Thanks Elon Musk For Being A Real Leader On Patent Reform

Fred Wilson beat me to it this morning with his post A Big Win For The Patent Reform Movement but he’s got a couple of hour time zone advantage over me. Regardless, I love Fred’s punch line:

So it was with incredible joy that I read these words by Elon Musk, founder and CEO of Tesla Motors and possibly the most innovative entrepreneur in the world right now. [Elon wrote in his post All Our Patent Are Belong To You] “Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They have been removed, in the spirit of the open source movement, for the advancement of electric vehicle technology.”

I’ll pile on with my accolades to Elon. While I don’t know him, I’m long time friends with his brother Kimbal who lives in Boulder so I always feel like I get a little taste of Elon whenever I talk to Kimbal. So – Elon – thank you for being a real leader here and taking action.

I’ve been asserting for a number of years that while software patents are completely fucked up, the general patent system stifles innovation. More and more research is appearing on software patent issues and patent trolls in general, including this recent piece by Catherine Tucker, an MIT Sloan professor of Marketing, titled The Effect of Patent Litigation and Patent Assertion Entities on Entrepreneurial Activity. As Ars Technica summarizes in New study suggests patent trolls really are killing startups:

Turns out there is a very real, and very negative, correlation between patent troll lawsuits and the venture capital funding that startups rely on. A just-released study by Catherine Tucker, a professor of marketing at MIT’s Sloan School of Business, finds that over the last five years, VC investment “would have likely been $21.772 billion higher… but for litigation brought by frequent litigators.”

As my lawyer friends tell me, “the Supremes” are finally making some calls on this. The induced infringement theory, a particularly obnoxious patent litigation approach, is no longer valid. The main event, Alice Corp. v. CLS Bank, is still waiting to be ruled on. Let’s hope the Supremes take a real stand on when software claims are too abstract to be patented this time around, unlike the punt they made on Bilski.

  • Really great news. There’s been this really nasty dynamic the past few years where, as startups struggle with patent trolls (like you mention), some of the absolute worst behavior we see has come from the supposed ‘leaders’ of the tech space. Not to name any names or anything. *cough*
    Hopefully this announcement puts Tesla squarely into the category of inspirational, recognized tech leadership along with Apple Google and co.

  • Paul Self

    I am very confused.

    Brad’s blog and the rest of the investor/VC community think this is the “right thing to do”. That the open source movement is the better approach. BTW, I agree. Innovation is very stifled by some of the patents out there. Especially Apple’s approach to patents.

    BUT on the other hand, every VC, Angel, PEG practically demand a strong IP position. Every investor pitch I have given or watched force this issue.

    So, WTF! The investment world seems to be speaking out of both sides of their mouth.

    • I’m a VC and I couldn’t care less whether you have patents. They never factor into my investment decision.

      • Paul Self

        I hope this perspective is infectious. The time and money spent on patents is better spent on product development and customer acquisition. The entire IP process slows down the speed to market for a nimble company like ours.


    The idea of giving an inventor the opportunity to make money from their invention is needed. Taking that out of the US legal system is a HUGE mistake!!!
    That being said… Handling it the right way is also needed. What we all dislike, if I can speak for everyone, is stifling innovation. Telling someone they are assured that no one can steal their invention helps promote innovation. BECAUSE… Many times people *must* invest huge dollars to “bring the invention to life.” To make that attractive you must provide some way to help them recoup that money and make some profit to they can invent something else in the future. As we all know FU money sets *true creators* free to create even better things!

  • JohnLElkins

    More and more research is appearing on software patent issues and patent trolls in general, including this recent piece by Catherine Tucker, an MIT Sloan professor of Marketing, titled The Effect of Patent Litigation and Patent Assertion Entities on Entrepreneurial Activity.

  • brianassam

    What about the little guy who spends a good decade of his life (and all his financial resources) discovering a novel solution to a really complex problem, and all along he realizes his (foreseeable) competition are the giants in the industry. Isn’t the first thing he should do is to protect his technology through patents? especially since he knows that 1) he is ahead of the curve, and 2) that seeding a novel technology in a flooded market is going to be exponentially difficult?

    Don’t patents play into strategy if a really small start-up views their path to accelerating their product to market through eventual collaboration or partnerships with a similar companies? or when they know their path is going to be extremely difficult because they are pushing something that is completely new and different?

    I think there is a huge difference between protecting the inventor and patent trolls. The inventor should have a way of being protected and valued for their novel contributions, especially if their invention(s) solve complex social problems.

    • If you are patenting software or a business process, I don’t believe the patent should be valid.

      If it’s something else, that’s fine. But you need to be a practicing entity – that is, creating a product from your invention.

      And, as Elon demonstrates, in many situations, the patents aren’t the differentiator, especially in situations where incumbents are very slow moving around innovation.

      • brianassam

        What’s the difference if the patent improves the functionality of an electric car or if it improves the functionality of socializing the Web? I totally agree that patents should be supported by a functioning entity and inventors shouldn’t have control over something they are not practicing or trying to market, but as a system and a method that improves upon per-existing technology, and is unique to all other per-existing technologies, how can we consider it invalid… just because its not made of matter?

        Ideas, whether they are put into hardware or software, are still ideas. Ideas are, and always will be, the source of intellectual property rights. The USPTO does a good job of ensuring that these ideas are 1) unique and improve upon existing art, and 2) put into practice before they are considered valid.

        If the little guy with “the big idea” isn’t protected then he has no chance against the the larger corporations, who can put 1000 times the resources into an inferior product that might make the little guy’s product obsolete, even if it is a better product.

        Also, I’d have to assume that Elon Musk would have a different opinion on patents if he was still
        in early stages of development and had yet to seed his product or had yet to see success with other ventures. After all, Nicholas Tesla (the namesake of Elon’s electric car) never had much outside/market support of his ideas. He was a true genius and inventor that was ahead of his time, had little support, and this killed his ability to market his own inventions and see the rewards of his accomplishments. He died a forgotten man (at the time) and the only reason “Tesla” is a household name is because of the multitude of software patents that he authored.

        • 1. You can’t patent an idea. You can only patent the expression of an idea.
          2. I disagree with you that the “USPTO does a good job of ensuring that these ideas are 1) unique and improve upon existing art, and 2) put into practice before they are considered valid.” There is a huge amount of quantitative as well as qualitative data that contracts your assertion.

          • brianassam

            Maybe in the past yes, but I’ve been through the process 3 times in the last 3 years and from personal experience it totally does.

            Software patents is an emerging/evolving subject that patent reform can improve upon. I will re-iterate that it should come down to the level of intent/use, and not to the level of the inventor. This would be a clear cut solution that would still support innovation and novelty.

          • brianassam

            Please look at it from the perspective of a guy who spent 15 years of his life trying to create a novel solution to a highly complex problem; who sacrificed all his resources, time, and all affiliations in order to focus specifically on this problem. And who also knew, all along, that this would be the hardest product to market given the complexity of what this product solves.

            What other protection is there?

            Also, I’ll open source my product and I.P. in a heartbeat once it reaches the market. So it’s absolutely not a matter of control, its a matter of protecting novelty until it reaches market.

          • I’d obviously have to know more about what you’ve done to have an opinion. So I guess I’ll have to wait until it’s on the market!

          • PatentGeek

            As Brad points out, ideas are not patentable; only truly inventive ideas are patentable. That’s fair, it means you can’t, at least in theory, patent science fiction … you can’t patent, for example, the concept of fusion power, but you could patent, if you can figure it out, an “enablement” of the concept … an actual process through which fusion power could be generated.

            The problem with software patents is that they are essentially patenting ideas … you take the idea and then take 10,000 words to say “and we’ll do it with a computer,” and the Patent Office then accepts that as an invention. However, most software patents don’t contain “enablement” … that is, they really don’t say how to carry out the process; rather, they just paste together a bunch of mumbo jumbo about servers and networks and this and that. But more importantly, software patents generally don’t *require* enablement. That is, if you simply tell a “person skilled in the art” the idea behind the patent, he can build the system without needing you to explain how to do it, a sure sign that it’s merely an idea, not truly inventive.

            There’s a patent on the idea of putting pins on a map in a Web page to show store locations, for example, a patent that should have been invalidated by the Courts because it totally lacks “enablement,” but also a patent that doesn’t require enablement; any decent programmer could do it without needing a patent to explain to him how to do it.

            As the Supreme Court said, back in 1883:

            “It was never the object of those laws to grant a monopoly for every trifling device, every shadow of a shade of an idea, which would naturally and spontaneously occur to any skilled mechanic or operator in the ordinary progress of manufactures. Such an indiscriminate creation of exclusive privileges tends rather to obstruct than to stimulate invention. It creates a class of speculative schemers who make it their business to watch the advancing wave of improvement, and gather its foam in the form of patented monopolies, which enable them to lay a heavy tax upon the industry of the country, without contributing anything to the real advancement of the arts. It embarrasses the honest pursuit of business with fears and apprehensions of concealed liens and unknown liabilities to lawsuits and vexatious accountings for profits made in good faith.”

            And yet that’s what the Patent Office is doing, issuing patents on “shadows of a shade of ideas.”

            BTW, the Supreme Court has also stated quite clearly that the problem is the Patent Office acting unconstitutionally. Back in 1950 it stated…

            “The attempts through the years to get a broader, looser conception of patents than the Constitution contemplates have been persistent. The Patent Office, like most administrative agencies, has looked with favor on the opportunity which the exercise of discretion affords to expand its own jurisdiction. And so it has placed a host of gadgets under the armour of patents – gadgets that obviously have had no place in the constitutional scheme of advancing scientific knowledge. A few that have reached this Court show the pressure to extend monopoly to the simplest of devices.”

            Until the big tech companies band together to sue the Patent Office for issuing these unconstitutional patents, the problems won’t end.

          • brianassam

            Thanks PatentGeek for your thorough input.

            I wasn’t stating that all ideas should be patentable. I was stating that all patents arise through ideas, and I totally agree that ideas, that are eventually patentable, should be inventive and provide, what you call, “enablement.”

            I think the point is clear. Patent reform should focus on the legitimacy and use of software patents. However, software patents, in general, should not be considered invalid. In a proprietary based economy the end results of invalidating all software patents would be detrimental to innovation and novelty. It would be like throwing out the baby with the bathwater. No bueno.

        • brianassam

          IMO, patent reform shouldn’t come down to the level of the inventor, it should come down to the level of intent/use. Wouldn’t this address patent trolling all together?

          • It would likely address some of it.

        • This is fascinating and seems to resonate with the “execution is more important than IP” mantra we see across Startup Weekends, hackathons, etc. As well as a Millennial generation that puts collaboration, sharing, etc at the heart of its core values.

          And if the average wait time for patent approval is 3 years (a lifetime in the tech world) how meaningful is that approval at the end of the day?

          Has involvement of StackExchange and others in the equation helped ameliorate any of the trolling for legitimate patent proposers?

        • > If the little guy with “the big idea” isn’t protected then he has no chance against the the larger corporations, who can put 1000 times the resources into an inferior product that might make the little guy’s product obsolete, even if it is a better product.

          Quite honestly this will be the case regardless of whether you hold a patent to the invention. There’s a thousand ways a determined large company can crush you, including, ironically, via the patent system.

          • This is true. It’s a fun system we live in isn’t it.

  • Tom Hochstatter

    Brad, thanks for amplifying Elon’s leading position on innovation and patents – there is still much to do on many fronts. My firm, idealAsset, is attempting to level out the patent and IP marketplace by offering an alternative to all inventors/patent holders to efficiently find and transact their IP. We provide a hyper fast and efficient method to match buyers/sellers to one another.

    Patent Trolls and courts are the “marketplace of only resort” for far too many patent holders. Once we make things more liquid and transparent will mature markets and (market) participants emerge to provide the grease and not the glue.

    As a 25 year vet of Enterprise S/W and start-ups (and patents) – it escapes me why their isn’t more innovation in the innovation industry.
    – Tom Hochstatter

  • PatentGeek

    The Supreme Court did more than just make “induced infringement” a harder argument to make. It also told the lower courts that they need to be invalidating patents that are clearly “indefinite.”

    The Federal Circuit–the Courts that handle patent cases–should simply be invalidating patents that don’t make sense, or are unclear.There are plenty of software patents that don’t seem to make any sense, but the courts like to “explain” patents through a process called “construction.” If some statements in the patent are “indefinite,” the Court says, “don’t worry, here’s what it all means.”

    The courts never had the right to do this, but nevertheless they do … but now the Supreme Court is upping the standard, saying essentially that if the patent is unclear–is indefinite–tough luck, it’s not a valid patent. You don’t get to revive a confusing, badly written patent by having a bunch of attorneys and a judge decide what it means. This will make it much easier for Defendants to invalidate patents. Many software patents are intentionally vague, in fact, so they can be broad enough to create a wide range of potential litigation targets.