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Ropes & Gray attorneys provide timely analysis on legal developments, court decisions and changes in legislation and regulations.
Steve Pepe: Hi, I’m Steve Pepe, chair of the intellectual property litigation practice and lead of our firmwide sector on consumer technology and hardware here at Ropes & Gray. I’m located in our New York office. I want to welcome everyone to the latest episode of the R&G Tech Studio podcast. In this edition, we have my very good friend and colleague, Matt Shapiro. Matt’s a trial lawyer in the intellectual property litigation group here at Ropes & Gray, and also located in our New York office with me. Welcome, Matt.
Matt Shapiro: Steve, it’s a pleasure to be here. As one of my key mentors and role models, it’s particularly fitting that you’re the one leading today’s discussion. I thought that nearly 15 years ago, when you interviewed me for a summer associate position, that that would be the last time that you would be interviewing me—but boy, was I wrong.
Steve Pepe: Boy, you were. Maybe one day you’ll be interviewing me and sitting in my chair. I look forward to that day.
Matt Shapiro: Same here.
Steve Pepe: Can you tell us a little bit about yourself, Matt?
Matt Shapiro: Sure. As you mentioned at the beginning, I litigate technology disputes, primarily in the automotive, electronics, and consumer device sectors. My focus is on high-stakes, district court, and International Trade Commission (ITC) patent litigation disputes, but I also advise clients on licensing and pre-litigation issues, and I serve as a resource to clients and the firm on Europe’s year-old Unified Patent Court (UPC) and its impact on global litigation strategies.
Steve Pepe: The UPC has been a really interesting development, and I hope to touch on that during our interview today, but before getting there, can you tell us a little bit about the clients you’ve been working with recently?
Matt Shapiro: Certainly. I generally work with leading technology companies, including clients such as HARMAN, Samsung, LG Electronics, and Emerson Electric.
Steve Pepe: Can you tell us some of the ways that technology is impacting those clients and the industries that they’re in?
Matt Shapiro: Absolutely. For today’s discussion, I think it’s important to focus on the automotive industry, particularly because it’s been a tremendous incubator for innovations over the past 15 or so years, and that’s only the beginning. We’re likely to see tremendous innovation over the next decade, and it’s an area that you and I have really been working in, focusing on, and monitoring.
Steve Pepe: Tell us a little bit about recent developments in the automotive industry that are impacting your clients.
Matt Shapiro: Sure. One key example is what’s nicknamed “vehicle-to-everything” (V2X) communications. This is the idea that vehicles should be able to communicate with other vehicles, with roadside infrastructure, and with pedestrians to enable safety and better efficiency on the roadways. And so, with that development, you have an increase in technology and incubation of that technology. A second example is electric vehicle (EV) technologies—not only the core EV itself but also batteries and battery components and charging and charging infrastructure. And the final example is autonomous driving, where not only is patent litigation important but data privacy and the enablement of standards governing both the interaction of vehicles and the data that’s generated.
Steve Pepe: Let’s take those one at a time and start with vehicle-to-everything. Just so it’s clear to the audience, the driver and the passengers, are they aware of the communications that are taking place?
Matt Shapiro: No, this is all happening behind the scenes. The idea is that the vehicle is communicating wirelessly to other vehicles or to infrastructure surrounding it. It’s providing perhaps speed, whether it was in a collision, weather conditions, or other information so that other vehicles can be aware of this information and use it to enhance their ability to drive on the roadway.
Steve Pepe: If a car a hundred yards ahead of me goes over black ice, that car could communicate to my car that there’s black ice ahead and warn me in advance?
Matt Shapiro: That’s right. Even, perhaps, in terms of autonomous driving, the car may adjust its driving capabilities and take that out of the driver’s hands, for example, increasing braking ability or reducing the speed of the vehicle in an autonomous fashion.
Steve Pepe: I could see how there could be a lot of innovation in this space with this technology. What’s the backbone of this technology? Is it 4G? Is it 5G? Is it some other wireless communication standard?
Matt Shapiro: 5G is really what is enabling this to occur. Even looking into the future, the next generation, 6G, is still a ways out but is also under development currently. But the core for this is wireless technology, primarily 5G.
Steve Pepe: Where along the supply chain is this technology going to originate? Is it going to be the car companies, the chip suppliers, or is it some combination of various companies within that supply chain?
Matt Shapiro: It really impacts every level of the supply chain from the chip supplier, who will be developing a chip that is compatible with the wireless standards, to the party—perhaps a Tier 1 or Tier 2 supplier—that is integrating that technology into a component, to the original equipment manufacturers (OEMs) who are going to need to purchase those components and provide the final integration. All of this is under the backdrop of the government, including the Department of Transportation, encouraging this, providing grants, and setting an ambitious 10-year plan.
Steve Pepe: Just thinking back five years and comparing a car from five years ago to today, there’s been such a technological improvement with respect to its connectedness. When do we expect to see this vehicle-to-everything technology really pick up traction and find its way into vehicles that we’ll be driving every day?
Matt Shapiro: According to the government’s plan, at least, in the next two years, they would like to see at least some V2X technology rolled out to federal infrastructure—so, think interstate highways. They’re also encouraging auto OEMs to include this in vehicles beginning in 2027. While 2027 may seem far away, it’s only a couple model years away at this point.
Steve Pepe: Let’s move on to the second topic: electric vehicles or EVs. They certainly have gained momentum over the last couple years, but that momentum seems to have slowed down a bit. Where are we these days with EVs?
Matt Shapiro: EV technology today is still very much in development. You have essentially every auto manufacturer promoting EV vehicles, but at the same time, there’s been an increased move towards hybrid technologies, which include hybrid plug-in vehicles that incorporate both EV components as well as a traditional ICE engine to generate electricity when the batteries are diminished. This is an area also of incredible development because that slow uptick that you mentioned, Steve, is largely due to mileage that a vehicle can get before it needs to be charged and the availability of charging locations when a vehicle needs to be charged. You can also recall recently, when there were a number of cold winters, individuals having trouble charging their batteries or not getting the mileage that they had anticipated.
Steve Pepe: Where do we think we’re going to see the most technological advancements with technology for EVs—what areas?
Matt Shapiro: While the core EV technologies, for example, the motors, are likely to improve, likely the bigger innovation is going to be in the batteries, increasing their capacity, improving the components of those batteries, and the ability to charge the batteries both wirelessly and wired in a faster manner.
Steve Pepe: Do you think your clients in the automotive industry need to make a choice at this point between traditional ICE engines (internal combustion engines), hybrid engines, and EVs, or can they try to do all three simultaneously?
Matt Shapiro: What we’ve seen already is that certain manufacturers came out with bold predictions. For example, they’re going all in on EV, and they’re not going to invest in ICE engines or they’re not going to invest in hybrid technologies. And then, we’ve seen many of those clients pull back and say, “You know what? We made a mistake.” So, I think the safer strategy is to innovate across the spectrum but to focus the innovation on the hybrid and EV side, because that is going to be the wave of the future even if it’s not quite here yet. We see even the EPA coming out with ambitious plans to transition to significant EV technologies in the coming decade.
Steve Pepe: Great. Let’s talk about the third area of innovation, which is autonomous driving and autonomous vehicles. Tell us a little bit about what’s happening there.
Matt Shapiro: Sure. The innovations here focus on the core imaging, radar, and LiDAR technologies that are used as components for autonomous driving. Improving those components, not only the cost of them but the size and their accuracy, will really yield increases in the ability of autonomous driving. There are also the software components, of course, and the need to protect the data that’s being used. For example, as a car is driving and it’s collecting personal data, ensuring that that data’s protected and not misused is going to be an important issue.
Steve Pepe: Does autonomous driving touch on that first category we discussed, the vehicle-to-everything data transmissions?
Matt Shapiro: Absolutely. As part of the data collection, the ability to use the crowd—as in the crowd of vehicles around you—to provide inputs and enhance your own driving is going to be very important. Now, a vehicle is operating as its own entity, and it needs to determine whether there’s a vehicle in front of it, what speed that vehicle is driving at; but with increased connectivity with vehicle-to-everything, that vehicle will have increased information and the ability to then use that information to drive more efficiently and safer, even from, “What is the state of the traffic light in front of you? Is it red, or is it green?”
Steve Pepe: Whenever there’s technical innovation or technical revolution in a particular industry, patent litigation is not far behind. Here, we have three separate areas of innovation: the connectedness you talked about, transitioning to EV, and autonomous driving. Have we seen an uptick yet in patent litigations in the automotive space?
Matt Shapiro: Certainly, over the last 15 years, there has been an uptick in litigation, primarily from non-practicing entities coming in with patents that are more generally applicable outside the auto space to technology, and the application of that technology in the automotive space. If we look to, for example, the smartphone wars of the late 2000s to early 2010s, that is likely a good benchmark for what we expect to happen in the automotive industry looking into the future.
Steve Pepe: What can clients do now to prepare for this impending increase in litigation in these three areas?
Matt Shapiro: Clients should be taking proactive steps now to prepare for potential litigation in the future. As we’ve seen in the past with litigations, having a strategy ahead of time is certainly very important. So, engaging in licensing discussions in a way that is meaningful and that will prepare you for litigation if it does ensue. Developing portfolios strategically such that if there is a dispute, you perhaps have your own arsenal of patents that you can use in a counterattack, or if the competitive situation is such that a party wants to engage in its own litigation to adjust the competitive situation, having those patents available to you.
Steve Pepe: Great. Let’s transition to a different topic. Is there any other development with respect to technology that has had an impact on your clients or will have an impact on your clients in the near future?
Matt Shapiro: One issue that we’ve seen over the past 15 years is the increase in standard essential patent (SEP) litigation, and how disputes that were really focused in the U.S. and perhaps expanding into Germany have now exploded to the worldwide stage—by that I mean that litigation is now present for SEP cases not only in the U.S. and Germany but in South America, in the United Kingdom, in China. Any SEP dispute involving an aggressive plaintiff really has multiple components across different jurisdictions, and with the new Unified Patent Court that’s now a year old, we’ve seen a number of SEP disputes which generally have shaped up, at the outset, to be like Germany but with an increased population. The UPC covers perhaps 400 million individuals who are purchasing consumers, while in Germany, it would only be about 80 million, so that large increase places a lot more at stake.
Steve Pepe: Does the globalization of SEP disputes create complications when advising clients about how to proceed with a new product offering or with respect to licensing negotiations with a SEP holder?
Matt Shapiro: It really does, because there are a number of issues that will impact a client that perhaps they weren’t thinking about in the past. In a SEP dispute, now a ex parte preliminary injunction that’s issued swiftly is a real possibility, for example, in Brazil. We’ve seen a number of patent plaintiffs with SEP cases filing in Brazil for that reason, to receive a swift injunction for quite a large population. Separately, you have some jurisdictions which will apply an unwilling licensee-type doctrine where if a party is not engaging in good faith negotiations, they may be assessed damages, or they may, as a patent holder, not be entitled to an injunctive relief.
Steve Pepe: Have there been courts that have been willing to set global rates for SEPs? And if so, which courts have been inclined to do so?
Matt Shapiro: That’s another really important point. For example, the United Kingdom, in a number of disputes, has been willing to set a global fair, reasonable, and non-discriminatory (FRAND) rate, for example, in Unwired Planet and more recently in the InterDigital v. Lenovo case. Those decisions are important because a party is receiving a rate that they can apply globally for their SEPs. Another example is China, which has also been willing to set a global FRAND rate.
Steve Pepe: When advising clients, you’re really trying to advise them on a global SEP strategy, whereas in the past it was just more focused on U.S. and perhaps Germany? Is that right?
Matt Shapiro: That’s exactly right. And with that comes the need to have a global strategy, to be capable of coordinating that global strategy, and having important global partners to execute that strategy. We’ve been working to maintain those strong relationships so that when a dispute occurs, we are able to represent clients across the board in an integrated fashion and to address these unique issues that are present in different jurisdictions.
Steve Pepe: Is there generally consistency in determining what is a fair, reasonable, and non-discriminatory rate across all these various jurisdictions, or are there differences in what may be a FRAND rate in the U.S. versus a FRAND rate elsewhere?
Matt Shapiro: At its core, there are generally consistent principles, but then, the application of those principles can be very different. For example, some have said that the U.K., while it will set a global FRAND rate, may not be the best rate—you might receive a better rate in some other countries. And in some countries, you’d receive an injunctive relief, which perhaps is even better than a FRAND rate for a patent holder.
Steve Pepe: Does this lead to forum shopping for an SEP holder?
Matt Shapiro: Yes, it certainly does. The SEP holders, in their forum shopping, have been doing a lot of shopping in that they’ve selected typically multiple jurisdictions to proceed in in parallel, some which would provide injunctive relief and others which would be more likely to result in a higher damages award.
Steve Pepe: Alright, Matt, we’re going to move to something that we call the lightning round, which allows our listeners to get to know you a little bit better. Tell us about outside of work, where do you live, and tell us a little bit about your family.
Matt Shapiro: Sure, absolutely. I live in New York City with my wife, Alison, and two kids who are in elementary school.
Steve Pepe: With the little spare time that you have with two young kids and a job at a law firm, what do you like to do?
Matt Shapiro: When I can get out of the office, I love to travel. I love going to Europe and Asia. When I’m there, my goal is to photograph. A lot of people love to photograph natural beauty. I see beauty in industrial aspects, particularly decaying industry. I can think back to one time when I was in St. Petersburg, Russia, and we were cruising through the old port. You could see some Soviet infrastructure that was really falling apart, and I loved photographing that—that was a memorable time.
Steve Pepe: I know, for me, one of the great things about this job is that we deal with all different types of technologies. Growing up, I really had a passion for airplanes and fighter jets, and I actually got to work on a case relating to airplanes. Do you have any passions from your childhood that are related or connected in some way to the work that you’re doing?
Matt Shapiro: Growing up, I absolutely loved transportation, particularly planes and ships. I was always fascinated by them. I always loved a plane journey not for, necessarily, the destination but for just being on the plane, looking out the window, and watching the takeoff and the landing. But I’m pretty sure it’s in my genes, because at every generation that I can recall, my family has been interested or fascinated with transportation. And so, as no surprise, when I graduated from college before I became a lawyer, I worked in the engineering field on transportation, where I was designing positive train control systems and submarine navigation systems—I found that to be incredibly interesting. Today, now, I get to see new technologies and the litigation surrounding them, and I love that about the job.
Steve Pepe: I want to thank you, Matt, for joining us today. And thank you to all our listeners. This has been the R&G Tech Studio podcast—it’s available on the Ropes & Gray website, on the R&G Tech Studio podcast page, and wherever you get podcasts. Thank you, everyone, for listening.