Car manufacturers are giving patents away for free – why?

Electric car parking

Tesla Motors created ripples on the patent landscape when its CEO, Elon Musk, announced on his blog that he was making its patent portfolio available for use free of charge.

In what was certainly a dramatic move from a company that is no stranger to patent litigation, he stated that the car company would not enforce its patents relating to electric vehicle technology against anyone who wanted to use it.

Toyota then followed suit, announcing that it would be making its impressive portfolio of 5,650 patents relating to hydrogen fuel-cell cars royalty free until 2020.


Patents are rights in technological inventions. A patent enables its owner to exclude others from being able to use the patented technology. Both Tesla and Toyota have spent significant resources on acquiring patent protection for their inventions.

However, the companies have taken the rather unusual step of allowing free use of their patent portfolios in a bid to open up the market to wider adoption of their technologies. For Tesla the hope is that other car manufacturers will use the technology to produce electric cars to grow the market. This should help to improve the general interest in electric cars and also to improve the charging station infrastructure needed to run the cars.

Tesla sees conventional petrol and diesel cars (which still dominate the car production market by more than 99 per cent) as their competition, not other electric car manufacturers. In fact, some have suggested that Tesla aims to provide batteries to other electric car manufacturers and to become the world’s largest battery producer.

Toyota has an additional motivation, stemming partly from the lessons it has learned from the obstacles facing early electric cars: without suitable refuelling stations, hydrogen-powered cars cannot hope to enter the market as a feasible alternative. Indeed, while most of the patents will be available for use royalty free until 2020, about 70 patents for installing and operating hydrogen fuelling stations will be available indefinitely.

Additionally, the portfolio covers fuel-cell stacks, high-pressure hydrogen tanks, software control systems and the industrial processes involved in generating and supplying the gas. Toyota hopes that this will help to further refine new fuel-cell components to increase performance, reduce costs, and attract a broader market of buyers.

Can literally anyone use them?

Well, not quite. Naturally, having spent considerable resources on acquisition of the patents, the companies want to retain some form of control over the direction of subsequent development.

Toyota confirmed that there will be an application process to check what the technology will be used for and then a royalty-free licence will be issued.

Tesla’s brief blog statement was less specific, but included the caveat that the use of the technology must be ‘in good faith’. In this way, the companies can ensure that the technology is not used for commercially detrimental purposes or for morally uncertain purposes, which could include, for example, military applications.

Are patents still worthwhile?

With these car makers having spent the resources on building impressive patent portfolios, only to then grant royalty-free licenses, it is fair to ask whether it is worth obtaining patent protection in the first place.

The answer is yes, absolutely. There were reports that, shortly after the announcement, both Nissan and BMW were in talks with Tesla. Without the patent portfolio to become the frontrunner in electric car battery technology in the first place, Tesla would not have had the bargaining power it now has to encourage development of its chosen market.

Catharina Waller is a trade mark and patent attorney at Bates Wells Braithwaite