The Hype Behind the Industrial Internet of Things Jeremy Dunbar, Jonathon K
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FEBRUARY 2019 DEVOTED TO LEADERS IN THE INTELLECTUAL PROPERTY AND ENTERTAINMENT COMMUNITY VOLUME 39 NUMBER 2 THE LicensingJournal Edited by Gregory J. Battersby and Charles W. Grimes FEBRUARY 2019 The Licensing Journal A The Hype behind the Industrial Internet of Things Jeremy Dunbar, Jonathon K. Hance, Joel Bagnal, Ashok Choudhury, Mark Soloman, and Mark Thirman Bracewell Partner Jonathon Hance is a litigator LES, ASM International, Sigma Xi and Tau Beta and an intellectual property lawyer who works Pi and holds CLP credentials. to protect and monetize his clients’ innovations and protect his clients’ brands across a variety Mark Solomon, Hamilton Brook Smith Reynolds, of sectors, including the energy, real estate, and has dedicated his 20-year legal career to guiding technology industries. He also advises healthcare universities, research institutions and companies institutions regarding corporate governance issues of all sizes through the development, manage- and patient data privacy and protection under the ment, protection, and enforcement of intellectual Health Insurance Portability and Accountability property rights. He provides high value IP services Act (HIPAA). for clients who value IP by drafting and prosecut- ing patent applications from licensing and strate- Bracewell Associate Jeremy Dunbar handles gic business and legal perspectives, as applicable. complex commercial litigation related to energy, He also assists clients with intellectual property contract, and real estate matters. Jeremy draws matters relating to licensing, patent litigation, from his experience as a former law clerk to the written and oral opinions, trademark prosecution Honorable David Hittner of the United States and oppositions, copyright law, trade secret law, District Court for the Southern District of Texas, domain name disputes, and sale of intellectual where he assisted in thirty trials, including property assets, and provides associated strategic motions in limine, jury selections, evidentiary counseling. objections, jury charge conferences, and jury debriefings. Mark Thirman has over 30 years of experience in executive, business development, and sales roles Joel Bagnal is the President and Chief Operations gathered in a broad range of telephony, infrastruc- Officer of Vercilave, Inc., a cybersecurity company ture, and networking companies. Currently, Mark focused on offering customers a highly differenti- is working on global loT strategy with J. D. Power, ated national security grade solution to prevent a global leader in consumer insights, advisory cyber threats from accessing networks. Joel is an services, data, and analytics. Mark has also experienced global security and risk management worked with Amazon Web Services (loT), Cloud executive who develops and launches strategies Technology Partners, and TELUS. Mark currently that create enduring, customized security solu- chairs the Connected Things group at the MIT tions across entire organizations. Joel implements Enterprise Forum and serves on the board of customized risk management programs designed directors. Mark is a frequent speaker on the topic with effectiveness and growth as sustainable out- of loT/Connected Things and often is a guest lec- comes. A proven innovator, powerful influencer, turer at MIT, Tufts, Boston University, and other and entrepreneurial leader, Joel rapidly builds high universities. performing teams and develops leading edge solu- tions that achieve an organization’s growth goals while also reducing enterprise risk and improving efficiency. Introduction Dr. Ashok Choudhury is the Manager of Physical Sciences licensing at Vanderbilt University. He The term “Internet of Things” (IoT) was coined at is the recipient of numerous technology transfer the Massachusetts Institute of Technology Media Lab awards including a R&D 100 Award. Ashok is a in 1966 by researcher Kevin Ashton as a last minute metallurgist by training and stays involved in the PowerPoint addition: technical community through teaching and advis- ing activities. Ashok is the co-author of two books I coined the term ‘the Internet of Things’ when on failure analysis. He is a member of AUTM, I had to make a PowerPoint presentation in the FEBRUARY 2019 The Licensing Journal 1 1990s to convince the senior management of the of lights, air-conditioners, humidity controls, [and] company I was working for, which was Proctor liquid control . .”12 & Gamble, that we should put . a tiny micro- For all of the hype, however, there are multiple chip in everything Proctor & Gamble made.1 unique challenges facing IIoT that need to be resolved before it can be fully and safely utilized. Chief The phrase has since become confusing for many, among them are challenges involving intellectual but the best description of IoT is as a system of sen- property rights and data security. IIoT innovators sors, incorporated into consumer and industrial will undoubtedly seek patent protection for their devices, which in turn are connected to a network inventions. Difficulties in doing so may discourage (either the Internet or, in many cases, a private further innovation. Likewise, as IIoT innovation network2) to monitor, manage, locate, and collect evolves, device security and network vulnerability is real-time data. Device-generated data are important inevitable, and the consequences of a potential data in many key industries, including medicine, automo- breach become catastrophic. This article discusses tive/transportation, HVAC/connected buildings, con- these challenges and explains why now is an oppor- nected agriculture, and natural resources. Also, while tune time to address them. consumer-facing IoT devices are just beginning to take a foothold, enterprise-focused IoT developments involving machine monitoring and control (previously Intellectual Property referred to as “M2M” or “Machine-to-Machine,” or in some cases by the acronym SCADA—“Supervisory Challenges Control and Data Acquisition”) have quietly existed Largely because of its inherent interconnectedness, for over a decade. IIoT presents multiple discrete and unique difficulties Today, tens of millions of devices are part of a in obtaining and enforcing patent protection. networked IoT system of one kind or another, with First, it may prove difficult to demonstrate pat- massive growth predicted for numbers of deployed ent eligibility for IIoT products. Furthermore, there connected devices and the data they emit.3 Cellular is a jurisdictional aspect to this issue since the law phones, for example, are expected to have 3.5 billion regarding patent eligibility varies between the indus- IoT connections by 2023.4 And at a recent Amazon trialized nations. In the United States, Section 101 of Web Services conference, one presenter from the the Patent Act sets forth the requirements for patent Formula 1 race car organization described their protection eligibility: “Whoever invents or discovers vehicles as containing “120 sensors on each car, any new and useful process, machine, manufacture, generating 1.1 million telemetry data points per or composition of matter, or any new and useful second.” improvement thereof, may obtain a patent therefore Although sensors on race cars are exciting, perhaps . .”13 Although software is generally patentable, IoT’s most promising application is to industry—the abstract ideas are not.14 Thus, “simply using software so-called “Industrial Internet of Things” (IIoT).5 IIoT to implement abstract ideas is not patentable.”15 To generally refers to “the proliferation of industrial determine eligibility, courts ask (1) whether the inven- systems, machines, and devices capable of interact- tion is “directed to an abstract idea”; and, if it is, (2) ing with the physical environment, people, and other whether the invention “adds significantly more” to devices.”6 There is much hype behind IIoT technol- that idea.16 ogy. Popularly referred to as the “fourth industrial Courts have struggled to apply this standard to revolution,”7 IIoT has been described as having the inventions involving computer technology,17 and its potential to “revolutionize the industrial sector in the application to IIoT will likely prove even more chal- United States and around the world.”8 lenging.18 In a physical sense, IIoT is not new. The IIoT technology is already being adopted in several “Things” in IIoT generally include hardware that have industrial markets.9 For example, companies can existed for years: a device being monitored, commu- remotely monitor industrial hardware and, using nications modules, connectivity equipment, and sen- cloud-based analytics, predict the necessity for main- sor technology. In that sense, one may find abstract tenance before it arises.10 IIoT also has the potential the idea of, for example, connecting these devices in to dramatically change industrial logistics; retail giant a way that allows for the collection and analysis of Amazon has begun to experiment with drone deliv- data to predict when manufacturing machinery will eries using IIoT technology.11 Power management need maintenance. But is this application an abstract, could also be improved when “specific sensors can patent-ineligible idea merely because it uses preexist- detect environment and trigger to turn on/off control ing hardware? The answer will likely turn on step 2 The Licensing Journal FEBRUARY 2019 two, above. Thus, in drafting and submitting patent however, may not prove as useful in the IIoT arena. applications for IIoT technology, applicants would be IIoT