Imagine if your global market potential consisted of 2 billion units turned over at a rate of 100 million units per year, most people needed one of these products, your particular technology offers similar performance to existing platforms in a new way that reduces overall carbon dioxide emissions and provides a vision of the future steering away from a reliance on fossil fuels.
Your current commercial niche is the luxury end of the market with a price point hovering around US$70,000 to US$100,000.
Last year you outsold the iconic brands Mercedes, BMW, Porsche and Audi in the same class. You have taken steps to own and control your intellectual property to the extent that you have a wall in your head office covered in granted patents. You have no competition.
An enviable commercial position.
Elon Musk thought differently. The CEO of US-based Tesla Motors announced in June this year that “Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology”.
This statement has been interpreted by industry-watchers in wildly different ways, from evidence that Tesla is bullishly anti-patent to the more cynical view that we should watch this space to see to what extent Tesla is willing to let someone act “in good faith”. Some commentators have suggested that Tesla will expect that usage will only be in “good faith” where the option of a quid pro quo cross-licence is provided to Tesla for any future improvement. A more balanced view might accept Tesla’s realization that they simply do not have the capacity to deliver a world-beating electric car platform on their own, and potential licensees aren’t exactly queuing at the door to offer their help.
What I do find exceedingly interesting about Elon Musk’s decision to ostensibly shelve Tesla’s patent portfolio is that he has not decided to abandon them altogether. Tesla is free at any time to withdraw the apparent donation of their technology. In fact, Tesla has decided to continue to file patent applications, apparently to ward off patent trolls – those companies that purchase a patent portfolio for the sole purpose of deriving revenue from the extortion of true innovators through egregious lawsuits. But you don’t need to go to the expense of filing a patent application to prevent others from patenting your invention - you can simply publish the information, in a newspaper, journal or even your own website.
So, if you will excuse me, I am a little cynical of Tesla’s apparently altruistic intent.
However, I am not writing this article for the sake of being pro-patent or anti-patent. As a patent attorney, focused on helping businesses own and control their intellectual property, I regularly advise clients against filing patent applications when the timing and commercial imperatives do not add up. For example, certain technology areas do not always lend themselves to patent protection as strongly as other areas. In certain circumstances the innovation cycle is moving too rapidly for the patent process to be valuable and it is not unusual in certain sectors for the law to struggle to keep pace with the technology. In other sectors, such as the pharmaceutical sector, where time-to-market is slow and the cost of research and the delay in gaining regulatory approval should be compensated with a period of exclusivity, it is difficult to imagine a business model that doesn’t incorporate a patent strategy.
Any good intellectual property strategy takes into consideration the past, current and future directions of a business, and it is my job as a patent attorney to provide business owners with a toolbox to be used strategically at their discretion.
From the outside looking in I find it strange that Tesla ever had a wall decorated by granted patent deeds. They aren’t very interesting to look at, and they were never designed as office décor. If you want a patent just to hang on the wall then you probably should never set out to get one in the first place. A patent is a business tool. As I tell my clients – don’t patent an idea just because it is clever, patent it if you can use it as a business tool to advance your commercial objectives. What are you going to do with your intellectual property position? What markets are important to you? How are you going to carve a niche in those markets? Are you going to be the sole manufacturer? Will you enter into partnership with others? Will you sell the technology altogether?
In my view this is exactly what Elon is doing – merely continuing to use the patent portfolio as a business tool. To this point, the patent portfolio has helped provide Tesla with a competitive advantage that will not be undone through increased competition – a rising tide lifts all boats. Such veiled altruism hasn’t been too bad for Tesla’s public relations either.
Elon Musk is an exceptional businessperson. There is a reason for opening the patent portfolio to “good faith” users, and I doubt it is purely the result of a shift in ideology.