Tesla’s intellectual gamble – The London Economic

Tesla’s intellectual gamble

By Guy Dorrell @GuyDorrellEsq

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Pfizer’s abortive bid to take control of Astra Zenica in May 2014 was widely commented to have been motivated, at least in part, by Research and Development issues. More specifically, Pfizer has for some time relied upon the cash-cows of its existing products; bolstering its share price through attempting to increase sales, while driving out back-office costs.

R&D is an expensive pursuit whatever the industry, though pharmaceutical companies seem to have an especially tough time. Around 1 in 10,000 formulated drugs completes all the mandated stages necessary to have it licenced for use on patients. In the US, Pfizer’s home market grants pharmaceutical licences that run for 20 years only – with an estimated eight to ten of those years taken up with gaining FDA approval.

Just as the prospect of a take-over of Astra Zenica was finally being put aside, Tesla Motors’ Chief Executive, Elon Musk announced, in a headline-grabbing move on 12th June that his company would, “in the spirit of the open-source movement”, turn over its intellectual property and allow others to benefit from the patents that Tesla has developed. Further, he claimed that if anyone used this intellectual property in good faith, Tesla would not issue litigation against them. It all seemed too good to be true.

Innovation of the existing

Of course, Musk and Tesla were repeating with their intellectual property rights what they did in establishing the present position of the company; they innovatively used something that already existed.

In a 1985 paper, the GNU Manifesto, software engineer Richard Stallman laid down the guidelines to encourage intellectual property sharing, to get around copyright issues. At the forefront of what we now know of as the open source movement, Stallman recognised that no one person had a monopoly on innovation. He also indentified that copyright effectively killed the subverting innovation that software engineers adding to and tinkering with code could bring.

His move was triggered by a sequence of events that ran contrary to what he believed and stood for. While working on a software project, Stallman had given his work to a commercial company to study and perhaps improve. The finished article that the company released did indeed improve on Stallman’s initial version, but the company then rigidly enforced the rights they now held over the software, profiting from the springboard that Stallman had given them.

In response, Stallman created the first copyleft license, which, over time, evolved into the GNU General Public License. There has been a good deal of talk about the wisdom of invoking GPL but, contrary to some popular misunderstanding under the GPL the originator does not give up all rights over their original work.
This system of credit to the original author, and the potential for royalties that go with it, but the freedom for others to extend and improve the original, has had a profound effect upon society though much of it will have gone unnoticed.

The system isn’t new, though the medium through which it has entered the public consciousness is; the superb @MsJackMonroe essentially grants copyleft rights to all of her recipes while retaining more conventional copyrights. But she could not have gained exposure for her work if it had not been for the effective grant of a copyleft from a computer scientist from Oxford, working in Geneva.

Tim Berners Lee’s opening up of his hypertext transfer protocol (HTTP) was the foundation of the internet as we know it today. When Berners Lee turned over his invention, he created an environment for collaboration of a scale never before seen outside events such as D-Day. He also ordained himself as the kingmaker of a thousand internet millionaires and billionaires. Information about the earnings that the invention of HTTP has brought Berners-Lee is not available, but he is certainly not challenging Mark Zuckerberg for personal wealth. He is, however, pre-eminent and wields unrivalled influence within his field.

What is it that Tesla do?

Tesla make cars, but in releasing this statement of adoption of a derivative of copyleft, Elon Musk has firmly positioned the company not as a car maker, but as a company that specialises in and harnesses renewables – and what could be more “green” than giving patented technology away as a renewable?

What is noticeable about the use, explicit or implicit, of GPL and copyleft is that those that have embraced it have seldom been recorded to have been impoverished by their choice. The same cannot be said of many that have chosen traditional intellectual property protection methods.

Ultimately, Musk must know that monopolies do not always equate to sales, but where a market is vibrant, the first-mover advantage, coupled with a highly-publicised Unique Selling Proposition makes sound business sense.

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