In mid-September, tech media outlets reported news on patent filing activities undertaken by Palo Alto, CA-based tech firm Tesla Inc. (NASDAQ:TSLA). The patent application filed by Tesla that has piqued the interest of the tech media world covers a robotic system for replacing batteries within electric vehicles. Although most commentators are focused on the novelty and convenience of the technology disclosed in the patent application, the news itself is further proof of a damningly hypocritical stance on patents often promulgated by Tesla CEO Elon Musk.
On September 14th, the U.S. Patent and Trademark Office published U.S. Patent Application No. 20170259675, titled Battery Swapping System and Techniques and assigned to Tesla. It would protect a system for exchanging an electrical energy storage system (EESS) of a vehicle, the system including an EESS exchange station to position an electric vehicle, a vehicle lift to raise the vehicle to a predetermined height, an EESS lift configured to raise towards the vehicle until it is correctly positioned relative to a first EESS which the lift engages and lowers, and then an EESS conveyor which receives the first EESS and then presents a second EESS for the lift to raise to the vehicle. The invention is designed to reduce the amount of time it takes an electric vehicle owner to replenish power in the vehicle or address a battery malfunction.
Not to take away anything from the intriguing nature of this robotic system for swapping out car batteries but why is a company run by Elon Musk obtaining patents at all when Musk has said that patents are simply tickets to a lawsuit? At least that was the subject of a post published by Musk on the Tesla blog in June 2014:
“When I started out with my first company, Zip2, I thought patents were a good thing and worked hard to obtain them. And maybe they were good long ago, but too often these days they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors. After Zip2, when I realized that receiving a patent really just meant that you bought a lottery ticket to a lawsuit, I avoided them whenever possible.”
Musk must feel like he has an incredible amount of good luck because he has been stocking up on quite a few of those lawsuit lottery tickets (a.k.a. “patents”) in recent years. He seemingly did very little to dissuade patent filing activities at SolarCity, which he has served as chairman. His own company continues its patent filing activities, earning 27 patents through the first eight-and-a-half months of 2015. The recent patent application published by the USPTO is simply the latest battery-related innovation for which Tesla is seeking patent protection as the company looks to corner the energy market.
Any shareholder in a Musk-related company should be very concerned if Musk truly thinks that patents invite lawsuits yet he doesn’t stop his companies from obtaining patents. Or, what’s more likely the case, Musk is trying to gain a lot of political goodwill during a time when the federal government has become very anti-patent. Such positioning helps to improve Musk’s profile to the point where government subsidy helps to prop up his billionaire net worth.
Of course, the typical response to articles pointing out the hypocrisy of Musk on patent policy is for his fans to erroneously cry that Tesla, or Musk’s other companies, must file patent applications and obtain patents in order to prevent competitors from obtaining patents on technologies Musk or his companies first innovated. That, however, is simply a false narrative fed to fans and unsophisticated shareholders.
The United States is a first to file nation, which means that in order to be entitled to a patent in the United States one must file a patent application prior to information about a technology being disclosed. If Tesla, Musk or any of Musk’s companies want to prevent competitors from obtaining patents all they have to do is disclose the technology. It is very easy to do, and extraordinarily cheap. The fact that Musk and his companies continue to pile up patents obviously means that he, like so many other innovators, sees obvious value in protecting his innovations with patents.
For someone who avoids patents “whenever possible,” Musk and his companies sure do seek patents on a lot of innovations. So why can’t he just be honest about his motivations? Or why doesn’t he come out and explain that innovation demands patents and it just isn’t realistic to invest many millions, or in his case sometimes billions, into research and development if you cannot obtain and exercise exclusive rights? That is, after all, perfectly honest and true. You can’t invest in what you can’t own, and Musk knows that. For some reason he just doesn’t seem all that interested in his fans and shareholders realizing that undeniable truth.
There is absolutely nothing wrong with protecting innovation through the pursuit of patents, but taking hypocritical positions on patents that inflame and mislead is counterproductive and duplicitous. Clearly, Musk and his companies do not avoid patents “whenever possible.” They acquire patents for strategic business reasons.
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14 comments so far.
DennisJanuary 8, 2018 01:10 am
Sorry, but there is a lot of ignorance regarding these patents. Elon Musk was sincere when he offered to allow other vehicle manufacturers to use Tesla patents for free BUT the patents are just as valid as any other patent and he has the legal right to a monopoly. He is absolutely correct in saying that a patent “buys you a ticket to a law suite”, but he is now in a position to financially cripple anyone who abuses his offer for free use of his patents. The tables have turned. Anyone using his patents would be well advised to write to Tesla and get written permission to use these patents without royalties, explaining the purpose for wanting to use the patents. There will be no problem for anyone with the same socially responsible life goals as Elon Musk, but any scallywags who don’t ask will have a sword over them.
Monica RavanelloOctober 2, 2017 09:38 am
Maybe Musk is betting on the ignorance of the public who think the “open source” means he’s being “altruistic”…I think he’s simply saying things for PR reasons. However, if you work in patent law you know that there is no such thing as a “free lunch”.
BennySeptember 28, 2017 09:19 am
I don’t need a patent for freedom to operate. I just need to make sure that no one else has one.
In the real world, having a patent for a device with N functions doesn’t guarantee you freedom to operate if a subset of N is already patented, or if the commercial application requires further functions.
RalphSeptember 28, 2017 09:06 am
“..why is a company run by Elon Musk obtaining patents at all when Musk has said that patents are simply tickets to a lawsuit?”
Ensuring freedom-to-operation comes to mind.
BennySeptember 28, 2017 05:27 am
“The patent application filed by Tesla that has piqued the interest of the tech media…”
The tech media didn’t read US8164300, so might not be aware that the system claimed by Tesla was publicly known 7 years ago. I hope the examiner picks up on that one, but I’m not holding my breath.
Gene QuinnSeptember 27, 2017 03:13 pm
I believe you are correct. And I agree with you that Tesla’s patent strategy does make good business sense. There are many ways to strategically use patents. But altruistically patenting to then donate them to the public is not what Tesla or Musk does despite the fact that so many fans seem to erroneously believe that is what is going on.
Appearance of …September 27, 2017 02:23 pm
Also — Tesla’s patent policy helps to ensure that its particular approach becomes an industry standard. By contrast, if competitors had to engineer around Tesla’s technology, the competitor’s technology might become the industry standard.
If this happened, Tesla could end up being marginalized.
So again, Tesla’s patent strategy has some good arguments for it.
Appearance of …September 27, 2017 01:54 pm
As I understand it, the Tesla patents are not true “open source”. The patents still have strategic value under “mutually assured destruction” (MAD). That is, if a company asserts their patents against Tesla, Tesla will, in turn, assert the Tesla patents back. So the Tesla patents still have strategic value.
This seems like a reasonable business strategy to me.
Tesia ThomasSeptember 27, 2017 12:13 pm
Todd Merchant, you have to realize that if Musk opens up his IP and loses market share, then he will not be able to decide whether or not to sue for patent infringement. His shareholders and investors will compel him to do so lest he be buried in legal misfortune and lose everything he’s worked for.
Open patents is a good business strategy for now. But, it won’t be for later.
In fact, I believe that not filing patents on key innovations could likely be seen as a breach of fiduciary duty. Shareholders and investors would likely sue Musk for not properly protecting his intellectual properties.
I mean, ‘Tesla’ is trademarked too!
Tesia ThomasSeptember 27, 2017 12:04 pm
Yeah. Ceo’s CAN’T be altruists or they get sued or worse.
That’s the biggest negative about taking other people’s money.
That’s why Musk is still cool to me. He’s gotta do what he’s gotta do. But, this whole open-source patents thing is a false narrative.
As soon as someone uses those Tesla patents to make more money than Tesla or encroach on their territory then…
1) fiduciary duty will kick in and
2) Musk will have to sue for IP infringement
…or be sued or end up in prison or something.
Tesia ThomasSeptember 27, 2017 11:59 am
“Of course, the typical response to articles pointing out the hypocrisy of Musk on patent policy is for his fans to erroneously cry that Tesla, or Musk’s other companies, must file patent applications and obtain patents in order to prevent competitors from obtaining patents on technologies Musk or his companies first innovated. That, however, is simply a false narrative fed to fans and unsophisticated shareholders.
The United States is a first to file nation, which means that in order to be entitled to a patent in the United States one must file a patent application prior to information about a technology being disclosed. If Tesla, Musk or any of Musk’s companies want to prevent competitors from obtaining patents all they have to do is disclose the technology. It is very easy to do, and extraordinarily cheap. The fact that Musk and his companies continue to pile up patents obviously means that he, like so many other innovators, sees obvious value in protecting his innovations with patents.”
Guess you’re a Musk Apologist.
Gene QuinnSeptember 27, 2017 11:59 am
Sorry you don’t like facts, but that really isn’t a problem with the article as much as it is a personal problem.
The issue of Tesla open sourcing patents has been discussed here in other articles on IPWatchdog.com. As much as Musk fan boys like yourself would like every article to be a thesis, articles are articles and not chapters in an encyclopedia. So articles don’t tell every stitch of history.
Of course, I’m sure you wouldn’t like the truth about the open sourcing of the patents. As we’ve explained, Musk open sourced his patents not as the result of some altruism, but rather because Toyota had informed Tesla that they would no longer use the Musk battery and were going to use their own battery. Having built an entire manufacturing facility Musk had to open source his patents so that others could use the technology. So Musk’s decision was a shrewd business decision, not a form of corporate altruism. In fact, had it been a form of corporate altruism he would have been removed and properly sued for mismanaging shareholder resources.
Those are the facts. Open your eyes.
Todd MerchantSeptember 27, 2017 11:42 am
What a pathetic article. You conveniently neglected to mention that Tesla open-sources its patents to allow others to use them, in order to accelerate sustainable energy. Horrible journalism.
Tesia ThomasSeptember 27, 2017 09:48 am
I love this article.
Elon Musk is awesome but a freaking patent hypocrite just like Google et all!