Panasonic is the latest company to offer the use of its patent rights for free in order to grow an industry.

As reported in The Japan News on March 25, 2015, Panasonic will allow the free use of about 50 patents related to the “Internet of Things” (IoT).

The Internet of Things

According to the Technopedia, the Internet of Things

is a computing concept that describes a future where everyday physical objects will be connected to the Internet and be able to identify themselves to other devices… .  No longer does the object relate just to you, but is now connected to surrounding objects and database data. When many objects act in unison, they are known as having “ambient intelligence.”

The value of this technology is explained in a quote by innovation expert Kevin Ashton during the Jurassic era of the Internet (1999):

If we had computers that knew everything there was to know about things — using data they gathered without any help from us — we would be able to track and count everything, and greatly reduce waste, loss and cost. We would know when things needed replacing, repairing or recalling, and whether they were fresh or past their best.

Ashton is said to have been the first person to use the phrase as a term of art.

IoT technology is used for, among many other things, connecting smart grids to smart meters for energy distribution.

Panasonic’s Patents

In addition to allowing others to use certain of its patents free of charge, Panasonic will also make available the source code for the software covered by the patents.

The company has not announced when, if ever, it will stop allowing the free use of its patents.

Freebies Now, Profits Later?

Other companies have recently employed a similar strategy — forgoing enforcing their patent rights, at least temporarily, in order to grow markets and, hopefully, reap profits later.

For example, Toyota Motor Corp. offered free access to its patents for fuel-cell vehicle technologies, and Tesla announced an “open source” approach to its patents, going so far as to remove the framed copies from its lobby wall.

Companies that release their patents give up short-term limited monopolies, and a larger piece of a small pie, in hopes of “growing the pie” and gaining a sizable share of it later.

According to Leech Tishman IP attorney Thomas Peistrup, “these moves can be viewed as efforts to encourage third-parties to innovate in ways that help new market segments to grow and flourish, a strategy that draws inspiration from Apple’s encouragement of third-party developers in building a self-reinforcing “ecosystem” for iOS products.”