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UnitedLex Reveals Major Auto Brands Overspend $2-4M Annually on Non-Strategic Patents

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January 17, 2023

UnitedLex Reveals Major Auto Brands Overspend $2-4M Annually on Non-Strategic Patents

Honda’s lapsing strategy dominates among “Big 5” auto brands, saving more than $28M over the last decade

UnitedLex, a leading data and professional services company specializing in litigation, intellectual property, contracts, compliance, and legal operations, has announced the release of two new reports examining the financial impact of patent lapse strategies for major automotive manufacturers.

According to its analysis, UnitedLex reports that the average patent lapse rate for auto manufacturers is approximately 18%. Assessing patents through objective data analysis reveals otherwise obscured opportunities that help businesses meet objectives and realize millions of dollars in shareholder value. This includes divesting and monetizing patents no longer core to business objectives and allowing commercially immaterial patents to lapse.

“In today’s precarious economic environment, strategic lapsing of patents can provide automotive companies and their patent teams more control that can lead to significant near-term cost savings,” said Joe Dearing, Executive Vice President, Global Intellectual Property, UnitedLex. “However, our analysis shows a number of automotive companies continue to maintain patent assets for dated and off-strategy technologies.”

The UnitedLex Automotive U.S. Patent Lapse Analysis, vol. 1 analyzes Tesla’s evolving approach to patent lapse management and how its increasing patent retention rates run counter to public comments made by Elon Musk, the company’s high-profile leader. The UnitedLex Automotive U.S. Patent Lapse Analysis, vol. 2 focuses on many of the world’s largest automotive original equipment manufacturers (OEMs)--including Ford, GM, Honda, Hyundai, and Toyota--whose massive U.S. patent portfolios dwarf Tesla’s and represent billions of dollars of shareholder value.

Key findings from Volume 1:

  • Despite Elon Musk declaring “patents are for the weak,” over the last decade, Tesla expanded its electric vehicle patent portfolio, amassing approximately 3,000 globally and 1,000 in the United States through 2021.

  • Tesla is increasingly investing in patents, filing at a consistent pace, and retaining patents annually at rates of 98-100%.

  • Counter to Tesla’s strategy, Ford has increasingly embraced strategic lapsing over the last five to seven years.

Key findings from Volume 2:

  • With an average lapse rate of 27%, Honda realized $28M in savings over the last decade validating a more optimized approach to defensive patent maintenance.

  • In the last five years, with a patent lapse rate of just 14%, Hyundai spent $16M in maintenance fees on U.S. patents but faces more than $54M in total renewal costs due over the next five years, more than a 3x increase.

  • Toyota spent approximately $36M in U.S. maintenance fees over the last five years but faces roughly $96M to maintain its entire U.S. patent portfolio over the next five years, a more than 2x increase from approximately $7M to approximately $14M per year.

  • Volkswagen and Toyota spent the last five years trading places as the world’s largest auto brand based on vehicles sold, but Volkswagen does not make the top five list with its portfolio of approximately 6,400 U.S. patents.

  • Both GM and Ford are facing significantly higher maintenance costs over the next five years of more than $12M per year for each company.

The reports are part of the UnitedLex Automotive U.S. Patent Lapse Series which will conclude with a third report analyzing the U.S. automotive industry through the lens of patent data. Visit here to download the Tesla-focused volume 1 and here to download the analysis of top OEMs in volume 2.

About UnitedLex

UnitedLex is a data and professional services company delivering outcomes that create value for high-performing law firms and corporate legal departments in the areas of litigation, intellectual property, contracts, compliance, and legal operations. Founded in 2006 with a mission to push the boundaries of legal innovation, we provide solutions that enable measurable performance improvement, risk mitigation, revenue gain, cost reduction, and digital business synergy. Our team of 3,000+ legal, data, and technology professionals supports our clients from operational centers around the world.