The Rise of Joint Development Agreements: Inevitable To Future Automaking

Google Self-Driving System On A Ford

Joint Development Agreements (JDAs) are beginning to pop up in much greater numbers due to a need for software and technology assistance at the traditional, established automakers. The need could play out just as easily the other way, as automotive software and technology gurus are looking for vehicles to house their products. Ties between the places like the Motor City and Silicon Valley will likely become commonplace.

Attorney, Greg DeGrazia,  for Warner, Norcross and Judd LLP in Southfield said:

“(The use of JDAs) is increasing exponentially. I probably have seven or eight going right now. I think it’s the future of Detroit — getting these things done.”

He cites the recent probable Ford and Google JDA as an example:

“Ford doesn’t have the software expertise and Google is feeling like, ‘We’re not an automaker,’. That’s a win-win situation if that ever goes anywhere.”

These agreements turn out to be less involved than joint ventures due to not having to involve shareholders and the U.S. Securities and Exchange Commission. It makes it possible for companies to share and create technology and products that neither company may be able to successfully and financially produce alone. Costs are cut and products can be delivered sooner.

Karl Hochhammer, head of technology at a Detroit-based firm shared:

“The biggest difference is the content in automobiles — the infotainment stuff, the autonomous cars — that’s driving a lot of it.”

The bridging of tech companies with traditional automakers is causing lawyers new difficulties due to confidentiality and clash of cultures. While the automakers are used to having the upper hand, the tech companies have a product that the automakers need and, no matter how large or small the company, intellectual properties must be protected. It makes for a more level playing field as the successful agreements are drafted.

DeGrazia said:

“Google, Microsoft and Apple have something like 10 times the number of patent infringement lawsuits” than the automakers . . . They’re very aggressive with their intellectual property”

Hochhammer added:

“Silicon Valley tends to move very fast, and they’re fine with making mistakes. That is something the traditional automotive manufacturers have not been comfortable with.”

As more of these reported JDAs begin to surface and come to fruition, the future of automaking will change indefinitely. Apple Car fans can only remain hopeful that the company will be able to pull its venture off successfully on its own. There is surely no lack of potential.

Source (Crain’s)

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