Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.
Musk minimized the gravity of his action in a press briefing, saying, "I don't want to overstate the value of patents," and called it a "modest thing." He said that relying on an existing set of patents was a sign of weakness, writing:
Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers. We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard.
Musk emphasized that the liberation of the "hundreds" and eventually "thousands" of patents will help Tesla in recruiting the best technical talent despite "some wide-eyed looks" from people on the board and management team. Musk said, "Technical leadership was determined by where the best engineers want to work," he wrote, adding, "If I was graduating from college, this would make a difference to me."
He said it would make a difference to "the very best engineers."
Tesla Motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.
Musk said, "Early on I thought patents were a good thing," but he has since come to the conclusion that the "technology doesn't usually benefit." Musk cited the Apple-Samsung patent dispute as having "no benefits" for either side and not serving shareholders. Musk said that Tesla was not going to stop filing patents, but would continue to put them in the open source category. Musk noted that SpaceX has "virtually no patents."
Too often these days, they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors.
Ira Ehrenpreis, cleantech partner at Technology Partners and an early investor in Tesla, told GTM:
By catalyzing the move to greater EV adoption, Tesla stands to become a major player in a larger segment of the market as opposed to the only player in a small niche. Second, unlike an open-source platform like Linux, Tesla actually produces the end product. Consumers are not making their purchase decision based on patented technologies or features only. It is brand desirability, design, quality, purchasing experience, superchargers, etc. Tesla’s success is a function of the total desirability of its product and total appeal of the ownership experience.
Nancy Pfund, Managing Partner at DBL Investors and an investor in Tesla, commented to GTM:
As usual, Elon is ten steps ahead of us, actually doing something that we all wish we could do but don't have the guts or panache to pull off. Just as the car dealer laws have veered way off course from what may have been a legitimate purpose (100?) years ago, the patent system has morphed away from its pro-inventor roots and now gobbles up time, talent and resources in a way that is at best defensive and at worst crippling.
I wouldn't say that Tesla's move alone will change the way patents are used in the innovation universe, but that in the context of a broader movement to re-examine their proper role, today's announcement will be seen as tremendously significant.
At the same time, anyone who has spent 10 seconds in the Tesla Fremont factory knows that the real competitive advantage Tesla enjoys does not live in a box of patents taken off the wall but in its people, its prodigious work ethic, and its spirit to lead us into a sustainable 21st century. I think that larger purpose is what is resonating with people, that our planet is too important to leave to an arcane, slow-moving IP machine. A machine that divides rather than unites common action against the formidable opponent that is fossil-fuel driven climate change.
Steve Jurvetson of DFJ, an early investor in Tesla, commented on the blog, "Engineers >> Patents. The capacity to innovate is more important than any one innovation." Jurvetson cited a patent law professor who said, "Yes, it has caused a flurry in the patent bar, as you might imagine. And I had lunch with an in-house IP counsel at a company who said he had 64 emails this morning from engineers at his company saying 'Why can't we do that?' Good for Elon."
The notion of donating green technology patents is not new. This is a move in the tradition of the Eco-Patent Commons (a repository of donated patents directed to various technologies conferring environmental benefits) but Tesla’s patent “commons” is much more significant and likely to have a greater impact. While the Eco-Patent Commons consists of tiny random slices of technologies the donating companies had little interest in exploiting, Tesla’s patent portfolio is large in breadth and scope and presumably includes the crown jewels of the company.
The question is to what extent other EV players will be motivated to invest in manufacturing vehicles using Tesla’s patented and patent-pending technology with the obvious upside being the proven innovation that technology brings and the down side being no exclusivity, instead of investing in their own R&D and patent protection where the upside may be exclusivity and the down side may be inferior or unproven technologies.
Ben Kallo of investment Bank RW Baird writes in an analyst note:
We believe the opening of patents is incrementally positive, as the decision could ultimately increase the adoption of electric vehicles while supporting faster development of the supercharger network.
Musk said he was "disappointed" in the lack of progress that EVs have made in penetrating the marketplace with a current market share "well below 1 percent."
Musk sees the patents allowing others to take the small cell approach that Tesla uses in its powerpack. Musk also said that high-speed charging was an area ripe for collaboration and would be well served by an open-source approach. The Tesla CEO doesn't see a big short-term impact: "People overvalue patents as a competitive element," he said, adding, "In the long term, I'm hoping this improves the rate of transition to electrical transport."
"I think this is good for Tesla and the electric vehicle industry" and "the right thing for the company," Musk said.
Steve Jurvetson, an early Tesla investor, posted a photo of the Tesla Motors Patent Wall, writing, "I got a photo of it before its demolishment."
A different view of the patent wall
Nikola Tesla's patent for the alternating motor. Photo by Steve Jurvetson.