While Tesla Motors and CEO Elon Musk are being heralded for making its patents open source, lawyers are questioning whether or not this will turn into an intellectual property land mine.
“Is the posting a good marketing and PR move? Absolutely. A good business move? For this particular company in this particular industry with this particular technology with these particular challenges, I hope the answer proves to be ‘yes’ for Tesla,” said Martha Engel, an intellectual property attorney and writer for DuetsBlog. “As a patent lawyer, this is certainly not something that I would advise clients to do.”
Musk announced on June 12 in the optimistically-titled blog post “All Our Patents Are Belong To You” that the move to an open source model is meant to spur competition in the electric car market. Currently, electric cars only make up a little over 1 percent of total vehicle sales, but Musk believes that allowing anyone in “good faith” to use their technology will encourage larger auto manufacturers to more seriously consider selling their electric cars.
While there have been serious consider about Musk’s motives, patent lawyers are not entirely sold on the legal protections that companies who want to use the patents have.
“It’s still pretty unclear with what’s going to be meant by ‘good faith use.’ There are just a lot of question marks at this point in time,” said Scott Bialecki, a former Federal Trade Commission attorney who now specializes in IP litigation. “If you’re a company that is interested in using the technology, you’d first look into what is mean by ‘good faith’ use, what is mean by free and what strings are attached to it.”
Musk has not publicly clarified what “good faith” doesn’t include, and according to Bialecki, it isn’t a blanket protection against litigation for potential patent users.
“Even in the open source, you can have enforcement efforts,” said Bialecki, who notes that attribution is a common stipulation in open source agreements and it wouldn’t be unusually if Tesla asks for protects derived from their technology to be marked with their patent number.
There are also some ambiguities surrounding whether or not this includes their design patents and licensing fees.
“Mr. Musk’s post was vague enough to be attractive to an audience looking for a hero when all they hear about is trolls, but the statement is too vague for other auto companies,” said Engel. “To be safe, other auto companies may want to collaborate with Tesla, maybe even obtaining some royalty free license agreements with Tesla to clear up any uncertainties.”
Not clearing up these vagaries could prove fatal for Tesla since the success of this bold move depends on other companies creating their own electric cars.
“If that doesn’t happen and they want to enforce their patents against potential infringers, I think there could be implications of having gone this open source route,” said Bialecki. “It’s not uncommon when you’re in patent infringement litigation and you’re trying to determine what are the applicable damages to look to what sort of licenses there are in place relating to that particular patent. If they’re basically giving away the technology to some people for nothing, then I can see that having an affect on their ability to enforce against others.”
According to Reuters, Tesla has spent $9 million on their U.S. patent portfolio. Tesla is certainly stepping into murky water, but they are not the first company to open source their patents, which is most often seen in the tech industry.
“Twitter and Sonos have gotten attention for similar patent initiatives. Twitter instituted an Innovator’s Patent Agreement where the inventors would still own the patent and Twitter would agree not to file lawsuits enforcing the patents without the inventors’ permission. Sonos offered to publish their patent applications early (typically they are published 18 months after the filing date),” said Engel. “With the new first-to-file system in the U.S. and the adjustments made to the requirements of patentability in view of that shift, there is an incentive for defensive purposes for companies to publicly disclose their filings as soon as possible.”
Whether done for altruistic reasons are not, Tesla is one of the few companies in the right place to open up their patents, according to Engle.
“The whole concept of the US patent system is to reward inventors who already give their inventions to the public, by publicly disclosing their invention with writing and representative figures in a patent application that enables others to copy the invention, rather than maintaining their inventions as trade secrets. In exchange for explaining an invention to the public, the reward to the inventor (or a company) is the right to exclude others from making, selling, or using their invention for a limited time.
Few companies or CEOs are in the position of a Tesla or a billionaire like Elon Musk. Tesla needs other auto manufacturers to adopt similar technology in order to build a workable network of charging stations and a manufacturing network.”