Tesla
In June 2014, Elon Musk the CEO of Tesla revealed that they had removed every one of their patents to aid the advancement of electronic vehicle technology (Musk,2014). Musk claimed they would not file any patent lawsuits against anyone who wanted to use their ideas for genuine purposes (Musk, 2014).
Tesla changed their approach regarding who they viewed as their competitors and concluded that other car manufacturers are not the competition, but rather the internal combustion engine itself is the major competitor. At present, annual new vehicle production nears 100 million per year, with over two billion vehicles on the worlds roads. (Chambers, 2015). A study done by the University of Toronto (2015) stated that 25% of cars on the road cause 90% of the pollutants in the air that we breath (Wang et. al., 2015).
As the car markets are ever evolving, technologic advances growing and increased need for more economical transport, will the lack of patents be a hindrance to Tesla and bring with it more problems?
Intellectual Property (IP)
Per the World Intellectual Property Organisation, intellectual properties are “creations of the mind”, a novel idea whether it be literature, a symbol, a name or image (WIPO, 2015). In general terms, intellectual property are intangible assets owned and legally protected by a company (Marsh.com, 2017). It gives the company protection from their property being used outside of the company by competitors without consent or from it being claimed by another (Marsh.com, 2017). Intellectual property can provide a firm with the competitive advantage required to stay ahead of competition, so protecting this is vital for a firm to prevent replication, especially in current years as work environments have become increasingly web based (Marsh.com, 2017). A company whom owns intellectual property predominantly utilises it internally, firms normally are protective of any IP they possess and will usually invest heavily in preventing any form of risk.
Tesla Roadster
Toyota notably started the electric craze with the release of their gas-electric plug-in hybrid, Chevrolet’s Volt is another hybrid electric vehicle with a considerably different design. Hybrids only offer 40% fuel economy and still release hydrocarbons into the atmosphere. Then there’s Elon Musk who wasn’t satisfied with just releasing a hybrid. The battery pack used in the Tesla Roadster electric vehicle is seen to be one of the largest and technically most advanced Li-ion battery pack in the world. Allowing the vehicle to reach speeds of up to 60 mph in 4 seconds, and can travel for up to 200 miles (Berdichevsky, G. et. al., 2006).
Tesla’s vision is to make cars 100% electric and to rid them of hydrocarbons altogether (Dent, S. 2014). There are currently no two electric / hybrid cars from different manufacturers that are designed the same or with similar features, Tesla’s open source patents were released with the idea that other manufacturers would implement their design ideas into their own manufacturing, resulting in fully electric cars that release no emission on the worlds roads. Tesla believe that if the ever-evolving technology platform was common across electric vehicle manufacturers that the world and the companies will all benefit in the long run (Musk, 2014).
Their ideology is that patents do not define technology leadership but rather the ability to inspire and motivate the worlds engineers and will eventually strengthen Tesla’s position on a global level (Musk, 2014).
This thought process goes against all the theoretical values of having IP within a company.
In an essay for Harvard written by William Fisher, he discusses how trademark law states that the primary economic benefits are; a) the reduction of consumer ‘search costs’, that if a consumer is looking to buy electric, their first stop will be Tesla, and b) creating an incentive for a business to consistently produce high-quality goods and services, because essentially they know that competitors cannot imitate their distinctive attributes.
Can the motor industry embrace open IP?
Chesbrough et. al., 2016 suggested that with calculated inflows and outflows of knowledge, the motor industry can defy the pressures of cost and innovation. The idea of open innovation suggests that firms should be using external and internal ideas and internal and external paths to the market.
The competitiveness of the motor industry is always increasing and consumer’s expectations are fast changing, so suppliers are required to keep on top of the technological pace to avoid the risk of losing market share. Musk has been quoted as saying that numerous companies have availed of Tesla’s open patents but refuses to state what companies (Lambert, 2015). The question must be asked, why are electric vehicles still only 1% of the annual vehicle production each year and why are have no companies come forth stating that are using the patents to better their products for consumers and the environment? As electric vehicle sales are still minimal in comparison to gas fuelled motors, Tesla’s open patents could initially help alter other industries before impacting on the motor industry. For instance, if Dyson was to use their battery system in its products for example the new hairdryer, other competing companies will soon follow suit, slowly making an impact. Once the electric ion battery becomes a household feature and consumers are more environmentally aware other car manufacturers will begin to take heed and begin implementing the Tesla patents into their manufacturing process.
Monitoring who is using their IP
In 2016, Tesla remained number one on the Forbes list of top innovative companies (Forbes.com, 2016). Therefore, their patents and innovative ideas would be well sought after by competitive companies, so how do they manage the threat of risk? Well, although Musk has said that their patents are open to use, companies cannot just simply log on and avail of these patents, instead the patent pledge is more of an invitation for companies within the motoring industry to approach Tesla in regards to licensing deals and terms and conditions. These contracts would allow Tesla to countersue any other company whom wished to sue Tesla themselves for infringement of their own patents. Tesla still have the authority to charge for access to the patented technology but have stated that they never will (Blattberg, 2014). All the legalities are still in place, to ensure that Tesla can, if needed, take legal action against any company unlawfully using their design.
Conclusion
Tesla’s open patent policy is immense for the future of the car industry and for tackling the ever-growing issue of pollution and its prevention. IP protection is already an issue as industries, marketplaces, processes and technologies become increasingly advanced. There are a lot of policies and regulations in place to protect against such risk but how does one protect a valuable idea that is on offer to the worlds industries? Also, is it a worrying fact that there are not already increased numbers of electric vehicles on the worlds road, apart from hybrids and existing Tesla’s.