Business

Here’s what Tesla’s ‘good faith’ patent stance actually means

Above: A Tesla Model S car.

Image Credit: Tesla Motors
NOTE: GrowthBeat -- VentureBeat's provocative new marketing-tech event -- is a week away! We've gathered the best and brightest to explore the data, apps, and science of successful marketing. Get the full scoop here, and grab your tickets while they last.

When he isn’t talking about commercial space travel, Elon Musk is totally that guy. You know, the one that’s always stopping the public discourse to ask, “Excuse me, do you have a second to talk about electric vehicle technology?”

But rather than begging for Greenpeace donations on the sidewalk, clipboard in hand, he’s petitioning the world’s largest automakers to build electric vehicles using Tesla Motors’ patented technologies.

“Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology,” Musk, Tesla’s chief executive, wrote in a statement Thursday.


READ MORE: 5 reasons Tesla wants you to use its proprietary tech


Here’s what that bold declaration means — and why it’s such a smart move for Tesla.

An invitation

Although Musk cited the open source movement as inspiration for his patent pledge, Tesla’s patents are not available under some automative equivalent of an Apache license. From a legal perspective, nothing has changed. It doesn’t matter how nonchalant Musk acts — Toyota, Ford, Honda, and the rest would never knowingly infringe on Tesla’s patents without legal documentation that everything is cool.

“We’re more than happy to do some sort of simple agreement with other car manufacturers if they’re concerned about that,” said Musk in a press call following yesterday’s announcement.

Elon Musk watches robots at the Tesla Motors plant (formerly NUMMI Plant)

Above: Elon Musk watches robots at the Tesla Motors plant (formerly NUMMI plant).

The patent pledge is an invitation for automakers to approach Tesla for licensing deals with very favorable, long-lasting terms. Those contracts would almost surely include a sword and shield provision — something to the effect of, “We won’t sue you if you don’t sue us.”

If a company using Tesla patents violates and sues Tesla for infringing on one of its own patents, Tesla reserves the right to countersue. Tesla would also take issue with automakers if their “new, original” designs looked exactly like Tesla cars.

Legally, Tesla could still charge for access to its patented technologies. But it almost certainly won’t. The benefits of fostering a standard platform for electric car tech far outweigh short term revenue gains from paid licensing agreements.

And that mindset demonstrates that, at its core, Tesla is a tech company, not a car company.

Silicon DNA

Tesla has several hundred patents. It won’t hold any of them back, not even its high-speed battery-charging tech, promised Musk.

“That is a very Silicon Valley attitude towards competition and intellectual property. No Detroit automaker would ever do something like this,” Mark Lemley, a law professor at Stanford University, told VentureBeat.

“Tesla recognizes that it is trying to build a network, and if it can get more people to invest in electric car technology, it will benefit even as others benefit too.”

Tesla's Model S is rated for a top speed of 130 mph.

Above: Tesla’s Model S is rated for a top speed of 130 mph.

Image Credit: Tesla

There’s very little precedent for this in the auto industry, but it’s more common in the tech industry. In 2012, Twitter announced it would only use its patents for defensive purposes. Sun Microsystems promised the same thing many years prior. Netscape made its patents for the SSL cryptographic protocol broadly available under a specific license.

Those moves weren’t purely altruistic, and neither is Tesla’s.

“In one sense, Tesla is clearly giving something up: the ability to keep competitors from using their proprietary tech,” Christian Hicks, president of litigation consulting firm Elysium Digital, told VentureBeat.

“But the analysis that Tesla has made here is it will benefit more from a faster-growing electric car industry than it will from hoarding a lion’s share of a small pie.”

Lack of infrastructure for electric vehicles has been holding market back, as most consumers want a vehicle they can drive across the country with minimal detours and delays. If Toyota or Honda started dotting the countryside with Tesla-compatible supercharger stations, and using the same battery technology in their cars, that would mean greater market demand for Tesla tech and lower production costs.

Tesla “wants to encourage others to develop on a common platform, and to the extent that they’re doing so, Tesla is not going to stop that by using its patents offensively,” said Michael Schallop, a partner at IP law firm Van Pelt, Yi & James.

But now, Musk is going one massive step further by shifting the company’s strategy for competition to one that relies on “good faith.” And good faith is exactly what Tesla Motors needs now that Musk has opened up its valuable library of patents, and pledged not to sue those that infringe on its IP.

More about the companies and people from this article:

Tesla's goal is to accelerate the world's transition to electric mobility with a full range of increasingly affordable electric cars. Palo Alto, California-based Tesla designs and manufactures EVs and EV powertrain components. Tesla ha... read more »

Powered by VBProfiles


We're studying digital marketing compensation: how much companies pay CMOs, CDOs, VPs of marketing, and more, with ChiefDigitalOfficer. Help us out by filling out the survey, and we'll share the results with you.
6 comments
David Plonsky
David Plonsky

Great way to accelerate the network effect. Everyone should benefit. Fantastic to see.

Bojan Land
Bojan Land

This will only have a negative impact on Tesla. Other companies will continue their closed practices and will benefit greately from Tesla's work... sad...:-/

Joel Kuznetsky
Joel Kuznetsky

If Elon Musk was not already a billionaire, do you think he would have still made this decision?

Juan Perez
Juan Perez

It means they can adapt and apply. Fully electric cars have been on the blacklist for decades because they lacked the leverage needed to survive a govt regulated market. Im sure with at least that patent out for other manufacturers, they (the auto industry) will send out there lobbyists to renegotiate the existing terms and regs. Overall this move will benefit Tesla financially in the long run, and innovatively in the industry as a whole..

William Su
William Su

It means fuck Chrysler, fuck GM, and fuck ford

Rudy Preciado
Rudy Preciado

Reminds me when Microsoft opened up it source code for many other developers to leverage. The entire Windows PC industry early on dominated the Macintosh Apple space. For many many years did that become the standard among business and government use in the US and abroad. It wasn't till Apple became innovative and 'cool' with lifestyle products that made the company what it is today.