Tesla Patent Pledge….Too Good to be True?

more+
less-

Tesla Motors logoOn Thursday June 12, Elon Musk, CEO of Tesla Moters, posted a blog post that said “…Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”   At first glance, a good thing.  It is certainly better than having no such pledge.  But before folks gleefully download all of Tesla’s patents and infringe at will, a few words of caution.

First, to point out the obvious, Mr. Musk says TESLA will not INITIATE suits.  Tesla seems to be reserving the right to file counterclaims under its patents if another party sues them.   Indeed, looking back over similar patent pledges from IBM, Microsoft, and others, you’ll see that “defense” notion expressed, albeit in different forms.   There’s absolutely nothing wrong with that.  So don’t think Tesla has somehow unilaterally disarmed itself.  They’ve said they won’t be the first party to launch the patent missiles; they’ve reserved the right to be the second.

But note also, this pledge applies to Tesla, and only Tesla.  If the patents are assigned by Tesla to some other party, this obligation would arguably no longer apply, because it only applies to Tesla.  While subsequent patent assignees typically take title subject to any licenses that have been granted by Tesla, in general that is not the case when what has been granted is a covenant not to sue, because that is personal to Tesla, the party granting the covenant.  And subsequent owners don’t typically take title subject to non-contractual covenants, such as this.  Maybe if Tesla ever sold these patents, they’d force the assignee to abide by the pledge.  Maybe.  The point is, I see nothing that would force them to do so.

Another thing–to quote from the post:

At Tesla, however, we felt compelled to create patents out of concern that the big car companies would copy our technology and then use their massive manufacturing, sales and marketing power to overwhelm Tesla. We couldn’t have been more wrong… 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.

…which sort of makes you wonder, what does Mr. Musk truly mean by “….anyone who, in good faith, wants to use our technology”?  On its face, it suggests that if you are making a “bad faith” use of Tesla technology, or if (good or bad) you are not using Tesla “technology,” the covenant does not apply.  So…what are the realistic situations where the covenant could not apply?

Maybe it’s this: if you are using a Tesla patent on a “gasoline car”….which Mr. Musk identifies as Tesla’s “true competition”…. is that a “good faith” use of Tesla “technology?”  Or, given that gasoline cars are Tesla’s “true competition,” could an argument be made that such a use is NOT a “good faith” use? And/or, it is not really a use of Tesla “technology?”  In the blog post Mr. Musk emphasizes that Tesla is all about electric-powered vehicles.  That sure isn’t your Ford F-350.  While it is quite possible Mr. Musk did not intend to cut such fine hairs, if I were Ford I’d hesitate before committing big money on use of a technology a Tesla patent reads on, if the use is to further “the enormous flood of gasoline cars…”

Finally, bear with me making a wonkish patent attorney point.  The Tesla pledge only applies to Tesla patents.  It does not apply to other patents that might be infringed if you implement a technology a Tesla patent reads on.  Just because a Tesla patent reads on a technology does not mean that other patents won’t.  Just because Tesla obtained a patent does not mean that there is no possibility of other, older patents being out there that apply to Tesla technologies and have broader claims.   So Tesla has not somehow created a “patent free zone” that applies to patents they do not own.  I wouldn’t expect them to.  You shouldn’t either.

 

 

Topics:  Assignments, Elon Musk, Good Faith, License Agreements, Patent Litigation, Patents, Tesla

Published In: General Business Updates, Intellectual Property Updates, Transportation Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Downs Rachlin Martin PLLC | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »