Printer Patent Ruling Could Impact Automated Vehicle Sales

July 20, 2017

Sam Abuelsamid, Navigant Research

Navigant Research Senior Analyst Sam Abuelsamid: It’s almost certain that OEMs and suppliers will ultimately be responsible if and when one of their autonomous systems makes a wrong decision.

Most of us (aside from some lawyers and activists) have become accustomed to simply clicking ‘OK’ or ‘Accept’ the first time we use a new device or piece of software. We don’t actually read the legal verbiage that accompanies that acknowledgement. Thus companies have gotten into the consumer-hostile habit of placing all manner of legal restrictions on our use of those systems.

Now the decision by a small company that refurbishes printer cartridges could impact the ability of consumers to eventually purchase automated vehicles.

What exactly do laser printers have to do with self-driving cars? More than you might think. On May 31, 2017, the U.S. Supreme Court issued a 7-1 decision in the case of Impression Products v. Lexmark International that significantly reduced the ability of patent holders to abuse their government-granted monopolies. Lexmark, like many printer companies (and increasingly, manufacturers in other business verticals) has placed restrictions on its products that may be used by customers in support of its business model.

What do laser printer cartridges have to do with self-driving cars? More than you might think. (Images Epson [left] and DCG)

If you’ve bought a printer you’ve noticed the mechanical hardware is typically inexpensive while consumables such as ink and toner are expensive. This has led to a thriving business of third-party companies refurbishing empty cartridges, refilling and reselling them at more affordable prices. Manufacturers and other companies like Juicero and Keurig have resorted to digital rights-management schemes in an attempt to lock out third parties. But consumers manage to find work-arounds.

In the Supreme Court case, Lexmark claimed its end-user license agreement (EULA) prohibited resale or reuse of it toner cartridges based on its patents. Reaffirming the first-sale doctrine, the court ruled that once an item is sold, further patent rights are exhausted. Once a customer exits the store with a printer or toner cartridge, they are free to do what they want with it—including modifying, repairing or refilling it, without paying the original manufacturer again.

For the auto industry, this means that anyone who purchases a vehicle has the right to do the same— which brings us back to self-driving cars. While the liability rules around automated driving systems are still far from clear, it seems almost certain that the OEMs and suppliers will ultimately be responsible if and when one of these systems makes a wrong decision. Proper maintenance and service of the sensor and actuation systems, along with software updates, will be crucial to the reliable performance of these vehicles.

Automakers have been battling against state legislative efforts to ensure a right-to-repair by third parties for many years of existing products. Giving the ruling in the Lexmark case, it is likely to be much more difficult to make the case that customers should not be able to modify or repair vehicles with third party parts in the future. Thus, along with the expected high costs and limited initial capabilities of automated vehicles (the ability to operate in poor weather or on unmarked roads) manufacturers will almost certainly want to keep these vehicles under their control.

While some premium brands such as BMW, Tesla and Volvo have indicated that they will sell at least partially automated vehicles to the public, others like Ford and Waymo have said that they are focusing on the mobility-service market. This will almost certainly include in-house operated services like Ford’s Chariot as well as placing automated vehicles in third party services, such as Lyft and Uber, where they can retain ownership.

The legal landscape around automated driving will continue to evolve in the coming years. Chances are that many laws and judicial opinions that don’t seem to be directly related will nonetheless play a part in shaping the mobility future.