When It Makes Sense To Not Enforce Your Patents

Elon Musk, CEO of Tesla Motors (and also SpaceX), announced earlier today that the company will not pursue enforcement of its existing patents.  This means that other parties (whether they are car companies or not) can use Tesla electric vehicle technology to develop their own cars.

This is not a surrender.  It’s an acknowledgement that if electric cars are going to become a significant share of global automobiles, more than one company will have to produce the cars with the range and at the price that most people will want to use them.  Musk says as much in the announcement.

In a very real sense, electric cars would benefit from network effects the same way the Internet and related technologies can benefit.  There is more value (from a utility standpoint) in the individual electric car the more of them are available.  Once a critical mass of cars is on the road, there stands a better chance of support structures (charging stations, repair facilities) spreading across the country.

And with more cars on the road, prices stand an excellent chance of going down.  And that’s a good thing.

Would Musk do the same thing with SpaceX patents?  I don’t know.  The underlying technology is not as mature, so there may be value in retaining and enforcing patent rights.  Additionally, the immediate market challenge is not to get customers to embrace reusable rocket systems, but to get consideration from customers in the first place.  Hence the lawsuit over the Air Force’s launch contracts, which is about as civil as you might expect.  Arguably should SpaceX get to a point where it might want to cease enforcing its patents, its competitors may have less interest in changing their technological path than the automobile companies that have at least moseyed in the direction of electric motors.

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