The Formula 1 Innovation Battle – On and Off the Circuit

August 25, 2015

What role do patents play in Formula 1 innovation?

Mercedes AMG Petronas has won nine out of the first eleven race races this season. One could say that there was a minor blip in Budapest with driver error from Lewis Hamilton and an unlucky puncture for Rosberg late-on, but Hungary aside, the ever increasingly dominant Brackley-based group has been nearly unbeatable in this year’s campaign. After an emphatic win in Spa and only a short break until Italy, we took some time to look into a slightly different aspect of the Formula One business before Lewis Hamilton and his rivals travel to Monza to be greeted by the infamous "tifosi". Formula One seems to go through eras of single team dominance – Schumacher’s Scuderia Ferrari in the early to mid-2000’s, Alonso’s fast starting Renault, Red Bulls “Vettel era” and now the continued dominance of Mercedes. These eras of dominance lead us to ask: does the battle on the track coincide with a battle in the patent office, and do patents play a vital part in a single team dominating the sport of F1? If we look back through history, assess the present day and hypothesise about the future, an interesting conclusion can be drawn: Within F1, there is a direct correlation between rapid, successful innovation and stringent rule changes. Let’s go back to 1978 and the Brabham BT46, also known as the "fan car," which was introduced at the Swedish Grand Prix as a counter to the dominant ground effect Lotus 79. The BT46B generated an immense level of downforce by means of a fan, claimed to be for increased cooling, but which also extracted air from beneath the car. Lotus driver Mario Andretti said "It is like a bloody great vacuum cleaner. It throws muck and rubbish at you at a hell of a rate." The car only raced once in this configuration —when Niki Lauda won the 1978 Swedish Grand Prix at Anderstorp. The concept was immediately declared illegal by the FIA before the car could race again. Formula 1 Fan Car   This has happened more than once, in the early 80s Williams started experimenting with a six-wheel car (the FW07D), the rear four wheels of which were driven. Team boss Patrick Head reportedly said the idea was dropped and the FIA banned four-wheel drive cars soon after and limited the number of wheels on a car to four. Alan Jones (AUS) in the six wheeled Williams FW07D. The car was tested but never raced. Formula One Testing, Donington Park, England, November 1982. Moving forward to the present day, this trend of rapid innovation and instant banning of the technology is all too frequent. Brawn’s double diffuser, Renault’s Mass Damper and Red Bull’s floor all spring to mind. Clearly the battle on the track is relative and success seems to be determined by the application of real innovation but why in this industry do patents not play a role? With the slightest of margins being the difference between top and middle order, some would think that every Formula 1 contractor would instantly patent any technology to shield its use from their competitors. This intense and sometimes brutal competition between the teams could be compared to other markets - the smart-phone patent war for example. Industry leaders ruthlessly protect their innovation through filings and aim to protect their market share and competitive advantage by enforcing their patent rights in courts across the globe. One would expect this trend to be the case in Formula 1 as well, but it’s not. Litigation battles are scarce within the motorsport world - there’s no F1 Patent war and this topic has been looked into before, specifically by James Allen, a BBC F1 journalist, in his Formula 1 online blog. He quotes a senior F1 engineer who explains that “it’s because if a team takes out a patent on a design, that then locks in an advantage the other teams cannot access. Therefore the other teams will simply vote it out through the FIA Technical Working Group process by the end of the season in question.” He goes on to say, “by keeping a new design in the game, a team can gamble that they can do a better job on a design than another team. Some good examples of this are seamless shift gearboxes and inertia dampers. If these were patented by F1 teams, then they may have been wiped out.” It’s not then that F1 teams are friends off the circuit and they have a “gentleman’s agreement” to keep the technology open source. It’s because of the regulatory environment that makes the process of patenting and protecting innovations futile. It’s much more beneficial for teams to actively try and hide their technology to maintain the short window of competitive advantage before others catch up. Even if patents were a suitable deterrent to copying tech in this environment, the lengthy patent prosecution process renders them utterly useless as they would grant and only be enforceable several seasons later by which time the rules would have changed….again.  Have you ever wondered why you see engineers from rival teams sniffing around the car of a competitor when they are lined up on the grid? It’s because for those few minutes, before the other team catch wind of what they’re doing and cover up the car, that’s the only time rivals get to see what technology their competitors are using. This means that the teams rely on trade secrets and confidentiality to protect their IP. Engineers from across the McLaren Group are using the Intralinks VIA for secure enterprise collaboration in order to share intellectual property securely. “Vodafone McLaren Mercedes needed a collaboration platform that we could trust with our highly sensitive information, but which would also keep pace with our business,” said Stuart Birrell, CIO, McLaren. As the company diversifies away from F1, through divisions such as its automotive and electronics arms, more technology needs to be patented. “IP has become more important for the long term, not just this year’s racing series,” he said. Trade secrets are all well and good within the F1 bubble. They offer protection to teams, or not in some cases, but either way these secrets don’t help the constructors commercialise their technology outside of the circuit. They offer no protection in the real world. This doesn’t mean the teams don’t file for patents at all. F1 teams do obtain patents for their innovation and technology, but it’s usually not totally F1 specific and they are usually very hard to track down. F1-originating patents aren’t easily accessible and the process of locating them is made even more difficult by both the extended company structure of many constructors, and the lack of information available on the cars. However, not all F1 innovation is completely secret. Take KERS for example – the kinetic energy recovery system. KERS is an automotive system for recovering a moving vehicle's kinetic energy under braking. The recovered energy is stored in a reservoir (for example a flywheel or high-voltage batteries) for later use under acceleration. This technology was invented within the walls of Formula 1 yet several commercial automakers have been testing KERS systems. There are and were other hybrid power storage technologies around at the time, but the rule changes mandating KERs in F1 prompted a 12 month innovation cycle. A resulting outcome from Williams F1 was the sale of the technology (which was patented) to GKN. Williams still has a royalty bearing license. In 2011, Mazda announced i-ELOOP, a system which uses a variable-voltage alternator to convert kinetic energy to electric power during deceleration. The energy, stored in a double-layer capacitor, is used to supply power needed by vehicle electrical systems. When used in conjunction with Mazda’s start-stop system, i-Stop, the company claims fuel savings of up to 10%. Furthermore, Bosch and PSA Peugeot Citroën developed a hybrid system that uses hydraulics as a way to transfer energy to and from a compressed nitrogen tank. An up to 45% reduction in fuel consumption is claimed, corresponding to 2.9l/100 km (81 mpg, 69 g CO2/km) on the NEDC cycle for a compact frame like Peugeot 208. The system is claimed to be much more affordable than competing electric and flywheel systems and is expected on road cars by 2016. In 2014, GKN acquired Williams Hybrid Power Limited from Williams Grand Prix Engineering Limited for £8 million in cash, plus a potential additional consideration based upon future sales. KN's purchase of Williams Hybrid marked the second acquisition of a flywheel-based automotive clean technology in the UK. Torotrak PLC  acquired Silverstone based Flybrid Automotive in December 2013 for a consideration of up to £23 million (for the 80% of shares it didn’t already own) and a minimum of £15 million (valuing Flybrid at between £18.75 million and £28.75 million). Flybrid's M-KERS hybrid technology is expected to enter into production this year, initially to supply the UK bus market. While KERS is a very small drop in the vast ocean of technical innovation within F1, seeing these technologies used in the real world means that the F1 teams are clearly contributing to high tech innovation and are now more proactively using patents to protect and exploit the long-term value of these innovations in various new market places, including automotive, health care and big data. I’ve been an avid Formula 1 fan for as long as I can remember and it now seems that F1 companies are diversifying away from just racing and extending their IP strategies to realise longer term value. This is quite a contrast to what will happen at Monza, when the latest tweak on the front wing or adjustment of rear break bias could be the difference between the 4th row and pole. What forms of IP protection will help your enterprise realise long term value?

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