Tesla Motors, the electric car manufacturer, has released all of its patents to its competitors. A search at the USPTO for patents and patent applications assigned to Tesla Motors returns 169 issued US patents and 231 published applications. No doubt more patent applications are filed that have not yet been published. At, say, $10K per patent, that’s on the order of $4m in expense for the patent work.
Here is the press release, “All Our Patent Are Belong To You.” In the release, Elon Musk, Tesla’s founder and CEO, makes a case for what Tesla is doing:
Tesla Motors was created to accelerate the advent of sustainable transport. 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. Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.
This statement also reflects the university research and patent situation. A century ago–and even just sixty years ago–the typical university position was one of holding patents to prevent companies from taking monopoly positions to block access to research as well as blocking further research. A university’s purpose in holding and licensing research patents was to assure access, not to hope for a high-paying monopolist partner.
Tesla’s position should be the university position:
- The purpose of university research is not to create opportunities for “laying landmines” for others.
- A university holding patent rights will not sue “anyone who, in good faith, wants to use” the university’s technology.
If a university inventor chooses to assign her patents to a university for administration, or a university administration insists on such an assignment, then the purpose for obtaining ownership must follow this operating model: no patent landmines, no litigation for good faith use. Whatever innovation is to come about with university mediation of patent rights, it won’t involve explosions, whether set by the university or by any monopolist business partner.
Musk pounds the point home:
Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.
This is the problem for innovation generally. The competition is everything else that flows on, just as before. A new idea is often a pebble in a stream. At best, if it is big enough, it creates a disturbance in the flow. The stream does not dam up, the channel does not change, nothing happens. For there to be change, there often must be a platform, not a pebble–a critical mass of like-minded people who adopt the new against the attraction and economics of the status quo. University research, other than when it is in the service of the status quo, is in this same predicament. More than anything, that research desperately needs adopters. The present “patent licensing” approach works against this need by imposing a patent barrier–and not just any patent barrier, but the worst one possible. Universities hold their patents, by default, on behalf of a future monopolist.
A “future monopolist” is a company willing to take an exclusive license to a research patent and enforce that patent against everyone, other than the university for its own research purposes (so it can create improvements to the patent). In some few cases, the exception extends to any non-profit university research, but even then, why would someone do that research if the results of the research still require the underlying patent for commercial use? The typical university exclusive patent license prohibits the licensing company, the monopolist, from regretting its monopoly. The license often sets up enforcement requirements, prevents sublicensing, or if the license allows sublicensing, requires payment for all such deals.
Thus, in the typical university exclusive license there is no chance, let alone incentive, for a licensee to cross-license the licensed patent to its competitors, or to dedicate the patent (perhaps along with others) to an industry standard. That is, the university license actively works to prevent platform formation. The license isolates the company and expects that whatever is going to happen, it is entirely the responsibility of the company to finance and produce product. Musk argues the opposite (my emphasis):
We believe that Tesla, other companies making electric cars, and the world would all benefit from a common, rapidly-evolving technology platform.
This platform-killing, use-defeating position, university administrators claim, is the pathway to the highest-paying “big-hit” patent deals. Anyone would be a fool, so the implication goes, to start with anything else. Yet, the biggest fools by far are these very administrators. I don’t know how to say it any other way to help them save face. It requires a “my god, what have I done?” moment to renounce such folly and reform. Musk, again:
Technology leadership is not defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers. We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard.
There’s the university metric for technology transfer and patent management effectiveness, right there in bold. How many talented engineers and scientists are attracted to what has been discovered at your university? How are you motivating the brightest, most capable folks, and the companies they work for, to mess around with your stuff? It’s not about the number of patents filed or issued, the number of licenses granted, or the money. It’s about the movement of talent. That’s where change happens, where economic “development” happens, where university research starts to matter. It is worth noting that Musk qualifies his commitment not to litigate companies wanting to use Tesla inventions with “in good faith.” That’s an important qualification. What might it mean? How would a company act without “good faith”?
First, a company could claim to practice a standard and yet take shortcuts. If Tesla wishes its inventions (and patents) to participate in a standard that has as it were, standards, then it will have to enforce the standard, and among other tools is the leverage of infringement litigation for companies that misrepresent the technology configuration they are using and selling.
Second, a company can adopt Tesla’s technology, and then invent improvements that prevent anyone from practicing the technology, and the common platform, in the ways that the technology and platform naturally would develop. Such race-ahead and exclude tactics are unethical in a shared development environment. In Tour de France terms, it would be equivalent to the winner of a stage preventing anyone else from finishing the stage, ever, or any later stage that depends on that stage. The Tour would be over after the first stage–and would not be much of a tour. Tesla has to reserve the right to litigate if a company thinks it can use a race-ahead and exclude strategy, playing off the largesse of Tesla to get expedited access to Tesla’s technology–that is, aiming to make Tesla appear to be the patsy-fool for releasing its technology without the threat of litigation.
The race-ahead and exclude approach is what university administrations have adopted. This approach is implicit in their technology transfer program statements, in their licensing practices, in their reporting. No wonder industry by and large hates ’em, hates every last little bit of ’em. University patent licensing offices aim to make industry pay, and aim to make them pay the most by being the patsy-fools and not patenting everything they can. This is the licensing office come-on to inventors–“we will make industry pay on your behalf–you will get rich, a Porsche in your parking place at work–on the strength of this operating model–industry is selfish and won’t pay, so we will sue them if we have to.” It’s a classic shakedown, wrapped in the packaging of public interest and thereby exploiting and damaging the university’s standing as a public institution.
This technology transfer approach cuts to the heart of the research university’s standing in the community. It is killing the research university, like too much salt, or alcohol, in one’s diet. It must change. University administrations, through a quirk of history, have gained control over a great deal of faculty research work. That quirk was the clever but false claim that the Bayh-Dole Act required university ownership of federally supported inventions, a quirk since exposed by the US Supreme Court. University administrations are now the first and primary barrier to the deployment and use of research results–inventions, data, software, materials, collections, recipes and procedures, insights.
It’s time for administrations to change their ways, or to step aside, and let research happen without a monopolist intervention. University administrations do not have any actual need to own patents or license patents but for the opportunity to provide access to everyone who in good faith wishes to practice university-managed technology. Universities should not take ownership of patents for any other reason, and when they do take ownership, they should reserve the right to sue for situations of bad faith practice that would damage the greater community of users, that would chase off the top talent from working with the university technology. Otherwise, no litigation. This approach will attract talent and resources, will create competition, will move ideas quickly upon publication into use, will stimulate validation work, and produce new platforms of commonly held technology.
Those platforms are the foundation for innovation and further research. Without the emergence of new research platforms, federally financed university research is pretty much a waste, little more than a continuous earmark of state-directed pork to be eaten up by university administrators.
This approach also will “make money.” This approach was the one in place prior to Bayh-Dole, and universities made money. How? First, because those who profited from patents gave back, with huge gifts. Second, because those that benefited from access gave back by sponsoring research, hiring graduates, and providing new ideas for research. Third, because those that asked for licenses chose to pay a royalty as a way of creating funds for further research–funding shared by everyone obtaining access–on the expectation that any improvements would be available on the same basis. These are proven ways by which universities have benefited from the deployment of the research results they have hosted. It’s time to go back to them, rebuild them, and restore university inventions to an important place in an economy that seeks innovation.