There is No Such Thing as the Internet of Things – at Least Not Yet!

November 12, 2015

This article first appeared online in Legaltech News on Nov. 12, 2015

It was also published in print in the National Law Journal on Nov. 23, 2015

Introduction

Today, the term “Internet of Things” – or simply “IoT” – is generally used to describe the union of wireless technologies, software, actuators, sensors, and the Internet. And by now, many people have at least a basic understanding of this concept.

Anyone that walks into a Best Buy or Walmart can see that more and more everyday objects are being embedded with technology that enables them to sense and communicate – everything from home appliances to health monitors and watches to washing machines.

In fact, with over 10 billion “smart” products, there are now more things connected to the Internet than there are people on the planet. And according to Cisco CEO John Chambers, this number will reach 50 billion by the end of the decade – a potential $19 trillion market!

But the invention of thousands of individual smart products does not equate to the development of a unified Internet of Things, one that allows for the interoperation of all of these Wi-Fi connected objects.

Developing a platform upon which diverse technologies will truly be able to interconnect will require the standardization of the infrastructural technology of the IoT, a goal that may prove to be very difficult to attain.

If the turf wars that have been waged in other technology fields are any indication, industry leaders will continue to be more concerned with protecting their own patents than cooperating to create a broad-based Internet of Things.

The IoT of yesterday

One of the first steps toward making the IoT a reality was the creation of the Internet Coke Machine in the early 1980s. A group of graduate students at Carnegie-Mellon University hooked up a Coke machine to the Internet (ARPANET back then) so they could monitor whether their favorite soda was out of stock.

In 1990, John Romkey moved the ball forward another few yards when he invented a toaster that could be turned on and off over the Internet. The device was connected to a computer with TCP/IP networking, and an information base (SNMP MIB) was used to turn the power on.

It wasn’t until 1999, however, that the term “Internet of Things” was actually coined by British technology pioneer Kevin Ashton. Ashton used this phrase in a presentation he gave to Procter and Gamble, wherein he discussed the benefits of linking RFID in P&G’s supply chain to the Internet.

But the biggest step toward making the IoT feasible occurred in 2007, when the first smartphone (the iPhone) was released. Smartphones, in turn, soon led to the development of thousands of software apps, many of which permit users to communicate with everyday items, such as thermostats, lightbulbs, and cars.

The IoT of today

The concept of the Internet of Things has evolved far beyond Ashton’s idea of tracking and inventorying products. This term now connotes the idea of things being able to exchange information systematically, to adjust automatically, or to be controlled remotely.

Here are a few examples of recent innovations:

Notion – This device notifies users when doors or windows are opened (including safes or cabinets), if there is a water leak, or when a smoke or CO2 monitor sounds. It can also monitor the temperature of specific areas of the home.

The Array of Things (AoT) – The goal of the AoT is to develop and install 500 sensors across Chicago to measure climate, air quality, noise and other factors. The University of Chicago was awarded a $3.1 million grant by the National Science Foundation to spearhead this project.

Smartpile Embedded Data Collector – These are rugged sensors that are placed directly into concrete during the pouring process. Users are then able to measure the compression, load capacity and overall quality of the concrete during installation.

But as amazing as these devices are, they still do not really exemplify “The Internet of Things.” Rather, they illustrate the development of many isolated “intranets” of things – individual systems with limited device-to-device (D2D) communication and/or control by a remote user.

This is still a far cry from what many envision for a true interactive IoT, where a whole city is smart, and Wi Fi connectivity is ubiquitous; where cars, buildings, public works, transportation networks, and even public parks are all connected to – and through – the Internet.

But the idea of embedding an entire metropolis with a digital nervous system that allows for this level of interconnectivity is still just a distant dream that is decades away from becoming a reality. Or is it?

Readers may be surprised to learn that a smart city actually already exists on 1500-acres of reclaimed land along the Yellow Sea in South Korea. It is called Songdo, and it is one of the largest privately funded real estate development projects in history.

Songdo is built on a fiber-optic broadband infrastructure that covers almost every square inch of the city, linking all essential information systems. This includes 13.7 million square feet of LEED-certified space, including the first LEED-certified convention center in Asia.

Perhaps the most amazing aspect of this project is the fact that companies like LG, United Technologies, 3M, and Cisco have been able to work together to bring Songdo to life, thereby demonstrating that technology titans can work together toward a common goal.

But it is one thing for a business district to be built from scratch on a digital foundation, it is quite another to upgrade America’s aging cities so that they can become part of the Internet of Things.

For even if sprawling urban areas like Los Angeles can somehow be retrofitted with the necessary IoT technology, it will then become necessary to deal with the vast amounts of information that will be constantly streaming through the city.

This can only be accomplished if the protocols that will manage all of this data are standardized. But if the technology is standardized, and if it is patented, third-party users could be forced to either infringe on such patents or pay steep license fees.

A situation like this could prove to be a substantial barrier to entry.

Of course, it is possible that owners of standard essential patents (SEPs) will be obligated to offer non-exclusive licenses on fair, reasonable and nondiscriminatory (FRAND) terms, as is required in many other industries, but even this would not resolve many potential problems.

Standard Setting Organizations (SSOs) would still need to establish exactl y what fees are “fair and reasonable.” Further, there is a risk that standardization could encourage too much cooperation among corporate giants. This could lead to violations of anti-trust laws.

Alice and the IoT

Another vexing issue is whether the programs and systems that will run the Internet of Things will even be patentable. Many had hoped to receive direction from the U.S. Supreme Court when it decided Alice Corporation Pty. Ltd. v. CLS Bank International in June, 2014, but much remains unsettled.

The Alice inquiry is technology-agnostic, expanding beyond financial and business method patents, to include any technology from implementations of computer software to biotech patents.

Further, the glare of Alice is cast equally on claims types including methods, processes, or systems, invalidating patents with “abstract ideas,” or “lacking inventive concept,” and leading to tumult and confusion in the patent bar.

As one District Court said, “[i]f one looks at almost any patent from far enough away, it could arguably claim an abstract idea” (and be patent-ineligible). Therefore, Congress may need to intervene and pass new legislation that seeks to clarify the patent-eligibility of software and systems.

Absent such statutory guidance, investors are likely to steer clear of IoT-related patents including both software-enabled inventions and technological implementations that “recite a handful of generic computer components configured to implement [an abstract] idea.”

Conclusion

Faced with the above challenges, it will likely be some time before the U.S. will be able to develop its own version of a “ubiquitous city” like Songdo – a city born with the IoT embedded in its DNA. For while the required technology is almost there, the ability of industry leaders to collaborate is not.

But just because connected cities may still be a long way off, it does not mean that efforts should not be made to improve the technological IQ of existing cities right now. For even if it is not yet possible to make cities that are entirely “smart,” we can at least strive to make cities that are not so digitally dumb.