Is the Rental Car Industry Heading Toward Disruption Because of Intellectual Property?

By John Cronin and Nathan Doudera, ipCapital Group

Presently there are signs of a disruption in the car rental industry due to intellectual property (IP). In the past year alone Hertz, Enterprise and Avis have all been sued for alleged infringement of technology patents.

One such suit has been brought against Avis and Hertz by MacroSolve Inc., for alleged infringement on U.S. patent 7,822,816 — a “System and method for data management.” This is evidence that IP is becoming much more relevant in the car rental industry, and has potentially negative consequences if ignored. This is especially true as many car rental companies now have technologies in place, such as smartphone apps, to make it easier for customers to browse and reserve cars.

Companies are also using new technologies to simplify the process of completing the rental agreement. Hertz, for example, has recently introduced automated kiosks that allow customers to complete rental agreements without the need for a Hertz employee on location.

Looking to the future, it is clear that the prevalence and importance of technology will continue to grow in the car rental industry. As this happens, there is an increasing likelihood of an industry disruption due to patented technologies.

Patent Developments in Car Rental

Source: ipCapital Group Inc.
Source: ipCapital Group Inc.

In the near-term future there are more disruptive technologies that can be expected and patent protected. The general connectivity between the different parties and parts of the car rental process is likely to increase dramatically. As this happens, it is likely that mobile devices will be used in even more aspects of the car rental process such as adding an additional driver.

Eventually, mobile connectivity could get to a point where there would be no need for a staffed office at every rental location — only a parking lot for the vehicles. Other connectivity developments such as in-car Wi-Fi access and cloud-based services are also likely in the near-term future.

Looking ten or more years into the future, possibilities such as robotic cars will open up the car rental industry to even more disruption leading to patentable technologies. In the future, a robotic rental car might be able to drive itself to the airport arrival terminal, so that the vehicle would be there waiting when a customer’s flight arrives.

Growth of IP in the Industry

Source: ipCapital Group Inc.
Source: ipCapital Group Inc.

Filing of rental car-related patents has grown significantly in the past several years. Out of all filed patents directly related to rental cars, there are many that are not held by rental car companies. The amount of rental car-related patents not held by rental car companies is a concerning fact and makes rental car companies susceptible to IP threats from outside their typical competitors.

Of the rental car companies, Enterprise is by far the leader with 66 patent filings. The rest of the major car rental companies are far behind in this regard: Both Avis and Dollar Thrifty Automotive Group have no patent filings, and Hertz has seven filings.

CONTINUED:  Is the Rental Car Industry Heading Toward Disruption Because of Intellectual Property?
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  1. Gavin [ July 18, 2012 @ 10:48AM ]

    Excellent peice of writing and raises some very good points. Also shows how far behind the car rental industry is compared to other industries, cant think of many companies that would let a new company like zipcar gain more patents than a couple of companies that have been trading for over 50 years.

  2. moti [ July 18, 2012 @ 10:15PM ]

    finally we got older and mature, competition is good for business! stealing is bad for business!

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