Should every CEO follow Elon Musk's example of making Tesla patents free to all?

Probably not, but Musk's gesture, which included taking down the framed patent awards from Tesla's lobby, could force a debate about a contentious issue in Silicon Valley.

On Tesla's website, where Musk posted a blog, and on Twitter, people called the Tesla CEO a "hero" and heralded the move as a sign that there is a new culture in Silicon Valley about patents. On the day of the announcement, I'm told, one in-house corporate counsel at a tech firm heard from dozens of employees asking why the company couldn't do the same.

Patent fights have long been a tech industry staple, often part of the maturation process for startups. Once a company starts to get some success in a competitive market, presto, it is sued over patent infringement. Companies learn that they need a patent treasure chest of their own to fight back. The skirmish is settled with a cross-licensing agreement.

But anger toward the patent system has been rising in recent years because it isn't just the big guns in a slugfest anymore. Lawyers representing patent-holding firms have besieged startups with accusations of patent infringement. The startups and their venture backers are often faced with paying to avoid legal action.


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In fact, more than $20 billion in venture capital investments would have likely been made in the past five years "but for (patent) litigation brought by frequent litigators," according to a recent study by a professor of marketing at the MIT Sloan School of Management and funded by the Computers and Communication Industry Association, a tech policy group.

"There is enormous frustration with the patent system among engineers in the valley, especially in IT, but as Tesla indicates even in manufacturing," said Mark Lemley, a law professor at Stanford.

Tesla is not the first to try to push back on the valley's reigning patent culture. Tech firms joined together to fight for patent reform, but it failed in the Senate.

Meanwhile, companies have tried to position themselves as good on patent issues. Twitter has an "Innovator's Patent Agreement," which states that Twitter will use patents mostly for defensive purposes and won't use them offensively unless it has the permission of the innovator.

Google has its "Open Patent Non-Assertion Pledge," promising not to sue developers, distributors and users of open source software who take advantage of a subset of Google's patents, unless Google is attacked first. Other companies, such as Red Hat, IBM and Microsoft, have made their own pledges.

None of these promises have been tested in court, but that doesn't matter. This is about perception. For example, being seen as "good" about patents may help with recruiting.

"This is a pressure cooker that has been cooking for awhile," said Jason Schultz, an associate law professor at New York University, who created an open source license for patents. "Tesla says it will use its patents for defense, not offense, and that's the line between the good guys and bad guys. I think Tesla's move will increase the pressure on other companies to make a commitment. Every engineer and employee in a tech company should ask their company if you will make the same commitment."

The answer may be no and for good reason. Typically a company's position on patents has to do with the firm's business model and market opportunity. At the time of Musk's announcement, analysts pointed out that Tesla was trying to expand the electric vehicle market, which could benefit Tesla if its platform is widely adopted. That's a bigger goal than fighting over Tesla's intellectual property.

But not every company faces the same strategic calculus as Tesla. "One of a firm's important assets is patents and differentiating itself," said Thilo Koslowski, an analyst at Gartner.

Also, a "no first strike" strategy won't work for all companies, said Robert Barr, executive director of the Berkeley Center for Law and Technology and former vice president for intellectual property and worldwide patent counsel at Cisco.

"The most common circumstance would be if the company's business goes bad, in which case they may want to monetize their patents."

Musk's move turns up the heat on every CEO in Silicon Valley to ask about the point of the firm's patent portfolio. It may be hard to bring down the patents from the headquarters' lobby, but companies should ask themselves what they want their patents for.

Contact Michelle Quinn at 510-394-4196 and mquinn@mercurynews.com. Follow her at Twitter.com/michellequinn.