Tesla Motors Inc (TSLA) Patent Pledge: View Cautiously

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Tesla Motors Inc (NASDAQ:TSLA) CEO Elon Musk opened company’s license portfolio to those who want to use, but legal experts are warning the interested parties to use the patent with caution, according to a report from the Financial Post. Lawyers at Borden Ladner Geravis have issued a caution signal to the parties, who want to benefit from the company’s entire portfolio of over 500 patents and patent applications.

Not an enforceable contract

Other lawyers from BLG, Richard Johnson and Michael Damiani said that the patent pledges are yet to be tested in the court, and that is why it should be accessed carefully.

“Elon Musk’s statement warrants serious consideration for those wanting to use, develop or build upon Tesla’s patented technologies,” they write.  They also noted that Musk gave an open invitation for using patent portfolio through a blogpost, which may not constitute an enforceable contract.

Language of Musk is casual and can be interpreted in various ways. Musk kept himself off from saying that his promises were legally binding or irrevocable unlike other companies such as IBM and Red Hat. Damiani said that Tesla can pull back or modify the ‘open source’ patent policy any time. They said that

“Even if Tesla remains committed to its patent pledge, its patent can be sold or assigned to third parties who may choose to enforce the full complement of their entitled patent rights,” lawyers note.

The Phrase “good faith” is also subjected to debate.

Pledge from Tesla open to numerous interpretations

A thorough examination of pledges by other companies points the questionable content in the pledge from Tesla.

For instance, Red Hat stated similar pledge and noted that it’s legally binding. Also, Red Hat did not include non-open source freeware, its hardware patent within the ambit of pledge. Similarly IBM, when it issued a list of 500 U.S. patents, explicitly mentioned that its non-assertion pledge will be legally binding by any open source software developer.

Similarly, Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) opened its free and open-source software patents, except for the parties, who sued the company. Also, Google made sure that any party that transfers or sells any patent should be bound by a pledge and impose a similar pledge on any further transferees.

In June, Tesla opened its patent portfolio for any party that wants to use it in the good faith. Elon Musk said that the real competition is not Tesla, who is producing a handful of electric cars, but the largest companies that manufacture millions of gasoline-powered cars.

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