Managing intellectual property can be a headache in most industries, but it can be particularly challenging when working between tire companies and vehicle manufacturers – in fact, managing the communication between the two is often a full-time job in itself. Naturally, both sides want to protect their IP; however, this can cause problems when trying to get anything done. If an OEM wants a manufacturer to design a tire for a new car, the tire maker will invariably want more information on the new vehicle – something an OEM may be reluctant to divulge. Similarly, if an OEM asks for more detail on a compound used in a new tire, the tire maker may be wary of sharing too much proprietary information.
Yes, I am simplifying the process somewhat, but it remains a consistent problem. Vehicles and tires need to work together as a whole. Arbitrarily putting a good tire on a good vehicle rarely results in a good overall package. So it’s imperative that OEMs and tire companies communicate effectively with each other. This is where IP protection can get in the way and limit both parties’ ability to develop products collaboratively. Ultimately, this can result in a lack of information transfer, which introduces more guesswork into the product engineering – leading to a more drawn-out development process.
A commonly used tool to help address the issue is the non-disclosure agreement (NDA), which ensures that anything discussed between the two cannot be shared with any third parties.
Great. Well, sort of.
These introduce another juggling match and collection of misconceptions. Firstly, NDAs are always constrained to specified areas or types of information (such as tire designs, tire testing, tire construction, and various other things beginning with the letter T), which are listed in the agreement. This makes sense as the agreements cannot blanket-cover all communication between the two parties – if person A casually mentions to person B that they had a nice vacation, person B may be somewhat upset if they get in trouble for passing that information onto a friend. However, as the companies continue to work together over time, the scope of projects can change. This can lead to discussions taking place around topics that were not originally written into the NDA and are not protected by it.
Even a diligent engineer, who checks the contents of the NDA prior to a meeting and then only talks about matters that are protected by it, may still have to deal with some issues. Both sides still want to avoid talking about anything that isn’t ‘need to know’, even if the information is protected by a non-disclosure.
The advice given to me by an IP lawyer was: “Can the other company do what you need them to do without the information you’re considering telling them? If yes, then stop talking! If no, then you should probably still stop talking!” Splendid.
So, it gets to a point where you can barely even mention the T word without getting in some hot water. This is where it can sometimes become challenging to make progress. No level of IP security is completely watertight. Staff move around; things get said in meetings that shouldn’t; people go out to dinner with customers, have a few drinks, and say things they shouldn’t. So even with a robust NDA in place, information can still be leaked, maliciously or accidentally. Furthermore, when it does, it can be very difficult to identify where the leak came from.
The solution must come from high up, where a company-wide risk analysis is needed – one that doesn’t just assess the risk and costs associated with losing IP, but goes beyond that and balances the risk against the reduction of profit brought on by a more secretive (but less efficient) approach.
An extreme example of this is Tesla, which, in June 2014, shared all its patents and IP “in the spirit of the open-source movement” and to encourage the development of the EV industry. This was a remarkable and sudden shift for a car company, most of which are protective of any IP that can give them a competitive edge. However, Elon Musk’s company believed that sharing their patents to grow the whole industry was a bigger win for Tesla than only growing themselves within a stagnant industry. Which is a bold philosophy indeed.
