Toyota Motors One-Ups Tesla, Makes Thousands of Royalty-Free Patents Available

Toyota is attempting to boost collaborative innovation in the field of vehicle fuel cell technologies by opening up thousands of patents for royalty-free use by other automakers. On January 6th, the corporation announced that it would enable cost-free licensing for 5,680 of its patents. Toyota is hoping that the decision will encourage wider development of hydrogen technologies for vehicles over the next few years.

This announcement marks an interesting trend for patent activities in the sphere of alternative energy vehicles. During July of last year we covered a similar announcement by Elon Musk, founder of Tesla Motors, who said that his company would allow others to use their patented technology for free, without charging typical licensing fees. This made about 200 patents for lithium-ion battery-powered electric cars available for use by auto manufacturers. The patent portfolio that Toyota just released dwarfs this total many times over.

It’s too early to tell how these decisions will impact the near future of automobile development. This Toyota announcement has created a good deal of buzz in various media outlets and for good reason: We’re much more familiar with companies suing to protect their inventions if they feel that a patent they held was infringed. However, there is one aspect of this story that many people have misconstrued. A multitude of headlines have indicated that Toyota is “following the lead” of Tesla Motors. It may be second-place in terms of timing but the number of patents that Toyota is making available and the thorough plan it has in place for cost-free licensing sets the Japanese automaker in a league of its own.


Toyota’s 5,680 Patents Available for Cost-Free Licensing

The Toyota Fuel Cell Vehicle concept car, the basis for the 2015 Mirai. (Photo by Bertel Schmitt is licensed under CC BY 2.0)

The patented technologies being made available by Toyota are related to a wide range of hydrogen fuel cell car aspects. A vast majority of the patents, 3,350 of them, are directed at fuel cell systems control within vehicles. Close to 2,000 other patents protect technologies regarding fuel cell stacks. About 290 patents are related to high-pressure hydrogen tanks.

These patents are being made available for cost-free licensing until 2020, which is when Toyota believes that the first generation of hydrogen vehicles will be available en masse. Interestingly, there are around 70 patents within Toyota’s cost-free licensing portfolio that will be available indefinitely. These relate to hydrogen production and supply for filling stations, one area of fuel cell vehicle infrastructure that is currently lacking.

This announcement was just one of the incredible developments in the auto industry that were unveiled at the 2015 Consumer Electronics Show. Toyota had already unveiled its Mirai vehicle, the world’s first mass-market hydrogen fuel cell car in December. The car will be sold in the United States as well as some European markets starting this year. The Mirai has a maximum range of about 400 miles when it is fully stocked with hydrogen and the tank can be refilled in minutes. 

In order to utilize the patented technologies without paying a licensing fee, companies still have to apply for a license through Toyota, so the company will be very aware of who is using which patent. Toyota will be evaluating petitions for royalty-free licenses on a case-by-case basis. As part of the licensing agreements it will be striking with other companies Toyota will request, but not require, that the companies obtaining royalty-free licenses on fuel cell patents will share their own portfolios related to fuel cell technologies with others on the same royalty-free basis. 

Reaching Critical Mass in Hydrogen Fuel Cell Development

Toyota’s decision isn’t solely directed at reaching agreements with major manufacturers like Ford and GM. A wide scope of companies will be eligible to apply for royalty-free patent licensing through Toyota, including parts suppliers, hydrogen bus manufacturers and even to those developing fuel cell technologies for industrial equipment. By reaching out to many other firms involved in R&D for fuel cell technologies, Toyota hopes that the royalty-free patents and any reciprocal royalty-free fuel cell patent licensing agreements from other companies will kickstart many advances in hydrogen fuel cell technologies in the next few years.

There’s a great deal of activity going on in America and across the world to usher in a new age of hydrogen-based electricity infrastructure. Last year, we covered a webinar hosted by the U.S. Department of Energy on that subject, with a view towards incorporating hydrogen fuel cell technologies into the larger electrical grids that provide electricity directly to our homes. In California, the state government has set targets of 1.5 million zero-emission vehicles and 15 percent of cars sold within the state to be zero-emissions as well by 2025.

That zero-emissions concept, which can also be achieved by electric vehicles and plug-in hybrids, is a big reason why many are hoping that hydrogen vehicles are here sooner rather than later. Reacting hydrogen with oxygen within a fuel cell stack creates the electricity needed to operate a vehicle. The only byproduct of the process is water, which is much less pollutive than the carbon emissions produced by vehicles utilizing gasoline or diesel fuels. Although the Toyota Mirai is the first mass-produced hydrogen vehicle, General Motors, Hyundai, Audi and BMW have each at least designed a hydrogen vehicle as a concept car.

Building the infrastructure necessary to fuel hydrogen vehicles is still a major stumbling block that has been preventing these concepts from becoming a reality in the production lines of these companies. California is leading the charge for environmentally-friendly vehicles on its roads but there are only 11 hydrogen filling stations located in that state, although there’s some speculation that number could nearly quadruple by the end of 2015.

Toyota has also been a major investor in hydrogen supply infrastructure and the United States has been the recipient of much of that investment. In May of last year, the Japanese automaker announced that it would provide $7.2 million to California-based FirstElement Fuel for the operation of 19 hydrogen filling stations within that state. Toyota has also collaborated with Air Liquide, a hydrogen filling station operator based in France, to develop a network of a dozen filling stations situated across the northeastern U.S., including stations in New York, New Jersey and Massachusetts.

Not every voice sounding off on Toyota’s latest decision has been positive, however. Plenty of pundits have questioned the company’s true motives with the royalty-free patent licensing program and some seem to feel as if it’s nothing more than a publicity stunt. As he is quoted as saying in this LA Times article, Center for Automotive Research chairman emeritus David Cole pondered whether Toyota’s fuel cell technologies were cutting edge enough to enable faster development of hydrogen technologies. There are also those who have raised issue with the way that hydrogen gas is produced, calling into question the entire idea of hydrogen fuel cell vehicles being environmentally friendly. Although hydrogen and oxygen create no carbon emissions when reacted in a fuel cell, the reformation processes used to create the hydrogen in the first place, which often utilize natural gas, does result in fossil fuel emissions.

How Has Tesla’s Gamble Paid Off So Far?

The first foray into royalty-free patent licensing was attempted in the middle of 2014 by Tesla Motors under the vision of its founder, Elon Musk. In a blog post dated to June 12th, penned by Musk and titled “All Our Patent Are Belong To You,” the patents held by the company were decried as posing a major impediment to the further development of electric vehicles. As a result, Musk indicated that Tesla Motors would allow other companies to utilize their patented technologies without facing reprisal from Tesla in the form of patent infringement lawsuits.

As we pointed out in our coverage of that announcement, Musk has more at stake in the lithium-ion battery sector, the area of electric vehicles within which Tesla specializes, than the cars being developed by Tesla. Musk is also behind the development of the Gigafactory, a manufacturing facility currently being constructed in Nevada which will cost tens of millions to construct. The Gigafactory will produce hundreds of thousands of electric vehicle battery packs once it reaches completion in 2020 and stands to produce multi-billion dollar profits for Musk if other car companies decide to utilize the Tesla technology.

Tesla and Musk received a great deal of publicity for this decision to go open-source with the company’s patents but there were some who questioned how effective this approach would be at actually encouraging further development in electric vehicles. At least one other blog has pointed out the fact that the 172 patents and 123 patent applications assigned to Tesla is still outpaced by the electric vehicle patent portfolios held by General Motors, Ford and Honda. Even Toyota, with 663 electric vehicle-related patents, holds more IP in that field than Tesla.

It’s tough to ascertain exactly how much activity in manufacturing electric vehicles has been encouraged by Tesla’s patent holdings, especially as its only been a little over half a year since Tesla opened its patent portfolio. However, at a Tesla Motors event in October, Musk made comments indicating that some companies have been in contact with Tesla to gain more insight into the company’s patent portfolio and ways that they might be able to make use of some of those technologies.

Time will also have to tell whether or not Toyota can inspire a new generation of hydrogen fuel cell vehicles to hit the road in the next few years. It is clear that, given Toyota’s investment in building networks of hydrogen filling stations in various markets where it will sell its cars, that this decision is part of a larger strategy involving hydrogen fuel cell technologies. Who knows if this trend will continue among carmakers but it’s been noted that Toyota’s decision highlights the flexibility in innovation available to companies with large patent portfolios. Instead of using those patents to merely assert rights, they can be used as a pathway to innovation for others. As long as these companies continue to agree that the development of alternative energy cars is more valuable than patent monetization, it’s tough to see this pathway to hydrogen fuel cell innovation in non-altruistic terms.


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One comment so far.

  • [Avatar for Simon Elliott]
    Simon Elliott
    January 20, 2015 01:37 pm

    I hope that our elected officials will not come away from this thinking that patents are irrelevant.

    Having a strong technical and market position in HFC, Toyota now needs widespread adoption of HFC. By offering a free license, it gets some insight into who is working on what. As the world’s #1 or #2 car maker, it can compete solely on its size.