Five Things We’ve Learned From Tesla Motors’ Patent Giveaway

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. 

Tesla's free patent giveaway is great news for everyone -- most of all Tesla.

Tesla’s free patent giveaway is great news for everyone — most of all Tesla.

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.

As Elon Musk knows, technology is the key.

As Elon Musk knows, technology is the key.

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.

Open source or not, Tesla wants to protect good ideas from patent trolls.

Open source or not, Tesla wants to protect good ideas from 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.”

Innovation is key to success, says Musk. That and reaching far.

Innovation is key to success, says Musk. That and reaching far.

“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.

Musk is clearly frustrated by the lack of innovation in the automotive industry, but says Nissan, BMW are at least committed to electric cars.

Musk is clearly frustrated by the lack of innovation in the automotive industry, but says Nissan, BMW are at least committed to electric 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.

The best way to get a new technology adopted is to make it easily accessible.

The best way to get a new technology adopted is to make it easily accessible.

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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  • There seems to be some confusion in the mainstream media that Tesla ‘open sourced’ its designs for fair use. eg: access to Supercharging hardware & network. (not the case, just the patents have been opened to fair use)nnThe focus of Tesla’s open sourced materials is just the ‘fair use’ of intelectual property related to its patents. Normally a company would license and pay a per use fee to produce a design based on the IP. Of note are some of Tesla’s patents are based on another parties patents, so some negotiation may be required. nnOverall Tesla has greatly lowered the bar for collaboration between EV OEMs. This creates an immediate opurtunity for 3rd party OEMs that have capability to design and build components that can leverage a Tesla patent. At the very least it will cause engineers at OEMs to look at Tesla’s patents and do some research (and perhaps come up with a better solution).

  • MEroller

    And just to clarify another point here: Tesla Motors’ patents are not secret, nor are anyone else’s. Completely on the contrary: applying for a patent puts it into the open, one year after it was filed. In this manner the “Deutsche Patentamt” in Munich currently lists 725 patents and patent applications by Tesla Motors. Of course there are some doubles and triples there, for instance US, Canadian, European, you name it, versions. But just about every one of those documents can be downloaded there and studied in depth for free, and always has been. A patent is there for others to see: I had this idea first, and this is how it works.nnIt is the compensation for licensing and the sueing that Tesla is prepared to drop, under their own conditions.nnThe most innovative companies actually try to make do without disclosing their intellectual property to the public via patent applications, as this will potentially allow them longer use of this information for their own benefit before competitors’ benchmarking activities could make their innovation known “to those skilled in the trade”.

  • CDspeed

    What I like is Musk has basically set profit aside, and is making the electric future the main priority. Of course this move will benefit Tesla in the long run. I hope this works out, Elon does seem to honestly want Tesla to succeed through the success of the electric car it’s self.

  • D. Harrower

    Musk, and Tesla, are putting an awful lot of trust in other automakers regarding the quid pro quo use of patents. In my, albeit limited, experience companies always view their own IP as more valuable than that of others, regardless of the reality.nn”Sure you can use our patent, but we want two or three of yours in exchange”.nnI can see weighing the value of individual patents becoming a serious headache for Tesla if they ever try to go this route. Hopefully, I’m proven wrong here.