If it were me, and the true intent was to distribute the Tesla patents as widely as possible, I would have said "Tesla pledges to license its entire patent portfolio, on a worldwide non-exclusive no-royalty basis, to any interested party. We will ask for consideration in the amount of $1 for a 99 year license. Your lawyers and accountants can reassure you that these sort of symbolic commitments hold up in court. They'll also no doubt ask to see the full terms, which are about as boring as you'd expect, and which are available from our Legal Department."
citrik 10 minutes ago | link [dead]
I don't think the "in business to make profits" part is entirely true. Apple and Tesla are both leading examples of companies that are out for something other than profits first. You can say that shareholder interests and publicly traded companies require ... but at the end of the day those are two companies that don't let capitalist dogma drive their path. I wish there were more than a handful.
Apple and Tesla just want to make great stuff. Not just great, esoteric stuff, but products that are also accessible to the mainstream. The profits are just a way of keeping score and giving them options for the future.
They're kind of like the Beatles, who as an organization always knew how to do things big commercially. But commerce is never what drove The Beatles. They understood that winning in the marketplace gave them more leeway to dream bigger and bigger.
It's easy to say, "why would a company want to exist besides to make profit?" But I think a company can be a creative outlet for its employees and shareholders, just like any other medium. The profits just ensure they have more creative control in the future.
There are a million reasons why I really want to like Apple. But I can't, because they use mostly trivial patents offensively against their competitors. That's not controlling one's own destiny, that's forcibly imposing one's will on others.
Comments like that don't do anything other than push Apple fanboys to champion them even more, followed by Apple haters to criticise them even more.
But the overall business goal is to make money, because unless they're making money they employees will not be able to continue making great things or doing great things.
I'm saying that management of Tesla isn't acting like a naive college kid giving away the store. There is a strategy. And the other auto companies will see it for what it is.
(i'm not asserting it is perfect, just that it is an effort towards what you describe)
What could be an interesting solution is to prevent people who want the protection of the mutual license from licensing patents from anyone else under any other terms. So if you want the protection of the license and a patent troll approaches you, your only choice is to either vanquish the troll or buy the patent outright and immunize everyone.
That should mean no more Rockstars at least, and should make life more difficult for trolls because they couldn't license patents anymore, only sell them outright.
It doesn't do anything about non-practicing entities because it can't. There's no formulation of words that could cause a license to have any bearing on NPEs.
Your potential wording would make the patent license completely unusable. Perhaps an alternative might be something along the lines of: You may not license a patent that has been involved in legal dispute. If a licensed patent is subsequently involved in legal dispute, either this license or that license must be terminated within NN months.
That isn't true at all. You can do something about NPEs by changing the behavior of their targets. You take away the ability to license a patent without securing a license for everyone and now the troll can no longer rely on extracting nuisance value settlements from large numbers of targets, because for the target the cost of losing the reciprocal license (and having to fight all of those patent holders) now exceeds the cost of invalidating the troll's patent. And if everyone sees the same calculus and everyone fights, trolling as a business model could become unprofitable.
> Your potential wording would make the patent license completely unusable.
Why is that? The ideal endgame would be to bring about a de facto nullification of software patents. The more patents that become licensed under the defensive license, the more incentive there is to put all of your own patents under it, which creates all the more incentive for others to do the same. Obviously you wouldn't have e.g. IBM signing on the first day, but as it snowballs the incentive to do so increases over time. At the end of the chain you would have a situation where there would be ten times as many patents that IBM is infringing than they own and the only way they could get a license to those patents is to join the agreement with everyone else.
I would think another interesting feature would be to allow anyone who has signed on to the agreement to use any of the signatories' patents offensively against anyone who hasn't, in exchange for a large chunk of the proceeds, essentially on a contingent fee basis. I believe a third of the amount recovered is typical? That would allow patent trolling to eat itself, because patents lawyers could sign on to the agreement at no cost (since they don't characteristically own patents) and then have instant access to a huge corpus of patents to go sue everyone else with, until such time as everyone relevant has signed on. And it would also create an incentive to sign on in the early days, because if you sign on and have any good patents there is a reasonable chance that some lawyers will go out and sue Microsoft et al at their own expense and then give you half the money. Until there are a lot of signatories that should be about as profitable for existing patent holders as hiring a lawyer to go sue people on your behalf without the defensive conditions, unless everybody starts signing on right away, which would be even better.
I think AnthonyMouse's comment was referring to NPEs that were sponsored by a practicing entity that is subject to a reciprocal license. An effective such license would have to restrict participants from indirectly funding attacks that would be violations of their agreement if they carried out the attacks themselves.
It is my understanding that Rockstar existed prior to Microsoft and others getting involved. They merely footed the bill.
Now, in a fair competition, that should give them an advantage over others who failed to manage their risks. But the way everyone here behaves, people expect them to just let things lie, effectively footing the bill for the rest of the industry. How's that fair?
Well, they (at least many of them -- e.g. Microsoft, Apple, etc) also 'play the game' with their own patents, so it's not out of character for them to use patents offensively. By using their patents offensively, they are contributing to the situation where they are required to 'foot the bill' with their own liabilities, at least. If they adopted a less aggressive stance, and instead put the money they've spent on lawyers towards lobbying for patent reform, what they 'need' to do to limit their liability might be really different.
That what I thought "in good faith" meant.
I believe the message was phrased in a way to be directed at consumers so that hopefully the consumers will send a message one way or another to the other manufacturers causing them to come to more official agreements with Tesla. (which will of course have terms).
> Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters.
This is consistent with my view of how engineers in the traditional disciplines view patents.
> At Tesla, however, we felt compelled to create patents out of concern that the big car companies would copy our technology and then use their massive manufacturing, sales and marketing power to overwhelm Tesla
This is the precise thing that patents are designed to prevent: to keep the market from turning into a race to see who can outsource most efficiently to China and inundate the public most completely with advertising.
> The unfortunate reality is the opposite: electric car programs (or programs for any vehicle that doesn’t burn hydrocarbons) at the major manufacturers are small to non-existent, constituting an average of far less than 1% of their total vehicle sales.
So the other manufacturers didn't copy Tesla's technology, either because they are incapable of it or because they didn't feel there was enough money in it relative to their traditional markets.
> We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly-evolving technology platform.
In other words, it helps Tesla more to have lots of companies developing electric cars to push back on regulatory barriers and consumer perceptions than it does for them to protect themselves against larger manufacturers copying their technology. Also buried in here is the assumption that Tesla is, now, far enough ahead of its potential competitors that it doesn't matter if they copy the technology.
I think this is the right move for Tesla, but there's a lot of dynamics at play that have nothing to do with the usefulness of patents in general.
I have absolutely no idea how you possibly came to this conclusion.
 At least when you're talking about physical products that are sold in one-off transactions for money. If you can leverage network effects or lock-in effects, or hide your innovations behind arms-length protocols, like many internet-based companies do, you're not as vulnerable to copycats.
With Cisco they have a head start on quality or at least the perception of quality, their products are tried and tested. There is also brand value, Cisco is the real deal, it looks dead posh in the rack for 'nobody got sacked for buying IBM' reasons. They also have supply chain advantages, e.g. a dealer network and short lead times for those dealers to get out of stock items. There is also the matter of warranty/returns.
Sure, another company can put together the customer service aspect, however, manufacturing is a very small part of the retail price of a product and it is normally the wider customer service aspects plus brand identity (which includes advertising/marketing) that makes a product succeed in the marketplace.
Copyright protection is all you need in the software space to differentiate from your competitors, because in software development the execution is a lot more important than the idea. Well executed versions of old ideas can blow away the competition. See e.g. the iphone, which did less than earlier smartphones, but did it much better. Note also that it wasn't the patents that prevented competitors from catching up, because they ended up ignoring them anyway and still took half a decade to make a competing product despite having access to the same hardware from the beginning.
Patents were largely designed to enable the state to have a selectively published library of what was being invented in the country and to reduce the power of trade guilds, who had huge power at the time. Offering a limited monopoly backed by force of law was one of the few incentives that worked for acquiring access to the kind of trade secrets you needed to keep your edge on the battlefield.
Also, so somebody else will help pay for all of the Superchargers they want to build.
I think Musk cares more about advancing electric cars than suing and squeeze profits out of patent monopolies.
We definitely have government protected monopolies though, no doubt about that. Tons of them in fact. From defense contractors, to telecom, to banking, to healthcare, and so on. Most major industries are filled with some variation of massive corporations protected from competition by the government.
See Bad Samaritans by Ha-Joon Chang.
Which amounts to “if we like you” and “we reserve the right”. If they wanted these patents to be open source, they would license them explicitly.
Imo there will be :
* Other car manufacturers (such as BMW, that already contacted Tesla on this matter : http://www.theverge.com/2014/6/12/5804890/bmw-confirms-that-...
* Oil stations (Esso, BP ,etc.). Electricity based car ARE the future. This is their chance to become a part of it.
For example, if I agree to explore a partnership with you "in good faith," it means I am serious about the possibility of a partnership. I am not merely wasting your time for the purposes of distracting you, defrauding you, conducting market espionage, or sending false signals. Basically, I am acting "in good faith" when I honestly believe I am doing what I claim to be doing, for the reasons I claim to be doing it. You assume I am acting in good faith, and vice versa, unless a pattern of actions or evidence gives sufficient cause to doubt it.
IANAL, but I've dealt with "good faith" issues in business development and licensing contracts more times than I wish I'd had to. There is usually an implicit assumption that all contracts are entered into in good faith unless proven otherwise -- which means I'd almost definitely want to enter into an agreement with Tesla if I were to use their technology.
> There is usually an implicit assumption that all contracts are entered into in good faith unless proven otherwise -- which means I'd almost definitely want to enter into an agreement with Tesla if I were to use their technology.
Doesn't that say the opposite? Assuming the sentence legally binds Tesla in the first place, wouldn't they have to prove you're acting in bad faith in order to sue you? I mean, maybe you want an agreement anyway, but to the extent that the term defaults to true, it means you need less contractual protection.
This promise is just as legally binding as the promises of political candidates when they are campaigning (i.e. not at all), and is worth exactly how much you paid for it (i.e. nothing).
That said, of all the companies out there who can make a promise, Tesla is near the top of my list of the most trustworthy.
Would I believe this promise if Apple, Google or Microsoft made it? Hell no. But for some ineffable reason, I believe Elon Musk when he promises something, and I believe Tesla wouldn't promise something without Musk's approval.
I still would get a license agreement to back up this promise if I were going to use any of their technology, though. You'd be stupid not to. Tesla shareholders could ultimately kick Elon Musk to the curb just as Apple did to Jobs. Musk could pull a reverse-Gates and become an asshole in his old age instead of a philanthropist. Nothing is certain in the world of business.
Trust, but verify.
Not that it applies here just yet, due to the vagueness of the good faith part.
This is merely stating that Tesla is open to such things, not a legal guarantee.
I can see a situation where a competitor / patent troll sues them, and they use the patents defensively. If they're obviously on the right side, their PR department won't have such a hard time.
Does the US Govt still hold car company debt? Things could get really weird...
A high profile company like Tesla is not going to want to be seen suing two high schools students using an electric motor to power their Tanzanian school. But they want to reserve the right to stop the White Supremecist Indy 500 team using the same engine.
Seems like the best of a bunch of good and bad choices
Lots of people are saying this, but I don't understand it. My understanding (IANAL) is that when the CEO publishes something like this on the company's official web site, it becomes completely impossible for the company to win any future patent suits due to promissory estoppel.
Musk has effectively stuffed all of the company's patents into his office shredder. Good for him.
(Edit: He has also intentionally lowered the market value of the company by a certain amount, which is interesting.)
EDIT I should explicitly say that I am being sarcastic. Mr Tabarrok is believing what he wants to be true.
Edit: Nice catch, peter_l_downs ... I didn't realize that the estimated search result of 6,430 would be off by such a large factor.
Most people don't expect upper bounds, though, when talking about estimations. I for one would appreciate a less-than or less-than-or-equal sign when this is truly an upper bound, as it gives me a better idea of what to expect of the actual number of results in relation to the estimation.
What do you mean? If all I know about a number X is that it is an estimate for Y, I would expect X to be an upper bound for Y 50% of the time and a lower bound 50% of the time.
How many times in the past has a private company opened up its core patents for everyone to use? There aren't that many precedences.
What Tesla is saying, here are my patents, let's start building electrical fuel stations arround the world, i can do a lot of them by myselve (and i'm doing that), but i don't have enough budget to do it arround the world.
It seems clear to me, that Tesla's biggest obstacle for electrical cars is electrical fuel stations and not other car dealers, because Tesla dominates the electrical car "scene" right now (personal opinion)... But i don't consider one , because there aren't any electrical fuel station arround here (Belgium) - although they are working on that as fast as they can, checkout http://www.teslamotors.com/supercharger and scroll between "open right now" and "winter 2014-2015".
I think it's a good business move from Tesla.. I'm just curious what happens when a car manufacturer takes the patents, adds one of their own patents and then unites with a other car manufacturers.... Leaving Tesla in the dark, is that possible or are there some limits to "opening" their patents?
That's huge. And smart.
Then people who want to choose an electric car, will think about Audi and Tesla.
It's not Tesla that is trying to get in the game, he's already in it... But are they willing to roll your dice against Tesla by competing him on popularity of products and joining him on aggressively providing fuel stations (hell, you can name it Audi Fuel Zone, if you want).
You could break out a huge market in no time, it wouldn't be bad to team up with Tesla to break open the market.. Although i wouldn't like to be Mercedes (for example), produce a electric car and say to my clients: hey, you can tank at a Audi Fuel Zone or we don't have an electric fuel stations compatible with our technology :)
None the less, electric cars are coming.
Got me on that one :)
It's helpful to keep in mind that AT&T operated under anti-trust watch from 1917 through 1984, with the 1950s action being among the most significant.
It was also responsible for keeping AT&T out of the computing market, which meant that when AT&T created an operating system, it had something it couldn't sell, so it gave it away.
You may have heard of this, it was called "UNIX".
Seems like there is good potential to build on the momentum of Tesla's announcement to formalize the process, and answer the questions that I'm sure will emerge in this thread - eg more akin to an Creative Commons (which is very well defined and practical).
Quite an interesting business move and pretty unprecedented as far as I know, at least for a non-software company. Presumably he is hoping that this will encourage improvement to infrastructure. He is also probably thinking he can build higher quality cars and cheaper than others, irrespective of if they are electric or not (probably this is true).
i could be totally off the mark though
No, it's for money.
It's the charging stations. There aren't enough of them, and it's the biggest problem they have.
Tesla needs the big manufacturers to build electric cars so they will put charging stations everywhere.
There may be altruism and mission involved, but Tesla isn't (and shouldn't be) a charity.
Altruism and being a company are not mutually exclusive. In case of Tesla, being a company is probably the most effective way to achieve its goal. It's the difference between instrumental and terminal values I'm trying to point out; i.e. Tesla is earning money to electrify transport, not building cars to earn money.
I'm not familiar with US legislation, but from my perspective this is just Musk on his soap-box making a statement. It's not something I can rely on while building a business that possibly (!) infringes one of Tesla's patents. They may retract their statement and reconsider at any time, especially when times get tough.
It's nice to hear this, sure, but I fail to see the meat in this announcement.
I think Musk's word in this case is good. He's not a nobody; his reputation is stellar.
Beyond that, anyone who wants something signed and in writing could likely drop a note to Tesla for it when doing their due diligence.
That would clearly apply in this case.
Longer term, the other problem is when Musk retires/dies. Of course, that probably wont affect any current patents, but it could to future ones.
The question is whether its a specific enough statement as to reasonably induce reliance, and whether promissory estoppel would apply. It seems to me (and I'm not an expert) like it may be close enough as to seriously threaten Tesla's ability to successfully prosecute suits, and vague enough that anyone else would still be leery about using anything Tesla has patented.
Sometimes I feel doing business in the US is liking playing with your toys while your mom (courts) are watching. No wonder the legal industry is so huge. It has ingrained in people's mind that other people's word are worth nothing. I wish we could look past that... go talk to the guy (or his whatever-department that handles licensing matters). If you're really interested in starting this business, it won't take much of your time.
Except that the legal enforcement of property rights is something that separates the First World with the rest of the planet, and is an engine for economic growth.
What exactly does that little "in good faith" clause mean in there?
For example, using the Supercharger network requires that the automotive company offer energy for free for life to customers, and charge up front at the point of sale for all energy requirements for the life of the vehicle.
That's Musk's business model and is enforcing it for anyone who wants to use his "open infrastructure".
Which is bollocks to me: only wealthy people buying extremely expensive vehicles are going to want to prepay for a decade or two's worth of electricity. It means BMW and Audi will Supercharge, but Toyota and Ford? You can't ask budget customers to prepay a decade's worth of travel costs. You can't competitively and aggressively price a vehicle like that.
I imagine "good faith" means "follow OUR rules for the industry", which makes me sad. I'd like to see things be a bit more open than that, and I have very little doubt that this "standard" will be duplicated by companies unwilling to play by wealthy rules.
A 2014 Ford Focus gets ~40mpg. Assuming 12,000 miles/year, that's ~300 gallons of fuel. Assume, conservatively, $3/gallon. That's ~$900/year for fuel, or $2700 over 3 years. The cost to get supercharger access from Tesla is $2000 at time of purchase ($2500 after delivery).
To finance $2000 at even a ridiculously high 10% over 3 years is $64.53/month, fully loaded principal and interest. This is already less than most people pay per month for gasoline/petrol.
And that's THREE YEARS. After that, to fuel at Superchargers is essentially free (already amortized).
There's nothing "free" about Musk being the decider on whether or not you get sued.
[edited for clarification]
I am having trouble working out what it does mean, though. Based on the rest of the article, my best guess is "Does not act in a predatory manner toward other carmakers, such as initiating patent lawsuits of their own." Basically, I think Musk is trying to say that Tesla are willing to cooperate toward the goal of making electric cars a bigger presence if you are, but they don't want people using their patents in conjunction with underhanded tactics to try and monopolize the market.
>"If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property landmines behind us to inhibit others, we are acting in a manner contrary to that goal"
Opening up, in this sense, could be seen to be a selfish endeavour, but still a positive one, aiming to position Tesla as the Apple of the electric car market, only mildly less litigious.
I've heard of various strategies like publishing the work in as many forums as possible; publishing it on IP.com; filing a patent application and withdrawing it; filing it and pledging; etc.
It would be nice if there were a step by step guide written by an attorney--ideally an ex-patent attorney--that goes lists the steps in order of priority/cost/ease for both individual innovators and companies with deeper pockets.
This is another option (although kind of outside the box in terms of what RPX normally used for), although it's likely to be pricey: https://en.wikipedia.org/wiki/RPX_Corporation
One would argue that they might not have been encouraged to invent these stuff if there were no patents. Even if that was true, the fact is that they had already ammassed massive fortunes even before they started patent wars. One would expect these visionary geniuses to let go patents in interest of advancing the state of art after they have gotten more money than they know how to reasonably spend. Elon Musk is the only one doing this here on the top of risking everything on fields that few entrepreneurs would dare. Hats off to him.
> At Tesla, however, we felt compelled to create patents out of concern that the big car companies would copy our technology and then use their massive manufacturing, sales and marketing power to overwhelm Tesla. We couldn’t have been more wrong. The unfortunate reality is the opposite: electric car programs (or programs for any vehicle that doesn’t burn hydrocarbons) at the major manufacturers are small to non-existent, constituting an average of far less than 1% of their total vehicle sales.
I read this as effectively saying that it's easy for them to take this step, relative to companies in other industries (Apple, Google, Amazon, et al) because none of Tesla's competitors even have the ability to make use of their technology. Makes me wonder if Musk would have done the same thing if Tesla were a software company.
Those companies have an established market share which correspond to a massive number of non-electric car sales, it is not surprising in the least that the new developing area they are coming in (electric) is being very small right now. That's doesn't mean they aren't doing a lot of R&D or lack the ability to uses those patents.
It is much better to hold the patent and allow others to used without being worried about getting sued. I am sure the big auto makers may consider taking advantage of this situation to crush tesla, but Elon Musk is known for not getting distracted by the petty things.
Perhaps Tesla relies on trade secrecy as well?
On the other hand, can't patents protect smaller companies? Open sourcing projects and technology has its case-by-case pros and cons. I agree the increase in open source adoption has had a largely positive impact on the development community. But there seems to be a lot of stigma against 'proprietary' as a whole.
How is your company supposed to grow if you can't protect your technology from being easily replicated by competitors?
You are conflating several concepts in the space of a paragraph.
Can patents protect smaller companies? Maybe, if you have the resources to defend yourself in court. If you are seeking investment, you can file for brain-dead patents as a way to prop up your valuation and quiet investor fears. Sadly, this seems to be the main motivation these days among startups.
'Open source' entails a public release of source code and associated artifacts under a copyright grant with certain freedoms. Traditionally, patent grants have not been a part of these licenses, probably because the pervasiveness of software patents is a relatively new phenomenon. It is only with version 3 of the GPL that it gained explicit patent grant and retaliation clauses, and most other open source licenses still don't have such clauses. But the bigger question is what 'open source' even means in the context of Tesla. It is not like they're going to release detailed plans and blueprints from production facilities and upwards that would allow competitors to make perfect replicas of Tesla cars.
'Proprietary' usually refers to trade secrets. If you file something as a patent, which is a form of public disclosure, it is no longer a trade secret.
Most of my peers are strongly against software patents. They don't consider it a moral obligation to open source your company's code or release proprietary information that represents a competitive advantage. In this moral framework, patenting is considered an anti-social act, and releasing source code and proprietary information are considered altruistic acts, ceteris paribus. Note that this doesn't mean that _not_ releasing source code is an anti-social act.
If Tesla really wanted to see the big auto makers build more capable electric cars, AND if they also want to be a profitable enterprise, THEN, the best course of action would be to OEM the powertrain parts that they have already invested in inventing and building.
In any case, I think a sufficient amount of people would probably still buy a Tesla because of the brand recognition, even if the big auto-makers were making solid electric cars.
Is there anything they can do that's binding outside of a declarative 'we won't sue you unless...' statement?
What does that even mean? How do you make cars in bad faith?
What about the defensive measure? To defend against being sued. It would be good if Tesla pools the patents with others to form an "open patent" club where all the interested parties can join and use the patent to defend against infringement lawsuits.
Sorry to be a pedant! Great points. :-)
What exactly is Elon committing to here? Is Tesla planning on releasing any design documentation, or technical specifications or manufacturing process information?
It's great that they won't enforce patents in an effort to not stifle innovation, but do they plan on taking any actions that will encourage innovation?
Separately using the "All Our Patent Are Belong To You" meme (as has been pointed out below by peterarmstrong ) appears to be a clear "in your face" to "the man".
Most people I would imagine aren't aware of this meme (I wasn't) and using it in a public press release seems a bit odd to me.
I would go all in on this. A niche product (in the current condition) and usable driverless electric cars.
You aren't really competing with Tesla, because you have a total different audience.
(2) Having limited legal knowledge, I'm curious what he means with "a lottery ticket to a lawsuit". Is he indicating that patenting something would make a company more likely to get sued? My basic understanding is the opposite, that patents yield protection from lawsuits rather than create exposure to them. Is this flawed?
Reason? The partner(s) want to sell all the capacity even if Tesla can't buy it all, and they want everyone to know there won't be any issue buying Tesla batteries.
More specifically - could you just buy the S chassis/drivetrain from tesla and build say a delivery van body on top of it?