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.