Comments for Open-source to the rescue: innovative ways of dealing with the carbon crisis

First off, it is crucial to note that, when it comes to Tesla, releasing patents to the public represent a huge Public Relation move, and it desperately need this kind of publicity to stay afloat. Its financial performances have been increasingly disastrous, not a single year resulting in a positive net income since it started commercialization ( with a 620 millions net loss so far in 2017).
When it comes to Toyota, giving away patents right is an act that reaffirm its commitment to be the leader of the « green » vehicles market. Being in much better financial health than Tesla, Toyota only need to keep its place at the top while Tesla crumble under the weight of its unattained financial promises.

It is also important to note that the technologies released to the public are strictly limited, and do not endanger in the immediate future the dominant position of Tesla or Toyota. Both companies carefully chose which advantages they could afford to lose, in an effort to minimize any unforeseen consequences.
Moreover, in the electrical vehicles industry, these two companies already have a sizeable share of the market, at least when it comes to brand name. Releasing highly specialized patents to the public doesn’t pose such a threat when the eventual competitors (Renault, Honda…) have not yet reached a menacing position.
We can expect a strict control over which patents are released. However, depending on the response from consumers, sharing patents or not patenting at all may become a widely adopted attitude across multiple industries if the popularity obtained by this practice outweigh its cost. It all comes down to how effective this action is, and how receptive the general population end up.

Finally, we can admit that brands would gain a lot of positive attention if consumers were convinced that their goal is to improve society and that they are not driven by greed. Coincidentally, society would certainly benefit from the end of excessive and abusive patent practices.

Even though there exist solid economic reasons behind Toyota’s and Tesla’s decision to share their patent, we can’t but applause and encourage such behaviors. It is no secret that on the opposite, some companies buy patents having the potential to improve the protection of our planet and ourselves and keep it secret while not even using them. Oil companies started using this strategy in the 1960’s by buying fuel cell patents that could have been used to reduce the carbon dioxide and never stopped ever since. ExxonMobil even led a disinformation campaign aimed at discrediting scientists to dissuade the governments from fighting the pollution and stopping the climate change. The pollution increased in a dramatically way only to profit to some people and companies already rich. Bypassing the use of those blocked patents to create a new eco-friendly car requires the best scientists and engineers and huge resources to secure the new discovered patents from being bought by companies only thinking about their wealth instead of humanity. Only other big companies or a worldwide law requiring the companies to actually make use of bought patents could fight against those devilish giants and we can only hope that as much as dangerous was the patent blocking vicious circle, this free knowledge will be as virtuous. The next step is now the reaction of the other companies using those patents and the reaction of the laws around the world. Just by making those public patents free of charges, countries could slightly encourage the movement and speed up the potential snowball effect. A more direct way of helping the electric car would be of course to build charging stations for those cars or at least to help them in their project.

If on the counterpart, if the other companies decide to go rogue and use the patents without trying to improve the world or to give something back, the virtuous circle could never start. It is a bold move and if the electric car doesn’t become a standard in a near future, Tesla and Toyota could have lost a lot of resources AND the patents. Each and everyone will also have a role to play in our future. Despite the purchasing power being relatively low and the other ( sometimes polluting ) temptations, people will have to invest in electric cars and the first ones have today to deal with a small charging station network. On that side, governments, namely in Belgium, did their part of the job by encouraging people to buy electric cars by means of tax relative to CO2 emissions but could go further. The probability of success of the electric car is high but what remains uncertain is the capacity of those cars and the adoption rate and speed. No doubt that Tesla’s and Toyota’s decisions will speed up everything but oil companies probably won’t resign so easily in their war against other forms of energy.

https://www.theguardian.com/business/2016/may/20/oil-company-records-exxon-co2-emission-reduction-patents

This article analysed Tesla and Toyota’s rendering their patented technology as open source in a very multifaceted approach. On the surface, these companies are providing a huge service for the longevity of our planet by making their tech open source. This should theoretically speed up the adoption of carbon neutral transportation, and these patents may also be applied to other areas of innovation outside of the scope of these two companies which would undoubtedly benefit society. What I found to be most interesting while reading this article, and was pleased that it was addressed near the end, is that Tesla and Toyota’s decision to make their patents open source, goes beyond an altruistic desire to “save the world”, and is most likely a strategy to ensure that their particular fuel source reaches critical mass before the other.

The future of transportation no longer belongs to fossil fuels and the internal combustion engine, but rather to one of many alternative fuel technologies that are currently battling it out to become the standard. One of the main reasons the internal combustion engine has had such staying power is that there is a great deal of infrastructure such as gas stations and oil pipelines, which prop up a relatively archaic technology. Infrastructure will also be key for any one type of alternative fuel source reaching critical mass, whether it is hydrogen, batteries or another yet to be discovered. Tesla has a lot more to lose should hydrogen become the standard, as they have exclusively invested in lithium batteries, while Toyota could pivot more easily. This I would argue is why they have been the most aggressive in launching a charging network and open sourcing their patents. Tesla needs batteries to succeed in order for the firm to survive. I would also argue Toyota’s move to make their hydrogen patents open source was reactionary to Tesla’s strategy, and that we may be seeing more similarities between the two firms’ strategy in the coming years. Currently hydrogen fuel cells lack the same reach in both their media coverage, sales and infrastructure that Tesla has with their battery technology.

Ultimately the “format war” over our move to clean energy may not be won by the best technology, as hydrogen is known to be more efficient in terms of millage, and less resource intensive than the production (and disposal) of lithium batteries. Open source might be what comes to the planet’s rescue, however it is also a useful tactic in a race to reach critical mass in which the victor may be an imperfect solution.

Sources:

http://www.businessinsider.com/why-hydrogen-powered-cars-are-better-2016-1

http://cleanedge.com/views/Tesla-Toyota-and-Open-Patents-The-Hype-and-the-Hope

This three-parts article gives a very good insight of how open innovation is being used in business and more specifically how it is being used to address societal problems such as Global warming. The case of the automotive industry has been widely discussed, and presents the somewhat uncommon strategic moves that Tesla and Toyota are taking. They seem to be quite new in the automotive industry but Open Source is becoming a norm in software companies. Indeed, many characteristics of software we use every day are the product of open source innovation (for example instant messaging technology was made available by Twitter) [1].
In this comment, I would like to discuss the perspectives for the future of Open source in the automotive industry, based on the experience in Open Source Software. This should allow us to foresee what the industry may look like if Open Source becomes business as usual.

First, it is important to say that Elon Musk seems to be a pioneer in the industry and therefore it may look like a one-way transaction. However, Open Source is mainly about building networks. So even though retribution of Tesla’s CEO actions will come in the ways presented in the article above, later in time they will also be able to benefit from the contribution of other people in the network who will be able to build upon what they Tesla had already made, or even solve problems that remained unsolved internally. This way of approaching technological solutions should accelerate the pace at which innovation happens, thus leading to a fast-moving industry. Instead of waiting 20 years to have an electric car we would see an evolution of the technological solutions allowing us to get even more efficient autos. Just look at the software evolution and all the possibilities it gives to its users. This becomes even more interesting from a welfare point of view if industries that have impact on the environment can find innovative solutions fast enough.

The implications of this change in business practices are different, an article from the Technology Innovation Management Review presents its conclusions from the implementation of Open Source Software, which may apply to any other industry [2]. Firstly, these practices emphasize the social interactions with the users and to open to external contributions for innovation. As we mentioned before the pool of knowledge to solve problems will become larger and solutions will therefore be more easily accessible. Secondly, the revenue models of companies will need to change. Businesses will compete in the way they offer a technology, allowing them to focus on service-oriented offerings. They will no longer have a competitive advantage just because they own a technology. It will undoubtedly urge companies to find their competitive advantage in other fields, such as Business Model Innovation: be it the target customers, or how they provide a given technology. This could benefit companies (because the complementary goods will be available, as said in the article) and the market, the size of the market size will increase and not divided into ever smaller slices. In the case of Tesla: they address a luxurious market segment, but a company using their technology without R&D costs would be able to address a low-end market segment, making the technology available to more people.

Will it be possible in that industry? For the reasons cited in the article the benefits might overweight the costs of going outsource, but more than an objective decision I think that a paradigm needs to be changed. This benefit needs to be perceived by CEOs. And Elon Musk looks like a pioneer in his industry, now that the first step has been made it remains to other companies to follow the move. If at some point Open Source becomes common ground, the companies not using it could be struggling to keep up with the pace of a fast-moving industry. Nevertheless, awareness of the possibility of doing business differently remains to be built. And it will be a challenging shift to make in managers’ minds. It is important to point out that some are talking about an Open Innovation renaissance in the manufacturing industries, an article in the magazine The Manufacturer mentions the actions NASA is conducting in this field. Even though they are doing it through challenges in partnership with the company InnoCentive, it clearly is a sign that the benefits of Open Innovation are being acknowledged.

In the specific case of joining forces to solve a societal problem, such as Global Warming, Open Innovation seems to be a tool to accelerate the pace at which we are looking for solutions. It is encouraging to know that this way of doing business could be adopted by industries like the automotive one without affecting companies’ profitability.

[1] http://www.huffingtonpost.com/fred-simon/the-future-of-open-source_b_5479678.html
[2] https://timreview.ca/article/510
[3] http://www.themanufacturer.com/articles/manufacturing-the-open-innovation-renaissance/

Climate change represents real issues for our society. Governments and companies cannot deny it. Since 1994, governments gather each year during the “COP” (Conference Of Parties) to tackle the environmental issues. One month ago, in Marrakech, the COP 22 took place and as a conclusion of this international conference, legal authorities specified new objectives to shrink the global warming (3).

However, according to me, more should be done in terms of actions to mitigate the climate change.
In the automotive sector, in 2014, Tesla Motors (electric cars’ manufacturer) was the pioneer of the IP-sharing with royalty-free access regarding green technologies. Toyota followed the move few months later. According to me, Tesla’s CEO, Elon Musk permitted dramatic improvements in the manner to do business. Thanks to this collaborative initiative, IP are not considered as a source of competitive advantage anymore (4). Even if the open IP practices are not entirely motivated by pure philanthropic reasons, I believe that the most important is the fact that they globally benefit the collectivity by slowing down the sustainability issues. Indeed, making the eco-friendly patents accessible to everyone for free is a good tactic to mitigate the greenhouse gas effects.

Personally, I think companies should take this “open-sourced” approach into account while doing business. It has been clearly shown in this article that in the long run, the benefits acquired by companies overcome their “loss” (cost to maintain the patents alive and also the risk to reduce the advantages related to product’s differentiation). The enterprises that opt for this strategy benefit from specific gains which are not the case while they act in a non-altruist way. Definitely, besides the clear advantages that these collaborative initiatives offer to the well-being of the community, companies enjoy tremendous strategic benefits. As explained in this article, the barriers to use green technologies are now removed. Then, it can be said that open patent licenses boost the clear innovation (2). In addition, companies are willing to show a green image of themselves which is really appreciated by potential consumers. They also want to attract qualified people to work for them and to keep the talented employees.

Other industries are using the open-sourced patents. In 2008, the Eco-Patent Commons were created by multinationals of various disciplines in order to foster the development of green technologies (1). Every actor in the industrial sector is concerned by the carbon crisis and should find solutions to avoid worsen the current catastrophic situation (5).

To conclude, in my point of view, companies’ CEOs cannot close their eyes anymore and they should introduce a new way to do business. I strongly believe that sharing green patents is the solution to overcome environmental issues. Moreover, I want to underline the fact that preserving the environment is not an option anymore but it is undeniably a real challenge in which everybody should participate.

References:
(1)Bowman, J. (2009). Eco-Patent Commons : pour un partage de brevets écoresponsables. Retrieved from http://www.wipo.int/wipo_magazine/fr/2009/03/article_0004.html, consulted on 20th of December 2016.

(2) Bronwyn, H. & Helmers, C. (2013). Innovation and diffusion of clean/green technology: Can patent commons help?. Journal of environmental economics and management, 66, 33-51.

(3) Marrakech COP22, UN climate change conference. (2015). The challenges of COP22. Retrieved from http://cop22.ma/en/#whatscop/post/161, consulted on 20th of December 2016.

(4) Masnick, M. (2015). Elon Musk Clarifies That Tesla’s Patents Really Are Free; Investor Absolutely Freaks Out. Retrieved from https://www.techdirt.com/articles/20150217/06182930052/elon-musk-clarifies-that-teslas-patents-really-are-free-investor-absolutely-freaks-out.shtml , consulted on 20th of December 2016.

As the topic about Open Innovation (OI) is already well developed in the three articles of this series, I wanted to focused on (Tesla) Elon Musk’s real intention behind realizing his patent. We have already talked about Musk’s environmental concerns. Even if it could seem to be a great step towards less Carbon emission (and it is !), the first interest of Tesla is to extend its market.

First of all, this act will have marketing-related benefits. This is one of the six reasons to reveal patents, according to Henkel, Schöberl & Alexy (2014). Indeed, Tesla was already known to be a pioneer – among other innovations – in green cars, now it will be perceived as even more sustainable by the public. This is linked to a second incentive to release by Henkel & al. (2014): the customer pressure.

However, beyond the marketing aspect, this Open Innovation has other advantages for the Silicon Valley-based company. Indeed, more and more car makers are going to implement patents of this latter. There is then a trial to see the lithium-battery become a standard in the automotive industry. This would – in fine – lead to more charging station and so more car sales for Tesla.

Next to this, the release of the “Model 3” by Tesla has seen pre-sales skyrocketing [1]. This incredible performance will already conduct Tesla to use the equivalent of six graphite mine [2]. To meet the demand, Tesla is building its “Gigafactory” where Elon Musk is planning to produce his batterie [3][4]. This will give him the ability to stay several steps ahead of his competitors and will allow him to control graphite mines demand. Open Innovation a first step to save the environment? Well done Mr. Musk.

[1] http://finfeed.com/features/tesla-model-3-splashes-make-waves-graphite-lithium/20160406/
[2] https://www.linkedin.com/pulse/20140617180553-63432340-elon-musk-is-brilliant-why-he-chose-to-release-the-patents-to-tesla
[3] http://benchmarkminerals.com/Blog/tesla-will-need-a-lot-of-graphite-lithium-but-china-will-need-more/
[4] http://insideevs.com/tesla-use-north-american-resources-planned-gigafactory/
Henkel, J., Schöberl, S., & Alexy, O. (2014). The emergence of openness: How and why firms adopt selective revealing in open innovation. Research Policy, 43(5), 879-890.

Open source has brought some tremendous change in the economic worlds.
One of this changes is coopetition. Who could have guessed, years ago, that Microsoft would join the Linux foundation and Google join Microsoft? These companies have been fierce rival for decades, and they are now shaking hands. Open source made them change their business model. The days were companies lived inside their proprietary stack are gone and have let place to interoperability. So, would be one of the most actual popular business model in the tech industry a mix between partnerships and open source?
Company gives in open source only their differentiation innovation. They are not gonna leave their core business freely. Putting your innovation in open source has multiple advantages.
Qualitatively, it leads to cleaner software’s. The code is in public view, so it will be exposed to extreme scrutiny, problems will be found and fixed instead of being kept secret and hiding.
From a productive point of view, it allows a great business acceleration. Companies doesn’t have to hire new coders, they come by themselves. Another good point is that it leads to standardized practices, who are easier to understand and to implement. It is also a way to customize your findings.
Moreover, strategically it is a factor that motivates your workforce. It attracts talents and the standardized practices lead to commodity infrastructure.
Nowadays they are a lot of business model based on open source.
The community edition is a model where companies build a product that is release as open source. The installation and support is left to the community. Like this, companies spare a lot of money on maintenance costs.
The freemium model is a model based on upgradable free product. The base product is free, but if you want more functionalities or to remove ads, you have to pay to access the premium product. One example of these business models is Odoo. The company propose OpenERP. You have a free downloadable community edition, a per-user enterprise edition and a hosted edition. This approach allows Odoo to reach most of his potential consumers.
One last business model is the add-on system. The base product is free to download. But you have a lot of useful add-ons that are payable thereafter.
To conclude, open source leads to new business models. They have advantages, both for companies and customers. But even if open source sounds like free access, it is always a new way for companies to make money.

Sources:
http://www.zdnet.com/article/how-do-linux-and-open-source-companies-make-money-from-free-software/
https://opensource.org/osforbusiness
https://techcrunch.com/2016/11/17/strange-days-indeed-2/
https://opensource.com/article/16/11/november-18-daily-news

The open-source concept is starting to be more and more present in people’s minds when you talk about innovation and efficiency. It’s quite common to think that this way to proceed only brings advantages but you have to take more than just the basic argument that if everyone focus on the same project, it is more efficient.

Also called open patent movement, this indeed, is a way to put all chances in our side. The innovation that will born from this kind of venture have the key ingredients to be a success story: every interested firm will have the right to use an already existent technology for free, will not have to lose time in some kind of research and development process, the project have more chances to be ‘’globalised’’ because of the fact that companies have more chance to use the same technology, … It’s clearly written on the Tesla’s official website that a main purpose of the ‘’ All Our Patent Are Belong To You’’ idea is to accelerate the rise of the sustainable/green transports. With all these important patents available for any firm, Tesla reduces the threat of patent lawsuits (also encourage ‘’shy’’ companies), makes all his work useful (all the spent money for the R&D process doesn’t have to be spent again by another one) and makes himself more attractive (green and nice image, attract workers that are regardful at ethic, …). A wise example to illustrate the fact that a gathering of all the knowledge is crucial for the innovation success is the story behind the development of the Bluetooth system. In the interests of efficiency, five big firms (at least at this time) from the electronic industry created a groupwork with the aim of a facilitated development of a low energy consumption communication system. Nokia, IBM, Intel, Ericsson and Toshiba created the Bluetooth Special Interest Group with a gathering of all the knowledge and resources of these powerful companies. The consequence is interesting because it permitted to build up a now daily used technology in a short time and allows now more than 20000 companies to use this technology.

The last thing important to point out in my opinion, is the economic aspect of open patents. The liberation of patents implicates the loss of the power and the owner’s right on a finding so it also means the loss of a huge part of the possible economic benefits. Indeed, you don’t have the monopoly anymore so the licensing of your innovation is not possible. It’s dangerous for some firms because it doesn’t allow you to make profits while you’ve invest resources in the R&D of your project. It makes the process not profitable for you! Here Tesla industry is big enough to support this loss, they feel that the economic gains will be more profitable later with the freeing of their patents. How? Because if loads of firms based their own works on technologies quite close from Tesla’s technologies (using their patents), it seems that products bought by Tesla will know a huge increase in terms of sales or production (i.e. increase in the number of superchargers, 4749 now). A lot of new products will be interested in the use of Tesla’s already ready-to-use infrastructures.

To conclude, a topic that I really care for is the environment. The Eco-Patent Commons provides a unique opportunity for business to share innovation that can foster sustainable development. Behind this great idea, you can’t even think about any drawbacks. The future is now and our situation is critical, gathering all the patents and free them is the best way to enhance our production systems and our ‘’green attitude’’ as quick as possible. Well done WBCSD, well done.

Sources :
https://ecopatentcommons.org/
http://fortune.com/2014/06/13/the-one-asterisk-on-teslas-patent-giveaway/
https://fr.wikipedia.org/wiki/Bluetooth_Special_Interest_Group
https://www.bluetooth.com/membership-working-groups/volunteer-with-the-sig
https://www.tesla.com/fr_BE/supercharger?redirect=no

Open source is definitely an interesting concept, for many good reasons that I described briefly here under. But it can also have a very cleaver mercantile aspect that is used by many large companies.

On the good reasons side, the first one is probably the ability to access complex technology on a free basis. This can benefit individuals or enterprises. For example, reporting or accounting applications are now in many instances open source.

On the same side, open source concept allows to attract many cleaver developers pushing the technology further and faster on a free basis without any mercantile purposes. In such a way, complex developments giving birth to really good applications can be achieved, applications that would have never been created, would a financial constraint had been applied up front.

On the other side, I agree with the article that companies very often use the concept of open source to open a market, to create a need, to generate attractiveness. So, the basis “model” is offered free of charge, but as soon as additional functions are required, an enterprise chargeable license is demanded. Firms use therefore open source as a powerful tool for advertising and for promoting their branding, but once you are trapped, you quickly have to pay and open source just become a business model.

For instance, Tesla Company has an idea behind this open source shift. It will definitely benefit them more than it will cost. It is impossible for Tesla to support all the charges of the electric cars technology implementation in the world. Tesla needs to share costs with other firms and direct competitors with the goal to involve them into this growing market and to force them to spend money on all dependent technologies linked to electric cars like Surpercharge electric pumps. Consequently, Elon Musk is creating a virtuous circle in where he is perfectly positioned at the center.

Another example would be virtual reality technology. A major part of this technology today is oriented towards open source to accelerate the development. But when we looked into it in depth, it’s mainly large firms that are already well positioned in the market and have some interest in virtual reality that are open source or push other small companies to shift towards it. The global idea behind it, it’s when the technology will be ready to unlock the critical mass, the market will be very profitable and yield huge amount of money (15,89 $ billion by 2020).

To conclude, open source is in certain cases just a philanthropist act with the unique aim of developing technology but generally there is a reason why companies opt for open sourcing. They have succeeded to create win-win situations.

References:

http://www.numerama.com/magazine/29681-elon-musk-tesla-motors-voitures-electriques-brevets.html
http://www.forbes.com/sites/briansolomon/2014/06/12/tesla-goes-open-source-elon-musk-releases-patents-to-good-faith-use/
http://www.osvr.org/
http://www.razerzone.com/osvr

First of all, it is important to pinpoint the importance of open source patents to solve greenhouse gas effect issues. It is a very innovative way to share a technology which is in accordance with the customer benefit . However, I highly doubt that the main purpose of a firm, such as Tesla; that issue this kind of patents is by pure philanthropy.
As already quoted in this blog, it is clearly obvious that a company that want to develop an electric car in a large scale has to create a new ecosystem to make its vehicle attractive ( electric stations for cars, higher visibility, mindset change, creating a whole industry gravitating around electric cars,…) . Moreover, Tesla will gain in attractiveness for potential consumers, potential workers, investors, etc. by implementing from the beginning a clean image of a company that have nothing to hide and no money to waste in litigations. In other words, “the loss of the patent benefits by the firm” which come from the release of the patent for public will be much lower than their benefits in my opinion.

Personally, I want to add that some other arguments can explain this strategy of open patents. Nowadays, even more in the technology sector, patents can be seen as a boundary for the market growth. As quoted: “More fundamentally, he is willing to eliminate the possibility in the future of competing as a technology company, which depend on the IP protections of patents, copyright, and trade secrets.” (1)
It clearly means that its strategy is to create a new kind of business model, where IP won’t be anymore a “competitive advantage” as used before by lots of firms before. Indeed, it allows thee firms to capture a huge benefit and the biggest losers are consequently the consumers and the technological innovation by blocking it for profits purposes. Applied on the electric cars, I personally think that the strategy of Elon Musk is very clever . Actually, GM already tried to commercialize an electric car with the EV1 (2) .The main causes of this car failure was the different stakeholders pressure ( Oil companies, car companies , or even the American government itself through lobbying) . By implementing new rules(like open patents) , Tesla may find a solution to develop its electric car so fast ( in accordance with a fast network around electric cars) that the different stakeholders won’t have any other choice than following him in the electric car expansion: a sector where Tesla could emerge as a key player aside Volkswagen AG or Daimler AG .

Moreover, even if IP valuation is a key element for valuing technology companies, a lot of research can easily linked the useless link between investment in R&D and company profit growth (3) .It implies that sharing their patent won’t actually imply a loss in the company valuation . It only imply a new kind of mindset that is more fitted to the actual realities.

In conclusion , I strongly think that the “open patent” strategy of Tesla can really be a success but that need some decades to see its real effectiveness. By implementing this strategy, Elon Musk only shows that he has a plan to create a breakthrough through the technology sector . It is very clever in my opinion and it has real chance of success.

Bibliography:

(1) https://www.techdirt.com/articles/20150217/06182930052/elon-musk-clarifies-that-teslas-patents-really-are-free-investor-absolutely-freaks-out.shtml (online)

(2) Movie source: “who killed the electric car ? ” (2006) , Chris Paine . (https://en.wikipedia.org/wiki/Who_Killed_the_Electric_Car%3F )

(3) http://search.proquest.com/openview/d9f02babc5f805e58964e3a3950682aa/1?pq-origsite=gscholar Morbey, Graham K (1989), R&D Expenditures And Profit Growth

First thing first, it is important that each company concerned by the carbon crisis, either by its production process or by its product itself (cars, smartphone, …), becomes aware of the urgency on climate change.
I think technologies are presently the best tools at hand to restrain the well known greenhouse gas effects’ progress. Even if it is true that Toyota and Tesla have contributed to considerable progress (open-source) in the fight against climate change, it is far from being enough.

As it is mentionned in this article, one of the disadvantages for open-sourcing firms is that there is no pledge for returned favour. But is it really what they are looking for ?
The second downside would be that the opportunity cost from the exclusive commercial exploitation would be lost. This may be true but from another standpoint, the benefit that results from this open-sourcing could be far more important. For instance, with Tesla, if the number of, as well as the interest for electric cars increases sufficiently, maybe one day the charging stations will become an industry standard.
The last drawback is the risk of “rivals overtaking you” but I think a firm wanting to open-source will be aware of this drawback and act consequently. I mean that a firm would not open-source if its business became at stake because of the open-sourcing.

With regard to the advantages linked to the open-sourcing, from my point of vue, the one that prevails is the reward of contributing to a welfare-improving project. Each firm should, to its own extent, contribute to a welfare-improving project. Not only it is rewarding but it also could seriously contribute to the firms’ green brand image.
Another plus arising from the open-sourcing is the new potential to attract top-talented profiles into the company but also to motivate the existing employees to continue within the company. This advantage would provide a serious asset on a human capital perspective and hence, give a significant competitive advantage. The last advantage is a financial one. If a company applies open-sourcing, it should normally save a signifcant amount of money from patent litigation.

I would say that the advantages outweigh the disadvantages. There’s more to gain, financially and ethically combined, from open-sourcing. I even think that open-sourcing, one day, will become the industry standard. Collaboration on sustainable development is the future of our industry landscape.

To go further, I think that “Eco-Patent Commons” represents a considerable advance for the future. It fosters collaboration between companies for innovation in sustainable development.
It is a good start but there still remain some challenges :”
-simplify the process of searching for and locating technologies that are essential to combating climate change;”
-cut the costs and complexity of negotiating access to technologies;
-promote an environment of sharing pre-competitive, upstream or ‘platform’ technologies;
-facilitate access to and diffusion of technology to developing countries, especially least developed countries.” (http://www.wipo.int/wipo_magazine/en/2009/02/article_0002.html)

Our world is currently changing. Indeed people’s minds become aware of the critical impacts of their actions if they continue to live the way they are doing. This is why more and more people as human as well as firms as entity want to operate a 180-degree turn in their way of managing knowledge. (Poukens, 2015) The key word becomes “sharing”. But as far as companies are concerned: what can be done to move in this direction? This is where we introduced the concept op “open-sourcing”. This is obviously not the only way of solving this huge problematic, but this the one we will discuss in this comment.

Open source (OS) means the patent is distributed for free with accessible source that can be modified and improved by anyone. The open source movement is comprised of both formal and informal groups of individuals who support the use of open source licenses. (Heaney, 2015). But is it really always beneficial or should it be thought twice before being considered as the new sharing strategy? No single paper can tell you without qualifications which is the best patent development model for your organization to adopt: open source or proprietary. As with any decision involving significant complexities, the only thing one can say for sure is “it depends.” (Open-Source vs. Proprietary Software Pros and Cons, 2015). In my opinion, it depends not only of the industry, but also of the state of the market companies are playing in. Let’s weight the pros and cons of this OS theory.

First of all, by open-sourcing their patents not only do firms eliminate traditional corporate boundaries but they also serve personal as well as collective interest and improve the social welfare. Firstly, the royalty-free access to their patent portfolios fosters the innovation. This philosophy makes it possible to build an idea upon previous research/work without involving additional costs. Besides this, it enables firms to set up as a standard in an organization. This offers a great opportunity for firms to compete on their own terms by encouraging other to build upon you. For i.e. Tesla as a pioneer in the electric vehicles industry needed to develop their recharging station network. That was made possible by creating a new market and making all its patents available unconditionally to anyone interested without requiring any formal discussion. Therefore small firms had created this network by initiating their own business. (Poukens, 2015)
This model is also the perfect way of avoiding patent war, which induces a considerable waste of time and money.
Finally, labelling your company as green and open widely contributes to the employer branding. It gives new values to the company as the willingness to develop the society as a whole while serving personal interest rather than considering only this second option. Thus it helps to attract, appeal and retain talents, which represents the real value of a company.

But even it can be seen as the new successful strategy, in my opinion the implementation of this model should be think twice. Actually the state of the market you are playing in can help you to define if it is a good idea or not. If you are placing yourself in growing market, this strategy can be beneficial as it contributes to the growth of your company itself. On the contrary, if the market of your company is mature I wouldn’t say the same thing. It represents more risks to give the chance to your competitors to overtake you by making it more difficult for you to differentiate your products. (Poukens, 2015) Moreover, since they are not constrained to share their own patents, they can use yours without sharing theirs and make your market situation even more critical.

In conclusion, the OS phenomenon seems to have many advantages but has to be well thought before its implementation. According the industry, the role of the patent in your business and the state of the market, this strategy can be an asset or not. The major argument in favour of this practice is the improvement of the social welfare for the reasons previously explained. In some cases, as the Tesla example, OS can also play a role in environmental matters by fostering the development of environmentally friendly way of transports. If it is possible in this sector, why do we not push make that philosophy the new working in other industry? As a decision can not be made without considering the pros as the cons, the government should act and develop a legislation in favour of this practice while minimising its disadvantages by creating some strict rules.

REFERENCES

Heaney, J. (2015). Intellectual Property and Open Source Software: Issues and Concerns. Consulted in December 2015, on Study.com: http://study.com/academy/lesson/intellectual-property-and-open-source-software-issues-and-concerns.html

Open-Source vs. Proprietary Software Pros and Cons. (2015). On Optimus Information: http://www.optimusinfo.com/downloads/white-paper/open-source-vs-proprietary-software-pros-and-cons.pdf

Poukens, S. (2015). Open-source to the rescue : innovative ways of dealing with the carbon crisis. Consulted in December 2015, on IPdigIT: https://www.ipdigit.eu/2015/06/open-source-to-the-rescue-innovative-ways-of-dealing-with-the-carbon-crisis-2/

Open-source to the rescue: innovative ways of dealing with the carbon crisis

Intellectual properties protection could become a real issue when it concerns ecological problems. Undeniably, the carbon crisis is considered as a common challenge that should be taken care of by our entire society. To do so, a new wave of open-sourced patent have been released by companies which truly believes in the use of their patents for the future of the planet.

Those open patent licences can help enhancing innovation and help attracting talented people. Moreover, it could be seen as gratifying for businesses to participate to a welfare-improving task.
The founder of Tesla, Elon Musk, truly believes in open patents as he has already opened his own patents for the Tesla electric cars to other car manufacturers. He said: “I thought patents were a good thing and worked hard to obtain them. And maybe they were good long ago, but too often these days they serve merely to stifle progress, entrench the positions of giant corporations and enrich those in the legal profession, rather than the actual inventors.” He believes that a company success is not made by its number of patents but by its ability to attract and motivate the world’s most talented engineers.

However, firms working with open patents offer competitors the opportunity to use them without paying any maintenance fees and also they have no guarantee that those competitors will do the same for them in the later. Besides by offering to others your patents you take the risk that one day those competitors overtake you thanks to your own patents.
Venture capitalists and some pharma and chemical companies argue that open patents can discourage innovation by hurting legitimate innovator.

To conclude, I truly believe that the Eco-Patent Commons is a brilliant idea, it can definitely remove some barriers that have always occurred in the field of “green technological advancement”. And even if congress may take some times to change the current patent laws, open patents are already available and can really improve the worldwide competitivity in the “green challenge”. And companies such as Tesla who have already understand it are forerunner and genuine model to follow.

References:
• https://www.siliconrepublic.com/innovation/2014/06/12/elon-musk-demonstrates-courage-of-his-convictions-opens-tesla-patents
• https://www.ipdigit.eu/2015/06/open-source-to-the-rescue-innovative-ways-of-dealing-with-the-carbon-crisis-2/
• http://techcrunch.com/2015/04/23/open-patent-licensing/

Through the 3 articles, we clearly see that open-source technology is a model that is more and more used. It enhances the speed of spreading the innovation and additionally, it makes easier to create new inventions based on the ones that already exist. From the perspective of society, it is very beneficial to have this kind of behavior.

But why does big firm like Tesla open their inventions? As it is say in the text, it isn’t just for the sake of it, but also because firms can find some benefits into it. I would like to discuss a little bit about these benefits. The first point I want to discuss is the example that is given with Tesla. The firm is building a reputation on his open source behavior to attract top engineers and it actually works because Tesla is one of the first to do this. What will happen if all the competitors in the market do the same? Each firms will be at the same point concerning the attractiveness of his brand.

Secondly, and as it is say in the blog of Tesla (1), electric car represent less than 1% of the total vehicle sales, so the electric car market can only increase. Of course, it is interesting for Tesla to increase the size of the market where they have a good position. We know by the theory that if you can win benefit from the growth of the market, there are no real need to compete hard with your rivals. But what will happen when the market matures? It will become more complex to give patent for free to your competitors, the one who wants to steal you some market share because there are no more growth on the market.

The last point I want to discuss is the fact that Tesla (and Toyota), by giving their technology for free, are building a strong position on the market of batteries and fuel cell system components that are used to power their electric cars. So today, they give their patent for free, but when all their competitors will adopt their technologies, they will be in a strong position to sell them the components. We can assume that it will create a dominant position for these two firms (of course, the competitors may produce the component after a certain time, but it require some investments, and Toyota and Tesla could be more efficient on this market because of the experience curve effect).

To conclude, I agree with the fact that it is good for society (and the environment) that such companies create open-source innovations. But I wonder if they do it really for the environmental impact, rather than for the additional benefits (and reputation) that they can derive from such behavior? What will happen when these behaviors will no longer maximize their benefits? Are they simply going to backtrack and use strong patent again? In other words, is this a sustainable behavior?

(1) https://www.teslamotors.com/blog/all-our-patent-are-belong-you

Companies struggling to be the first to develop certain technologies is now part of the agenda and it often is one of his strengths. Being the first to launch certain product can be crucial for the proper functioning and survival of companies.

However, increasingly, green awareness is being installed in the minds of people and, expectedly, will stay. Economy of consumption and its clients are increasingly concerned about the importance of the environment now that climate change is not only seen in papers but also to the naked eye by ordinary citizens. Therefore, large companies should help to ensure that all efforts are directed not only to economic growth but to improve environmental sustainability.

So, open green patents are the perfect way to show that these companies care about this worldwide issue. It has reached a point of no return in which social benefits should be taken into account when operating, thinking about the future of the planet and not only of the company. Therefore, open patents involve benefits to society, somehow opening the possibility for other smaller companies to develop new green technologies. This ultimately will result as explained above in a better green economy in the long term.

To conclude, the question companies have to ask themselves to decide to share or not their patents is whether it is more important, short term economical or long term social and environmental benefits.

I’ll try to explain my opinion on this article below as accurately as possible.

First, the carbon crisis is a problem that concerns the whole world and future generations. So it makes sense that we work together to solve this carbon crisis. This seems logical, but from a practical point of view this is much more complicated. Intellectual property costs to society because it slowed considerably technological advancement but it also allows innovators to reap the rewards of their labor. So it is unclear whether intellectual property is a good thing for the society or not.

The Eco-Patent Commons is a wonderful initiative, like that of companies like Tesla and Toyota. This kind of joint or individual initiative against the global problem of the carbon crisis enables any “green-innovative companies” to have fewer barriers to “green technological advancement”. Furthermore it improves the image of the company and strengthens the bonds of investors and employees to their company. But the questions are: do these companies invest as much as before in “green innovation” knowing that their findings will be shared for free? Is this not forcing companies to rely on the innovation of others and therefore invest less?

Although these ideas of sharing are admirable from an external perspective, these initiatives are not only losing money to the companies but these firms must also consider that sharing is not necessarily going in both directions and this can turn against them.

For companies like Tesla and Toyota the intellectual property sharing is a very good thing because, as said in the article, it will reduce the barriers to entry in the market of electric and hybrid cars. This will allow the development of the electric cars market which will be good for business and the environment.

My opinion is that it’s better for the actual and the future generations that “green innovative companies” competes against each other through marketing, experience, reputation, quality, price … than through “green technological advancement”. The competition between different firms should not affect the desire to solve problems affecting the health and future of the population.

One solution could be an environmental cooperation between several companies. The companies concerned would participate equally and the results will belong to all the cooperation companies. This will allow less waste of money and time and will enable the company to be more effective in “green innovation”. The firms will work together to make their sector more environmentally friendly. It is essential to have competition between business, but addressing environmental problems they must work together.

Is Elon Musk a stupid entrepreneur? With his famous quote: “all our patent belong to you”, he changed the whole scene of the patent industry. Tesla encourages other companies to use their patents in order to improve the technology.

It’s quite remarkable why Tesla initiated the idea to open all the technology to the competition. Musk’s competitors are not the other innovative companies who try to make electric engines (like Toyota), but the traditional car manufactures who still invest millions in normal carbon engines. The market of electric cars at this moment is very small. At this moment, less than 1% of the sold cars are electric ones. Tesla wants to open the competition with the traditional engines. Therefore, his technology needs to improve significantly in the next coming years. By opening the patents to newcomers, he remains in the driver’s seat of this big market opportunity.

Karl Ulrich (worton university of pennsylvenia) explained that that patents did not protect against the big companies who could easily work around those patents, but only protected Tesla against the small newcomers who tried to enter the market. As Tesla needs those small innovative companies to improve the technology, the open source idea is a big opportunity, not a threat. On top, he only makes the patents available, not the working documents including procedures, instructions, notes, etc.

At this moment, around 100 charging stations, owned by Tesla, can be found in the US. If this charging technology will become the standard, Tesla will earn Millions of dollars commercializing those chargers.

The same idea is true for their battery business. In 2017, Tesla hopes to produce millions of batteries around the world. By making the new battery technology public and open for the other car manufacturers, he encourages other car makers to buy his mass produced, and thus relatively cheap batteries. If his batteries for electric powered engines will become the standard, his business model will be seen as big success. Tesla will make lots of money.

Although the idea of opening the technology seemed at first to be a strange or even stupid idea, there is a big chance that this business model will become a huge success and that university students within the next couple of years will be learned the big benefits of this open source technology opportunity.

references:
http://www.ipwatchdog.com/2014/07/08/tesla-on-patents-open-source-altruism-or-shrewd-business/id=50331/
http://knowledge.wharton.upenn.edu/article/whats-driving-teslas-open-source-gambit/
https://medium.com/@DrRimmer/tesla-motors-open-source-revolution-intellectual-property-and-the-carbon-crisis-95259ff867e6#.mfg5o73z1
http://www.fool.com/investing/general/2014/02/25/tesla-plans-to-build-worlds-biggest-battery-factor.aspx

I am myself using open-sources in my daily life and to introduce my point of view, I want to share first a little naïve idea that I (and maybe other unaware people) had on them. Some years ago, I thought open-source softwares were only produced by hackers that wanted to fight against big companies requesting people a big amount for using their tools that are so necessary to achieve some works (like Microsoft office/Open office, Photoshop/Gimp, Norton/Avast, …). But I was wrong, these companies and others are using legally this way of thinking to improve the society’s welfare or the research field. Moreover, in some area, especially in medical industry, it is vital to be able to share information if you want to go further and be able to fight against powerful viruses or cancers.

So the aims of these companies are surely respectable, but is it enough profitable, knowing the lack of money return and the high probability of new rivals incoming? Just as this text well-expressed it, there are strong benefits to invest in open-source such as “building a green brand image” or “encouraging top talents to join the company and valuable employees to stay”, and each benefit is helping and pulling the others up, like a process in circle sharp. These key success are also playing a big role by improving the possibility of innovation, for the company itself and the others. I want to add here two other benefits that I have heard of it.

One of the major issues in innovation is the patent trolls, these ‘malicious’ companies that abuse of the patent system and demotivate entrepreneurs to innovate (see the post of professor Strowel https://www.ipdigit.eu/2013/11/will-patent-trolls-soon-appear-on-the-european-market/ and/or my comment if you need more details). Well, open-sources face the same problem but have the benefit to be able to use some open licenses in order to counter these trolls. This article (http://techcrunch.com/2015/04/23/open-patent-licensing/) details three of them :
1) Defensive Patent License : “Anyone can join, and members immediately (a) license all of their patents to the pool, and (b) receive a license from everyone else in the pool.” It increases the incentive to participate to do open-sources in order to gain access to more free technology.
2) License on Transfer (LOT) : “Any time a member of the LOT club sells a patent to someone outside of the club, it will trigger a free license from the new owner to everyone inside the LOT club. As a result, the new owner can’t use the patent to sue anyone in the LOT clubhouse.” With this method, if trolls acquire a from a LOT’s member, trolls cannot sue them. And even if LOT’s members can sue each other, the sued member can easily conter-suit : “you think I’m infringing your patents? Well I think you’re infringing mine!”.
3) Innovator’s Patent Agreement : “It prohibits companies from launching a patent lawsuit without the inventor’s permission.” It prevents thus even more the trolls to sue members.

I also want to mention an idea coming from one of my innovation courses at the LSM giving by professor Benoit Gailly : having a lot of patents is not always benefic for your company. To illustrate this idea, imagine you are a company with a bench of new very-effective technologies and anothers companies want to work with you. If your new techs are patented, the others companies may be reluctant to work with you because it implies complicated process and cost. You may thus miss big opportunities. However, if you made your new techs open-sources, others companies will have more incentives work with you or to choose you if there are other patented substitutes.

To sum up, open-sources have respectable aims such as improving society’s welfare and innovation, have strong benefits mentioned in the text, and moreover, possess open licenses to fights patent trolls and bring more incentives to create co-working with others companies.

References :

Alder, E., (2015). The Basics of Open Patent Licensing. Online on the Techcrunch website http://techcrunch.com/2015/04/23/open-patent-licensing/, consulted on 28 November 2015.

Harvey, C., (2015). Open Source Software List: 2015 Ultimate List. Online on the Datamation website http://www.datamation.com/open-source/open-source-software-list-2015-ultimate-list-5.html, consulted on 28 November 2015.

Poukens, S., (2015). Open-source to the rescue: innovative ways of dealing with the carbon crisis. Online on the IPdigIT website https://www.ipdigit.eu/2015/06/opening-up-knowledge-management/, consulted on 28 November 2015.

Rubens, P., (2015). Why the open source business model is a failure. Online on the CIO website http://www.cio.com/article/2944334/open-source-development/why-the-open-source-business-model-is-a-failure.html, consulted on 28 November 2015.

Strowel, A., (2013). Will ‘Patent trolls’ soon appear on the European market?. Online on the IPdigIT website https://www.ipdigit.eu/2013/11/will-patent-trolls-soon-appear-on-the-european-market/, consulted on 18 November 2015.

Here, we are in a situation that seems perfect: individually, that kind of innovation couldn’t improve the profit of the firms. But collectively, the increasing of the welfare is potentially unlimited.

Moreover, I think that the green reputation is a really important issue nowadays. According to a study led by Nielsen, a Dutch company which is focuses on marketing and consumers behavior surveys. They asked about 30.000 consumers across 60 countries about their relations with social and environmental engaged companies. 55% of the consumers says that they want to pay more for the product of these firms. Another study, lead across 9 countries this time, show that 2/3 of the consumers (that are considered here as “mainstream”, in opposition with the “eco-fanatics”) will keep buying products from the same company if the latter is concerned about environment and social issues.
The Eco-patent common could also be viewed as a strategy to be clearly identify as a non “patent hold-up” firms. With the growing phenomenon of “patent trolls” companies (more and more share of the fine are going in the pocket of non-practicing companies), firm can have an incentive to show that they are absolutely not involved in that kind of practice, as a sign of trust to other companies, and to the courts.

In the future, I think it will be particularly important to have a close supervision about this issue. Indeed, in the long-term, being a green company could bring more and more competitive advantage as it will be at the core of political concerns. And there could be a moment where the profits of the eco-patents could be above the profit related to the advantages of sharing it discussed in this article.

Sources :
http://www.nielsen.com/us/en/press-room/2014/global-consumers-are-willing-to-put-their-money-where-their-heart-is.html
http://www.webcitation.org/6RHquFQ9R