Musk Makes Tesla Patents ‘Open Source’ to Boost Battery Cars

Jun 12, 2014 4:34 pm ET

(Updates with comments on BMW in 10th paragraph.)

June 12 (Bloomberg) -- Elon Musk, Tesla Motors Inc.’s outspoken co-founder, said patents for the maker of Model S electric cars will be “open source” and available at no charge as it seeks to expand adoption of battery-powered autos.

The carmaker will provide access to all the “several hundred” patents it has filed and won’t sue those who use them in “good faith,” Musk said today on a conference call. At Tesla’s June 3 annual meeting, he said too few automakers offer “serious” electric vehicles and pledged to do something about it.

“Tesla Motors was created to accelerate the advent of sustainable transport,” he said on the Palo Alto, California- based company’s website. “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, poised to begin developing as many as three sites for a proposed $5 billion battery “gigafactory,” set a goal in 2006 of being a catalyst to move the auto industry from petroleum to electricity in order to power vehicles. While the company intends to boost deliveries of its $71,000 Model S sedan by more than 56 percent this year, it remains far from Musk’s goal of selling hundreds of thousands of vehicles annually.

The current patent system needs reform, as it can be a hindrance to technology advances, Musk said. While this decision drew “wide-eyed” looks from some Tesla executives, it won’t hurt the company, he said on the call today.

‘Best Talent’

“Investors should be much more concerned about whether a company can attract and motivate the best talent, not its patent portfolio,” Musk said on the call.

Patents force companies to “disclose and you can build on that innovation,” said Catherine Tucker, an associate professor at Massachusetts Institute of Technology who issued a report last month on patent litigation.

While some litigation is a sign of a healthy patent system, too much can hurt innovation, particularly when it’s by companies that don’t make products and rely exclusively on royalties, she said in the study. It was funded by the Computer and Communications Industry Association, which is pushing Congress to curb what it considers abusive litigation practices.

“Car companies traditionally lock their intellectual property in a vault and steal everyone else’s,” Erik Gordon, a professor at the Ross School of Business at the University of Michigan, said in an e-mail. “Musk is going to spoil their fun.”

BMW Visit

Executives from Germany’s Bayerische Motoren Werke AG, which sells the i3 electric hatchback and plug-in hybrid i8 sports coupe, met with Musk yesterday, he said.

In addition to suggesting that BMW collaborate on using Tesla’s “Supercharger” system to rapidly repower electric vehicles, “I suggested they build their own gigafactory,” Musk said on the call.

Kenn Sparks, a BMW spokesman, didn’t immediately respond to a call and e-mail on the matter.

Tesla has collaborated with major carmakers on electric autos, supplying battery packs and motors for Toyota Motor Corp. and Daimler AG vehicles. Both companies also hold stakes in Tesla.

The automaker has more than 160 issued U.S. patents for things like a system to protect battery packs from overcharging and an improved rotor construction in an electric motor, according to the website of the U.S. Patent and Trademark Office. Some of its more recent publicly available patent applications relate to computer-user interfaces and a port to allow for emergency maintenance of a high-energy battery pack.

Tesla, which saw its stock climb fourfold last year, fell 0.5 percent to $203.52 at the close in New York. The shares have gained 35 percent this year.

--With assistance from Craig Trudell in Tokyo, Susan Decker in Washington and Mark Clothier in Southfield, Michigan.