be patented when it is integrated with physical processes and produces a tangible technical outcome.
The lecture further clarified that a computer program itself can be claimed if it is connected to a technical effect. A claim can be drafted to encompass a computer program comprising instructions that, when executed by a computer, cause the computer to carry out the steps of a patented method.
Similarly, Siemens Energy has pursued software-related patents in the smart grid domain, such as WO2022/263155A1, which claims a method for demand-based optimization of power generation in a power generation and distribution network. These examples demonstrate that patenting is a viable option for protecting software-related inventions in CPS.
Trade Secret Protection: An Alternative Approach
Integrators in the smart grid industry often rely on trade secrets to protect their IP. A trade secret is defined as information that is secret, not generally known, has commercial value because it is secret, and is subject to reasonable steps to maintain its secrecy.
Trade secret protection offers several advantages over patenting. A trade secret can be protected for a longer duration than a patent, which has a limited term of 20 years from the filing date. The classic example is the recipe for Coca-Cola, which has been a closely guarded secret for over a century. Furthermore, trade secrets do not require publication, making it more difficult for competitors to copy the invention👉 A novel method, process or product that is original and useful.. Trade secrets can also protect information that may not be patentable.
However, trade secret protection also has disadvantages. Reverse engineering is permitted, meaning that if a competitor can independently discover the secret through analysis of a product, they are free to use it. There is also the risk👉 The probability of adverse outcomes due to uncertainty in future events. that a competitor may independently discover the secret and obtain a patent on it, which could restrict the original trade secret holder’s use of the invention. Proving misappropriation of trade secrets can also be challenging, particularly when the information has been shared with third parties under confidentiality agreements.
The Trade Secret Decision Tree
The lecture presented a decision tree to guide businesses in choosing between trade secret protection and patenting. The first step is to determine whether the information meets the definition of a trade secret. If so, the next question is whether it is possible to keep the information secret for a long period. If not, then patenting may be a better option.
If the information can be kept secret for a long period, the next question is whether there is a risk that a third party will independently discover the secret and obtain a patent on it. If the risk is high, then patenting may be the preferred option. If the risk is low, then the business should consider whether it is necessary to share the secret widely within the company or with third parties under NDAs. If so, the risk of leakage increases, and trade secret protection may not be the best option. Finally, the business should consider whether it collaborates with other parties who may have access to similar trade secrets, which could lead to IP contamination.
If the answers to all of these questions are negative, then trade secret protection may be a viable option.
Data Management and Open Standards
The lecture emphasized the critical role of data in CPS. The more data available, the better the performance of these systems. However, conflicts often arise between end-users who desire access to all data generated by a system and suppliers who seek to restrict access to protect their interests.
The lecture advocated for users to have access to raw data produced by sensors and systems, enabling them to perform their AI calculations. It is also essential to standardize data access through APIs, allowing multiple applications to utilize the same data.
The lecture highlighted the Open Subsurface Data Universe (OSDU) as an example of an initiative to promote open data standards. The OSDU aims to create a single copy of subsurface data in the oil and gas industry that can be accessed by any application, regardless of the supplier. This approach fosters innovation and avoids data silos.
Another example is Open Footprint (OFP), which seeks to standardize the collection and management of environmental footprint data. OFP defines standards for scope 1, scope 2, and scope 3 emissions, enabling companies to track and manage their environmental impact across their supply chains.
To Patent or Not to Patent: A Strategic Decision
The lecture concluded by addressing the fundamental question of whether to patent CPS innovations. The answer, according to the experts, is “it depends.” The decision hinges on several factors, including the nature of the business, the sustainability of the current business model👉 A business model outlines how a company creates, delivers, and captures value. in the face of CPS, the risk of others patenting similar inventions, and alignment with data and contracting strategies.
The lecture noted that while standards development can lead to patenting activity, organizations like the Open Subsurface Data Universe (OSDU) license patents on a royalty-free basis.
The lecture cited a report by the EPO indicating that battery and energy technologies and electrical technology, in general, have experienced the greatest absolute growth in patent filings. The EPO predicts that smart grids will be a key technology field to watch in the future, driven by the need to modernize electricity grids.
While suppliers of CPS systems have been active in patenting, integrators have been less so. Whether this trend will continue remains to be seen, but it will likely be influenced by considerations of freedom of action.
Conclusion: Charting a Course for IP Success in CPS
Protecting intellectual property in Cyber-Physical Systems requires a multifaceted approach. Businesses must carefully consider the advantages and disadvantages of patenting and trade secret protection, develop robust data management strategies, and engage with open standards initiatives. By understanding the evolving IP landscape and tailoring their strategies to their specific needs, companies can unlock the full potential of CPS innovation and secure a competitive advantage in the digital age.
