Last week, Tesla CEO Elon Musk changed the electric car world forever with the announcement that the Californian automaker would be releasing each and every one of its patents to the world under an ‘open source’ agreement.
Essentially designed to spur the development and building of electric cars, Tesla Motors [NASDAQ:TSLA] has opened up its own treasure chest of patents for other automakers to use, with the only real stipulation from Tesla being that the patents are used ‘in good faith.’
Musk’s original blog post announcing the Great Patent Giveaway of 2014, entitled ‘All Our Patent Are Belong to You’ set out the basic idea behind Tesla’s decision to make its patents open source. But the press question and answer session held afterwards — which we’ve spent several days examining — gives us plenty more information about how Tesla is going to operate its Patents and how Musk himself views the future of electric cars.
Here are just five things we’ve learned from that press call.
1) Here’s what ‘good faith’ means.
Journalists are known for being a cynical bunch, and so it’s no surprise that one of the first questions pertained to clarifying if ‘free’ really did mean free. Was Tesla playing a clever publicity stunt, or is it really giving away all its secrets?
As Musk reiterated multiple times during last Thursday’s press call, Tesla really is making all of its patents available under an open source agreement, for use by other automakers ‘in good faith.’
But there are a few small strings attached.
That, says Musk, means that any automaker who wants to use Tesla’s patents can do so, but in exchange Tesla would expect some quid pro quo behaviour if or when it needed to use someone else’s patent.
“All we mean by ‘good faith’ is that somebody can’t go and use a whole bunch of our patents but then sue [us] after using one of theirs. It seems like it’s not a very nice thing to do,” said Musk.
“If it turns out that we need to use something that’s much more valuable than our then they have a right to demand some form of compensation, but that’s only if we’re using something of theirs which is more valuable than something they’re using of ours.”
And while there’s nothing stopping Tesla’s plans from being used to build entirely new electric car brands, Musk did warn against it.
“We also wouldn’t want it if someone used our patents to mimic our car in a way which deceives consumers. That wouldn’t be right,” Musk said. “They can’t trick people into thinking it’s our car when it’s not.”
2) Free or not, Tesla will still apply for Patents
While Tesla’s patents are now all being released to the public domain, Tesla isn’t about to throw away the patent system, says Musk.
Instead, Tesla plans to continue applying for patents as it always has done to ensure that any applicable patents are not pounced upon by unscrupulous competitors or worse still, patent trolls.
“We’re trying to create a path for the rest of the industry,” said Musk. “We think that the rest of the industry is more inclined to make electric vehicles if the road ahead is clear. To some degree here a rising tide lifts all boats and so on balance it’s better if the rest of the industry pursues electric vehicles more vigorously.”
“In case other companies file patents in case of blocking manoeuvres, or if there’s a patent troll — someone who wants to create land mines — we want to create patents before they do,” he continued.
3) Musk believes innovation is important in staying ahead
Many of the press questions on Thursday revolved around the idea that Tesla was placing itself in a vulnerable position by giving away its secrets. Without patents, how will Tesla stay ahead of the game?
The answer, says Musk, is to stay ahead of the game by constantly innovating.
“In general I think that patents are a relatively weak thing for companies,” said Musk. “If a company is truly relying on patents or some existence of patents than that’s really weak because they’re not innovating. They’re not innovating fast enough.”
“I mean you want to be innovating so fast that you invalidate your previous patents,” he continued. “I should say for example at SpaceX we have virtually no patents and yet our competitive position in the rocket buisness is left unaffected.”
4) Musk is disappointed, angry at the automotive industry for its slow progress
As Musk characterised a couple of weeks back at Tesla’s annual Shareholder Meeting, the lack of progress on electric vehicle development is a personal annoyance for him. The decision to make Tesla patents open source is a direct consequence of his personal frustration.
“I am sort of disappointed. I feel that things should be much further along than they are when you think that we were on sale with the [Tesla] roadster in 2007 and that was seven years ago with a 250 mile battery range. Its been seven year and there’s no other electric car production with that range level,” Musk said. “If you just look at the bottom line results of how many cars… how many electric cars being made, then it’s just a very tiny number. Well below on per cent.”
The decision to make Tesla’s patents open source should, Musk said, encourage more automakers to move into the electric car sphere and perhaps, away from hydrogen fuel cell cars.
“I don’t think hydrogen fuel cell vehicles are a reliable path,” he said. “It’s not that I don’t wish them well, but it’s really my view the best possible fuel cell… the best theoretical fuel cell doesn’t compete to today’s technology of batteries, so it doesn’t seem like the right move. If you see fuel cells being used in say cell phones — in which they have very high volume and battery capacity is important — but we don’t see any being used there.”
5) Musk understands how to catch flies
“You catch more flies with honey than you do with vinegar” is an old wives’ saying which Musk not only understands but embodies.
In making Tesla’s technology open source, Musk is placing Tesla front and centre of the electric car world, challenging other automakers to not only beat it, but to join it in the electric car revolution.
Instead of requiring other automakers to come up with their own standards for charging or to pay exorbitant patent fees, Tesla is making it’s technology the de facto standard, despite its charging technology not even being an internationally-agreed standard.
It’s true that you don’t get something for nothing, but in this deal Tesla wins in the most important way: more Tesla-compatible charging stations and a far more even playing field to compete directly with far larger car companies.
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