When Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk announced that the electric car company would let competitors use its technology to build their own electric cars, many saw this as a shrewd business decision meant to energize Tesla’s particular niche at the expense of gas-powered cars. But analysis of Tesla’s patent portfolio by Thomson Reuters reporter Bob Stembridge (h/t Brian Fung at The Washington Post) shows that the company is already pulling back on patent applications, which lends more credence to Musk’s original explanation: “Technology leadership is not defined by patents.”
Nokia’s impressive patent portfolio proves Musk’s point
First of all, Tesla Motors Inc (NASDAQ:TSLA)’s patent portfolio isn’t that big compared to some other tech heavyweights. Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) is expected to pull in $800 million this year just by licensing its IP to other companies, while Stembridge estimates that Tesla spent $9 million to pull together about 300 US and more than 600 international patents. Considering that Tesla is one of the hottest companies on the market and Nokia is limping along, Musk certainly has a point.
Stembridge does a complete breakdown of the number and type of patents that Tesla Motors Inc (NASDAQ:TSLA) has in its portfolio, but what’s really striking is that Tesla is already pulling back on its patent applications. You could argue that it’s in Tesla’s interest to continue developing patents defensively so that other companies can’t lock it out of key functionality, but that doesn’t seem to be the plan. The difference between quantity and quality is especially stark when talking about tech patents, and Tesla may have a plan to continue developing critical patents, but the precipitous drop is very telling.
Supreme Court raises the bar on tech patents
The role of tech patents may be on the wane, following a US Supreme Court decision saying that an abstract idea can’t be patented simply by attaching it to a computer, reports Brent Kendall for the Wall Street Journal. Abstract ideas have never counted as inventions, but the marriage of business ideas to computer technology has blurred legal distinction between the two fueling countless patent wars (and patent trolls). It’s too early to handicap the fallout from last week’s ruling, but when the Supreme Court unanimously raises the bar for tech patents, you have to imagine there could be more rulings coming down in the next few years that further tighten intellectual property laws to promote competition.