Schaeffler Technologies is a market-leading manufacturer of elements for the automotive, aerospace and industrial sectors. With an annual revenue of over €14.2 billion, the company relies on its IP assets. We speak to Edgar Duschl, Senior VP of IP, about the firm’s IP strategy, what the stakes are, and the challenges ahead.
Leaders League. How does Schaeffler establish its IP strategy?
We have divided up the Schaeffler patent portfolio into more than 150 sub-portfolios, so we don’t have a “one size fits all” IP strategy. Our IP activity falls into three main areas.
The first one is called Repel, which means defending against infringing any third-party IP. We develop new products and new ideas and we check if any relevant third-party IP might already exist. For this purpose we created a specific department taking care of IP risk management to provide means and technologies to all our patent attorneys, so that they can meet the demand for acting in this specific area.
The second area is Create. Creating IP for the benefit of Schaeffler based on our own invention notifications creates a USP that will give us an advantage in the business area.
We introduced means to determine how important any one specific area of development presently is or will be in the future. We assigned this evaluation to each of the patent sub-portfolios mentioned above, such as wheel bearings or torque converters. There may be huge differences between the evaluation of the sub-portfolios, leading to varying needs for action. It may be the case that one portfolio is important today but will be less important within some years. This shapes the different patent portfolios and priorities in this area.
The third area is Enforce. This involves undertaking the necessary steps to make sure that Schaeffler IP rights will not be used unauthorized. This covers technical IP such as patents and non-technical IP such as trademarks, where our brand protection activities are very important.
How large is your team, and how is it organized?
Altogether the Schaeffler IP team comprises about 75 people worldwide. This includes the staff for patents, trademarks and inventor compensation.
In addition to our headquarters in Germany, we are present in three regions: Asia-Pacific, the Americas, and China, each with an IP department organized in a kind of mirror organization. 50 staff members work in our headquarters, seven in the Americas, eight in China and we are currently increasing IP department in the Asia-Pacific region, which presently employs four. All IP activities are aligned to different technical divisions such as e-motors, e-mobility or bearings.
Presently we see that there is growing demand in hybrid engines for cars. We are also active in industry fields such as wind power and rail. All these sectors are represented by IP specialists in our German headquarters.
What is the balance between trademarks, patents and other brand protection activities?
We have about 26,500 individual active patents and ongoing applications, and 3,000 trademarks and ongoing applications. Every year we obtain more than 3,200 invention notifications, which result in 2,500 priority applications worldwide. The IP department started with patent and trademarks at the same time. It also deals with taking care of inventors’ compensation worldwide and of course in Germany, which is a must according to German law.
How would you define your role as vice-president?
My main responsibility is to secure the support to present and future business at Schaeffler with respect to IP. It is not our goal to earn as much in license fees as possible but, rather, to support the business. My main objective is to guarantee cooperation between the headquarters and the regions, since we’re currently facing some tough challenges, such as the transition the car industry is going through.
How is the R&D department organized?
Our R&D organization employs 7,800 people across 20 R&D centers all over the world. Our R&D quota is close to 5.9%.
Depending on where the future markets are, for any upcoming product we think it is not efficient enough to only concentrate on the cost applied to immediate business but also on these future markets. This might require the use of artificial intelligence to do the necessary IP clearing.
What are the stakes involved in IP protection at Schaeffler?
Schaeffler comes up with more and more innovations, not only in Germany but also in the regions. This is the first challenge on a practical point. With all the inventions made all over the world, we must guarantee that these inventions will find their way to the IP department. This has to be handled from an organizational standpoint. We also have to deal with the presently ongoing transformations, which bring us very close to new technological fields in which we might not be the first mover. We must carefully engage in the aforementioned Repel activities to check all the relevant applications.
“We will be relying increasingly on machines to do pre-check procedures of invention disclosures”
Furthermore, we continuously check if and how digitalization or AI could help. For instance, when someone submits invention disclosure, we have introduced a portal through which an inventor can submit their invention. At the time of submitting the invention, it is checked and a prior art search is done automatically; the result is presented to the inventor. This includes applications that have already been filed in the name of Schaeffler and known competitors. In the next step, our internal patent attorney gets this information too. We are now expecting to get to a point where we can see if it’s possible to make a first draft of the patent application using this available information.
How does your IP department innovate?
As described above we use a technique known as Ontology during the process of submitting invention disclosures. We can classify all the documents which are available in one specific sub-portfolio. If you know the ontology, which is a representation of the documents, it allows you to compare the documents and identify the closest prior art. When the inventor has submitted the invention notification, the system itself can send a question to the inventor asking them to describe additional missing features. This helps to automatically get a better quality of invention notifications.
We already have a prototype for some of the sub-portfolios. Our expectation is to have it available on a broad basis and integrated in our document system by August 2021. Therefore, all 7,000 of our inventors and engineers will benefit from that system.
What challenges will your department will face in the next three years?
It’s very important to find a way to efficiently handle the increasing numbers of invention disclosures. Checking invention disclosures is time-consuming for an individual patent attorney. We are going to rely increasingly on machines to do pre-check procedures of the invention disclosure in order to raise its quality and clarify questions before it gets to a patent attorney. This is an efficient way to handle the increasing numbers of the applications themselves and office workload. In the legal field, we will come to a point where more and more AI is used to meet these challenges.
In the automotive industry and supplier sector, it will be important to gain clarity what the future of mobility will be and to what extend hybrid vehicles will expand in the next 20 years on a worldwide basis. It then will be quite clear for the engineers what the future demand for solutions will be and, for the sales side, what the market will be.