Secrets in the Pitlanes : Navigating IPR In Formula 1

ABSTRACT

The Adrenaline rushing sport of Formula One is not just a race among the twenty best drivers or pilots in the world but among the ten best Formula One car constructors. These teams develop a car from scratch. The sheer number of developments and technological advancements in the sport make it crucial for the teams participating to ensure that their intellectual property rights are not violated. This is where the various protections under international Intellectual Property Rights conventions come into play. They ensure a level playing field by ensuring that no advantageous secrets are leaked, and in case such a situation arises, there is a proper procedure to penalize individuals for the same. The following article focuses on the challenges of enforcing patent rights and Trade Secrets.

“ Its Lights Out and away we go”.

INTRODUCTION

Formula One is the pinnacle of motorsports not only for its thrill, adrenaline rush, and speed but also for its technological innovations and the race to make the best car on the grid. From Lights out to the final lap, F1 is an exciting experience for the audience. Ten teams compete with each other to procure the best cutting-edge technology before their rival team gets their hands on it.

Behind every Grand Prix Winning Formula One car is not just its driver but an entire team of engineers and scientists who work tirelessly throughout the season to get a competitive and technologically advanced car on the grid every race Sunday. When a margin of a second can cost the team and the driver the entire championship, a tremendous amount of effort is put in to obtain that technology, which makes the car a hundredth of a second faster than the rest of the grid. Hence, the constructors ensure they have the best engine, gearbox, and strategy that works.

Formula One can be perceived as an epicentre of inventions and innovations, making intellectual property indispensable in the sport. Hence, the traveling chaos of F1 is a world filled with patents, trademarks, copyrights, and Trade Secrets. IP can be found in the chassis of cars, uniforms, merchandise, various engineering and designing equipment, television broadcasting, and most importantly, carefully hidden trade secrets.

The following article primarily focuses on the complexities of the trade secrets and patents involved in this adrenaline-filled ride of F1, where the brightest minds work together to build the fastest cars.

A TRIP THROUGH THE PITLANE OF TECH

There has been tremendous development in automotive technology for motorsports. Through its rich history of 74 world championships, F1 has seen various technological developments, be it for the safety of the driver (Halo), optimized performance through active aerodynamics (DRS), or increased power (hybrid engines).

The First World Championship Race in Formula One was hosted in 1950. Back then, the primary emphasis was on the pilot’s driving skills rather than the technology used. Technology in the past was basic, consisting of normally aspirated engines.

As the years went by, F1 saw the rise of competition among the teams and their engineers, which led to them developing technologies to get an edge over their rivals. In the present times, many such developments have made the sport more competitive and exciting.

One such development would be that of the data acquisition systems. This system was developed from a basic setup to a highly technical one that collects data instantaneously. Employing active aerodynamics systems in-car devices like DRS (Drag Reduction System) has made overtaking in a gap of less than a second more effortless. The most significant of all would be the use of Turbocharged Hybrid Engines.

WHAT ROLEDOES INTELLECTUAL PROPERTY PLAY?

A  highly competitive sport like F1 has dynamic components like the car itself. The teams are always trying new developments and upgrades that will help improve performance in the race. Except for specific requirements that are kept stagnant through the race, the team can upgrade the car according to their wish and according to the team’s budget. In this constantly developing arena, F1 teams must go to great lengths to protect their technology and design secrets,’ which cost them a large sum.

Ordinarily, one would expect that it would be advantageous for the teams to patent their technology to safeguard their intellectual property rights, as this would impede their rivals from using their advancements. It would also benefit the engineers as patents would allow them economic benefits for years.

In spite of having such advantages, patenting technology in F1 is not a norm seen in the paddock. The most significant reason for this would be the ever-changing nature of the sport.

However, there should be something that protects IP rights; this is where trade secrets come into play. Trade secrets are the most preferred form of IP in Formula One. This is done so that a competitive air is maintained throughout the season. F1 is the best example of how a team or a community has trust among all their members to seal their loyalty by not spilling secrets and enabling rapid development.

WHAT DO INTERNATIONAL CONVENTIONS SAY?

The Confidential information, which may be sold or licensed, is a Trade Secret and forms a part of Intellectual Property Rights. Trade Secret is defined under Article.39 of the TRIPS agreement. For intellectual property to be considered a trade secret, it must have commercial value; only a small group of individuals must be aware of its existence, and the holder of these rights must take proper precautions that the secret remains a secret. This is generally ensured by signing confidentiality agreements such as (NDAs) by employees and partners.

Trade secrets have their peculiar way of being protected. Patents, Copyrights, and Trademarks can be registered to ensure that no individual would be eligible for economic gains apart from the author or the buyer of the rights. As there is no such need to register trade secrets, no limitation is put on its protection. However, this fact attracts ample disadvantages for this intellectual property. The protection of trade secrets varies from country to country and hence is considered weak compared to others.

The international conventions that discuss the protection of trade secrets are the Paris Convention for the Protection of Industrial Property,1883, which the World Intellectual Property Organization administered, and the Trade-Related Aspects of Intellectual Property Rights,1995 (TRIPS)[1], administered by the World Trade Organization.

A patent is an exclusive right granted to an individual for an invention, a product, or a process, which essentially is a new procedure of something or gives a novel solution to a problem. While filing for a patent, it becomes necessary for the individual to share his invention with the public through an application. Once an invention is patented, it cannot be imported, commercially manufactured, distributed, or sold without the patent holder’s consent. As patents are territorial rights, they are exclusively applicable in the country where they are filed. This poses a considerable problem to the F1 teams as they travel around the globe to race.

The Paris Convention[2] was the first international agreement on IP protection through patents. The Patent Cooperation Treaty later formed an international patent filing system. This system makes it possible to seek patent protection in many countries simultaneously.

ARE TRADE SECRETS BETTER THAN PATENTS TO PROTECT UPGRADES?

Patenting is a common practice in technology-related fields, but it is lacking in F1. This is because of the issues faced while filing for patents and the lack of need for them. One primary reason would be that of time. F1 teams do not patent their technology as the time taken to obtain an enforceable patent is very long. As the need for the development of new engine designs is felt season after season, patenting one would not prove wise.

[Image Sources: Shutterstock]

Another reason would be that patents are territorial rights; teams would have to file for patents in every country they would race in. For example, if McLaren wants to patent a specific part of their car, as it gives them an advantage of a tenth of a second over the other teams. Now, if McLaren patents the same in the UK, they will have to disclose their technology publicly. The other teams would then get the same knowledge. As patents are territorial rights, McLaren would not have a patent in other countries where the race is conducted. The other teams can hence copy McLaren, causing the team a disadvantage.

Patents can be filed by using PCT, which is more convenient. However, Article 21(2) (a) of PCT provides for the rule that international publication of a patent would be possible after 18 months have elapsed from the date of priority application. It will not be of any benefit to the team as the season lasts for approximately nine months.

When a team applies for a patent and gets it in time, in that case, they can stop other teams from using the technology and take advantage of the superior technology. They will also be reaping economic benefits from the same. This would prove disadvantageous for the competition. Therefore, “The Fédération Internationale de l’Automobile “(FIA) has placed specific regulations to allow a fair playing field for all the teams. These regulations state that if a team patents any technology, that technology would be ruled out as illegal by the federation, and no team would be allowed to use the same in the future.

Another reason for the lack of patent wars in Formula One would be that no apparent benefit is derived from filing a patent. As the Formula One team, Scuderia Ferrari will not make any enrichment out of patenting a specific invention. However, Ferrari can benefit economically by incorporating the same in luxury cars.

Although, patenting can be used in specific innovations that are extremely useful for the automotive market. Such technology can be commercialized. A notable example would be that of the Kinetic Energy Recovery System (2009)

Therefore, a patent would prove to be obsolete in this rapidly evolving sport. Hence, a need was felt to protect Intellectual Property through Trade Secrets. Teams guarantee the protection of their ideas through secrecy. The innovative ideas for developing the Formula One car are only with the team members, which ensures them a first-mover advantage.

Teams hide these trade secrets religiously, going to lengths like hiding the actual car with the help of covers and screens. One such example would be the Mercedes AMG Petronas F1 team, which makes it mandatory for the team members to use devices they provide. They have formulated a “USB Storage Pen Device Usage Policy,” which prohibits using any other USB device.

As trade secrets do not provide you with the inherent rights of innovations like patents do, they pose a considerable risk for IP leaks as the information could be lost or stolen. There have been numerous cases of’ espionage’ in the paddocks. The most popular is the ‘Spygate‘ (2007). Ferrari alleged that their former employee had voluntarily shared crucial technological details with their Constructor Championship rivals, McLaren. Nigel Stepney was scheduled to leave Ferrari as he was dissatisfied with the team arrangements. After the hearing, a final decision was made, which mandated penalties for McLaren for illegally gathering data from Ferrari to gain a fraud advantage over the team. They were later disqualified from the championship and were penalized with a fine of US100 million.

Another case arose in 2012 when two external consultants fraudulently gathered confidential information from a rival team and supplied it to Racing Point Force India.

Leaks in confidential information are challenging to prove as, according to the FIA regulations, it is not illegal to reverse engineer the car if the team has the proof of development and design of the car by themselves and exclusively for their use. This forms a massive problem for the team, alleging someone of spying.

Therefore, trade secrets are more valuable than patenting in Formula One. However, they come with their issues. These issues are primarily solvable and can be controlled by imposing stricter norms. Teams can create stricter penalization for violation of confidentiality agreements. Access to trade secrets should be limited and given to authorized personnel after precautionary checks.

CONCLUSION

Intellectual property plays a crucial role in the encouragement of innovation in the field of motorsports, particularly Formula One. While patents can be the first instinct of a team to resort to while looking to safeguard their rights in this sport, there are wiser options than patents, like Trade Secrets. Trade secrets are more suitable to the dynamic nature of this thrilling sport. It is a gamble played by the team when trade secrets are relied upon in the development process, as the risk factor involved is massive. However, throughout history, due to the rigid regulations by the FIA, the occurrence of leaks of trade secrets has been less. There must be increasing involvement of the FIA so that observations, conduction of IP audits, and inspection of cars are done thoroughly to catch any such violation of Intellectual Property Rights. This would safeguard the teams’ IP rights and make the sport fairer. The better the car, the better the race. Therefore, encouraging innovation by monitoring rights violations would make the sport thrilling and exciting.

Author: EESHITA PATIL, in case of any queries please contact/write back to us via email to [email protected] or at IIPRD. 

REFERENCES

BOOKS

• Sudhir Ravichandran, Intellectual Property Risk Management, edition 1 (2016)
• Elizabeth Verkey, Intellectual Property Law and Practice, (2015)

STATUTES

• The Paris Convention For protection of Industrial Property, 1883, https://www.wipo.int/treaties/en/ip/paris/
• Trade-Related Aspects of Intellectual Property Rights, 1995, https://www.wto.org/english/tratop_e/trips_e/trips_e.htm

ARTICLES

• Aplin Tanya, Trade Secrets and Intellectual Property: Breach of Confidence, Misappropriation and Unfair Competition, 5, pp, Queen Mary Journal of Intellectual Property, 99-102.
• Day Bruce, Roots of Intellectual Property: Trade Secrets, Patents, Trademarks and Copyrights, 62, Journal of the Kansas Bar Association, pp. 30-36

·         Saumya Kumar Sing and Prashant Shivam, Patent Laws and their Service for IP Rights, Intellectual Property Rights.

·         Molly Torsen, Intellectual Property and Sporting Events: Effective Protection of Event Symbols through Law and Practice, IIPI

·         Derek Bambauer, “ Legal Responses to The Challenges Of Sports Patents”,Vol.18, Harvard Journal of Law & Technology.

ONLINE SOURCES

• Adam Cooper, Analysis: the remarkable Stepneygate saga, http://www.autosport.com/news/report.php/id/60467 (3 Dec 2023).
• Gavin Dundas, Patents: A driving force in Formula One? https://www.reddie.co.uk/2015/03/25/patents-a-driving-force-in-formula-one (3 Dec 2023).
• James Allen, Patents in F1 Explained, https://www.jamesallenonf1.com/2012/01/patents-in-f1-explained/
• (3 Dec 2023).
• David Tremayne, Why is it called Formula 1- and 12 other questions about the championship’s origin, Formila1.com, https://www.formula1.com/en/latest/article.why-is-it-called-formula-1-and-12-other-questions-about-the-championships.1GHeel6u4jga6hMpX2eFs1.html

[1] Trade-Related Aspects of Intellectual Property Rights, 1995

[2] The Paris Convention For protection of Industrial Property, 1883.