Should Other CEOs Follow Tesla’s Musk and Open Their Patents?

Elon Musk, CEO of Tesla Motors, has shaken up the auto industry again, this time by announcing that Tesla Motors will let other companies use its patents. The move has other CEOs wondering if this a strategy they would benefit from.

July 7 2014 by Dale Buss


Elon Musk, CEO of Tesla Motors, has shaken up the auto industry again, this time by announcing that Tesla Motors will let other companies use its patents, in a move inspired by an open-source agenda. And he promised that Tesla wouldn’t pursue lawsuits against any company that wants to use its technology “in good faith.”

The move has raised questions. Why did Musk do it? What impact will it have? And, for other CEOs and business owners, is Musk doing something we should be taking a look at?

“As altruistic as that approach may be, it still creates victims out of companies that aren’t innovating fast enough to keep up in an open environment.”

Such an open-source approach has swept the computer-software industry, of course, as the attitude has prevailed that technology and the industry as a whole move ahead faster if the structure of innovation invites contributions from everyone and isn’t restricted to patented corporate silos. But as altruistic as that approach may be, it still creates victims out of companies that aren’t innovating fast enough to keep up in an open environment, such as Microsoft and IBM.

As BloombergBusinessweek pointed out, Sun Microsystems once opted to open-source all of its products, but that move came under different circumstances. The company was known for its pricey proprietary software and had fallen on hard times because of it, the magazine noted, so it was looking for new ways to create interest in its hardware and save the company.

Would an open-source declaration work for rivals in other verticals? Would CPG companies, for instance, benefit by throwing open the pantry doors to all of the patents covering their hard-won gains with better-for-you ingredients? CEOs and business owners would need a lot of persuasion on that point.