Tesla Shows Patents Are a Necessity, Not a Luxury, for CEOs


Tesla Shows Patents Are a Necessity, Not a Luxury, for CEOs

June 18, 2014

The recent announcement by Elon Musk, the CEO of Telsa Motors, states that Tesla is making its patents freely available to anyone to use – this is great news! It could mean that other electric car companies will use Tesla’s inventions and increase the market share of electric cars in the automotive market.

But what it really indicates is why patents matter, NOT that they impede progress or innovation. Intellectual Ventures was built on the firm conviction that ideas are valuable and we’re not alone in that opinion. According to a Market Research on Patent Attitudes study we completed in 2013, 70 percent of the 200+ C-suite executives (CEO, CFO, CTO) surveyed believe patents are good for innovation. Additionally, an overwhelming majority of respondents (85 percent) believe patent rights should be respected and that people should pay a license fee to use technology that is patented.

I respect Tesla’s decision and am encouraged by the fact it has catalyzed a conversation around the importance of patents. I want to take this opportunity to talk about something that hasn’t yet come up: the importance of protecting an inventor’s rights so they can make the decision whether to license, open source or keep their ideas until the patent expires.

The word patent originates from the Latin word patere, “to lay open" – basically to let everyone see exactly how an invention works.

If Tesla had not patented their inventions, likely most of their inventions would have remained a trade secret and they wouldn’t now be in a position to open them up for examination. 

Tesla will not require users to pay a license fee. That’s their right. And that’s also the point behind patents – the inventor has a right to the invention they’ve created in exchange for showing it to the public.

It’s great that Tesla is in a financial position to do this. And it’s even better that they see the possibility of increasing their market share by getting others to use their inventions. 

The reality is however, that there are many, many inventors who aren’t in such a position. In truth, there are thousands of individual inventors who don’t have the power or the luxury of Tesla to say “sure use my invention without paying me.”

The truth is the patent system has never been more important because inventors should be able to make a living from doing what they do best – coming up with great, game changing inventions that companies like Telsa can benefit from. 

In fact without the patent system, Tesla would not have been able to do what they just did. 

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