June 2014, Friday the 13th didn’t actually come that bad when Elon Musk, CEO of Tesla Motors, announced to open source all of their patents. In other words, he announced an open invitation to other car manufacturers to use Tesla patents. He made a claim that Tesla wouldn’t sue any company that uses these patents operating in “good faith”.
Quite a significant and well-intentioned move one must say! Unfortunately, this portrays a false impression about intellectual property that it is only a legal matter rather than a commercial one.
The purpose of patents is not only about winning legal battles. Perhaps, what Musk fails to understand is that patents are also mementos that represent the efforts made by the people who have worked hard for creating something that is exceptionally novel. If you invest in securing patents in the first place for any technology whatsoever, you are willing and able to enforce your rights anyway. To open source a company’s patent portfolio is to reduce that company’s ability to obtain the ROI in innovation.
It is obvious that the big car-makers aren’t really looking forward to standardising EV just yet, but they definitely have all the resources at their disposal to overwhelm Tesla if they wish to. An important aspect of IPR is that IP litigation between two companies arises when their market share is encroached upon.
If this is all about partnerships, isn’t licensing of patents a part of a normal partnership? Why does Tesla need to make a big deal out of it and imply that it is doing something radically different by throwing their patents out in open? If Tesla were making more of a dent in the car market, they wouldn’t be forced into this type of a PR stunt.
The spirit behind Musk’s announcement is great. But where are the details? Tesla didn’t mention anything about what patents they’re talking about as of yet. Does it mean all of the Tesla’s patents?
In Tesla’s case, open sourcing their patents could hurt them in the future in two ways:
- Undermining the future commercial value of the company
Consider this – Even if a company doesn’t have Tesla’s drawings or technology specifications but have the financial and engineering resources, it can reverse engineer their way to making the same product and innovate at much faster pace.
By announcing that Tesla won’t file any lawsuits against other car manufacturers, it is in a way letting those companies take a leap forward and rise potentially in the EV industry. The idea of sharing IP without having a licensing fee in place will only diminish Tesla’s investments and make it easier for its competitors to leapfrog Tesla making it an easier “takeover target”.
- Sourcing the spare parts
Tesla has been putting in efforts to enable itself to have direct sales of their EVs to the consumer making a lot of car dealers unhappy as they are bypassed by Tesla. If there’s no licensing fee in their open source policy then Tesla won’t be able to prevent their sub-component suppliers to sell spare parts directly to consumers or independent repair shops.
Musk’s goals about proliferating clean green technologies in the future do sound noble, but his comments regarding the open source patent policy don’t exactly align with the patent filing activities of Tesla Motors in the first place.
The whole idea of open sourcing might have made more sense if Musk was willing to redistribute his wealth to the employees and investors who committed themselves to create value for Tesla.