Powering Intellectual Property Sharing: How to Make Tesla's Patent Pledge Effective
Jurisdiction | United States,Federal |
Citation | Vol. 24 No. 1 |
Publication year | 2016 |
Powering Intellectual Property Sharing: How to Make Tesla's Patent Pledge Effective
Benjamin M. Hill
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POWERING INTELLECTUAL PROPERTY SHARING: HOW TO MAKE TESLA'S PATENT PLEDGE EFFECTIVE
Benjamin M. Hilt*
I. Introduction..........................................................................................192
II. Background.............................................................................................194
A. TESLA'S MOTIVATIONS.......................................................................194
B. OTHER BENEFITS OF OPENING UP PATENTS................................. 196
C. ISSUES WITH TESLA'S PLEDGE...........................................................198
III. Tesla's Options.......................................................................................201
A. OPEN SOURCE.......................................................................................202
B. PATENT POOLS AND STANDARD SETTING......................................204
C. CREATIVE COMMONS..........................................................................207
IV. Making Tesla's Choice........................................................................210
A. OPEN SOURCE PATENTS.....................................................................210
B. PATENT POOLS.....................................................................................212
C. CREATIVE COMMONS PATENT LICENSE..........................................215
V. Conclusion...............................................................................................218
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June 12, 2014, was an important day for the future of battery-powered automobiles. On that day Elon Musk, the CEO of Tesla Motors, surprised the world with a blog post announcing that all of his company's patents were open for anyone to use.1 Musk stated that Tesla would not "initiate patent lawsuits against anyone who, in good faith, wants to use [their] technology."2 On its face this seems like a bizarre decision. Tesla is known for being at the forefront of the electric automobile market by manufacturing electric cars that travel significantly farther on a single charge than any other electric car on the market.3 For a company that's unique and profitable patents were the main differentiator in the automotive market to simply pledge those protections away was a move that came as a shocking surprise to many.
One of the main reasons patents exist is because of the property right protections provided by the federal government to "exclude others from making, using, offering for sale, or selling the invention."4 Patents historically have been the foundation for innovation and protecting one's inventions in order to "promote the Progress of Science and useful Arts."5 If someone comes up with a novel idea and is granted a patent for that idea by the United States Patent and Trademark Office, then that person may sue, in the appropriate federal court, anyone who infringes on that patent in the U.S. for an injunction or monetary damages.6
However, Elon Musk is no entrepreneurial amateur,7 and Tesla is not a small company with a limited number of worthless patents.8 According to Musk,
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opening Tesla's patents was for the "advancement of electric vehicle technology."9 Holding onto their patents is akin to "lay[ing] intellectual property landmines behind [them] to inhibit others" and would be acting adversely to their goal of "accelerat[ing] the advent of sustainable transport."10 Instead of helping encourage innovation and progress, Musk reasoned that patents often "serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors."11 Tesla had patented so much of its technology out of a fear that larger auto companies would take advantage of Tesla's advancements and "overwhelm" Tesla with their substantially significant resources.12 Instead, the large companies average less than 1% of their total vehicle sales in electric and have mostly ignored Tesla's growing impact.13 Instead of the traditional "us versus them" model of competition, Musk reasoned that it was instead a battle of everyone against the carbon crisis.14 According to Musk, Tesla simply cannot produce electric cars fast enough, and so they are hoping that opening their patents will encourage other companies to cut back on their gas engines and instead produce more battery powered vehicles.15
As recently as 2013, Tesla was a staunch believer in the need for patents to protect its inventions and place in the market.16 Tesla even filed suits in the past to protect its intellectual property.17 Given this history and the potential lack of a binding effect Musk's patent pledge holds, many attorneys in the field have been reluctant to advise their clients to proceed with using the patents until a more
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definite defense is in place.18 If all the goals and dreams of Tesla and other open patents are to be realized, there must be a certain degree of reliability.19 The inability of innovators to rely on the unofficial promise prevents the field from being able to capitalize on open patents to their full potential. Current patent law does not offer the necessary protections, and as such, a tool from another field should be modified and made available for patents.
Part II of this Note examines the background of Tesla's decision and why that decision is not as effective as Musk believes. Part III discusses some of the more prominent trust institutions currently in place in patent law that may be helpful to Tesla. Part IV will analyze the strengths and weaknesses of each option and ultimately argue that adopting a Creative Commons License for patents will serve as the best trust institution to encourage adoption of Tesla patents to accomplish Musk's goals of a wider market adoption of electric vehicle technology. A brief conclusion follows.20
A. TESLA'S MOTIVATIONS
Elon Musk disclosed several noble reasons for opening up Tesla's patents, but several commentators have identified alternative reasons that may be more likely. The first and most obvious reason is the chance for market growth for Tesla.21
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Currently, the market for pure electric vehicles is extremely small. Electric vehicle sales have tripled since 2013, but they are still less than a third of a percent of the annual U.S. production.22 However genuine Musk's claims are about fighting the carbon crisis through expansion of the electric market, a likely reason is the expansion of the charging station network. Tesla's cars are pure electric cars and not hybrids, and they must use charging stations instead of gas stations. While it is Tesla's goal to put a supercharger charging station within range of 98% of all American drivers by the end of 2015, it is not always so convenient to find Tesla's charging type nearby on the road.23 As of the writing of this Note, there are 521 Tesla "supercharger" stations with 2,941 "superchargers" in the United States.24 When compared to the nearly 121,446 gas stations in the United States,25 it is easy to see how much more convenient it is to refuel a gas engine. Advancing growth of electric vehicles that utilize the same charging technology from Tesla's patents could make it possible to essentially recruit other manufacturers from across the industry to participate in creating compatible charging stations.26 By encouraging their competitors to develop electric vehicles designed to plug into their electric station network instead of a different charging type, Tesla stands to capitalize on a potential fortune.27
Secondly, Tesla has the opportunity to sell the batteries they manufacture to the potential companies that produce electric cars based on Tesla's patents. Towards the end of 2014, Musk announced the location of Tesla's new "Gigafactory" in Nevada.28 The battery production facility promises to double the global capacity of lithium-ion batteries, and when completed, will be twenty times larger than the largest battery factory currently in production.29 The ability to produce so many of their unique batteries on such a large scale would make Tesla the easy supplier choice for other manufacturers looking to get into
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the electric car market. If other car producers adopt Tesla's battery design in creating new electric vehicles, then it is reasonable that they would be potential customers to buy the batteries straight from Tesla instead of trying to produce the batteries themselves in large quantities. This would result in a sizeable source of income directly related to allowing others to copy their technology.30
B. OTHER BENEFITS OF OPENING UP PATENTS
The impact and benefits of Tesla's patent pledge can extend far beyond the obvious immediate benefits to that single company to meeting many of the needs not addressed by the current patent system.31 The historical justification for patents was the overall betterment of society by "encouraging inventors to share their innovations with others."32 This involved a tradeoff between the inventors and society.33 The inventors received an exclusive monopoly over their idea for a period of time, and society received a new and useful invention.34 Over time, the types of patents granted have changed drastically. Early patents often described complete products,35 and inventions like the historical steam engine typically involved licensing only one or two patents.36 Many of today's technologies are infinitely more complex. As such, the finished products we buy can involve hundreds of patents owned by a multitude of individuals and organizations.37
In many high tech industries, a key component of successful Research and Development is the potential for cumulative innovation.38 Cumulative innovation is where a new invention has to rely on preexisting ones instead of
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being independent of...
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