Intellectual Property Management of Tesla Motors - Essay Example

Intellectual Property Proposal for Tesla

Introduction

Intellectual property management is an essential element since organizations can exploit it to develop market dominance as well as a long-lasting competitive advantage. Ideally, once a company secures its patents through registration it enjoys the benefits of that invention in a monopolistic manner. Ideally, all other entities that intend to employ that technique will have to seek the approval of the patent owner (Tesla Motors Inc., 2014). Tesla is an established automaker that has developed a broad intellectual property portfolio over years a factor that has earned it a competitive advantage, especially in the electric cars segment. Conventionally, the firm was focused on developing a diverse and broad patent portfolio to enable it to operate without threats from its competitors. However, with time Tesla has reversed its strategy and opened up its intellectual property for public use by employing an open source strategy.

Intellectual Property Assets for Tesla

The company has close to 746 registered patents in the United States of America ranging from trade secrets, industrial designs, trade names, patents innovation as well as domain names. Ideally, ‘Tesla Motors, Inc.’ is the business name for the company, and it is the brand for its flagship electric car (Rimmer, 2014). Despite the firm being a global automaker, its operations seems to be inclined to electric vehicle technology more than to the manufacture of conventional vehicles (Kelty, Tarpenning, and Kohn, 2010). Tesla’s registered patents tend to focus on electric vehicle charging systems, batteries, and related technology. Notably, over the years, Tesla has been on a mission to expand its intellectual property portfolio to ensure that it owns a significant portion of electric car technology to curb threats from its competitors (Tesla Motors Inc., 2014). Similarly, the company has employed distribution and supplier agreements whereby it grants suppliers revocable and non-exclusive rights to utilize the company’s intellectual property for the purpose of performing the duties of suppliers as articulated in the terms of engagement as well as in distributing the firm’s products (Totaro, 2014). That notwithstanding, Tesla has also patented its operations, for instance, it's marketing strategies, technical skills of its experts as well as management expertise with the objective of discouraging rival organizations from copying its style of operation.

Status of the Organization’s Intellectual Property Portfolio

The company has registered a significant portion of its intellectual property and those granted have been entered into Thomson Innovation Patent Database. In that regard, the company has an intelligent system that can recognize its intellectual property through a coding system that identifies any slight similarities. In that light, entities that employ those patents in bad faith will be legally liable for infringing intellectual property rights (Tesla Motors Inc., 2014). Ideally, Tesla has an intellectual property portfolio despite the fact that it is narrow in nature. A majority of its patents are centered on electric car technology. It is evident that the company’s operations are limited to the manufacture of electric vehicles and its peripherals since its intellectual properties are limited to section H-electricity that include subclasses H02J and H01M as well as section B-transportation subclass B60L (Rimmer, 2014).

Despite the fact that the company was founded in the year 2003, a significant portion of its patents are relatively new since they were created much later with the first one being registered in 2006 (Totaro, 2014). Typically, it is important for intellectual property rights to be registered since they offer the company a competitive edge as well as enable it to benefit when rival firms that employ its invention. Relatively, given the fact that the motor industry is a technology driven sector it is prudent for patents to be registered since they will promote research and developments as well as regulate operations. Ideally, significant portion Tesla’s intellectual properties are registered in the United States of America, with others in Canada, Europe and Japan. However, the company has not patented its intellectual property in Asia a factor that has resulted in increased manufacture of Tesla clones in China (Tesla Motors Inc., 2014). However, with the consumers fast embracing electric cars the company is contemplating to register its intellectual properties in foreign markets especially in China and Asia at large to cater for its expanding markets.

How Tesla Plans To Protect Its Intellectual Property

Tesla has instituted elaborate measures that are designed to protect its intellectual properties from infringement by third parties. Ideally, the firm used to commercialize its patents by entering into agreements with other companies that would employ its innovation at cost. However, recently the company switched its strategy and allowed firms to use its intellectual property for free but without an intention of jeopardizing its operations. Ideally, under the commercialization strategy, Tesla sign an agreement that stipulates the rights and extent you which the third party will exploit its resources (Bessen, 2014). Issues such as confidentiality and non-disclosure clauses are often included in the commercial agreements to protect the firm's trade secrets and confidential information from leaking into the public domain.

Relatively, the employees of the company, as well as the primary business partners of Tesla, have a non-disclosure clause included in their agreement of engagement as a manner of ensuring legal liability in the event they leak confidential information. Additionally, the company has instituted a high level of confidentiality when it comes to safeguarding trade secrets, business information as well as other sensitive data that may jeopardize its operations if leaked to competitors. In that light, Tesla has instituted a policy that prohibits confidential information from being posted on its website or any other company domain where competitors can easily access (Kelty, Tarpenning, and Kohn, 2010).

Importance of Intellectual Property to the Success of Tesla’s Business

In the past three years, Tesla has risen very fast by commanding a substantial market segment with the advent of its electric car. The intellectual properties that the company owns have contributed immensely to the success of the company since a majority of inventions and technologies in the sector have been herald by Tesla. Notably, patent innovations are the most fundamental elements of Tesla’s intellectual property. Patent H02J, H01M, and B60L is especially essential for the electric car market since they represent the first technologies for battery and charging systems that are crucial in the manufacture of sustainable vehicles (Rimmer, 2014). Given the fact that it is Tesla that pioneered the inventions and registered them under its patents all other companies that seek to employ that technology will have to seek its approval. In that perspective, the company will leverage from commercialization of its intellectual property to facilitate further research and development with the aim of enhancing its business strategy.

Conversely, in 2015 Tesla announced that its patents will be open sourced to all firms that wish to employ its technology in their operations (Bessen, 2014). However, the companies were bound to act in good faith in the sense that their activities should not jeopardize the well-being of Tesla. Ideally, it is a strategy that was aimed at curbing increased competition since numerous firms had announced their intention to venture into the sector. The move would earn Tesla a competitive advantage since new market entrants will leverage from its patents thus making them invest fewer resources in research and development a move that will enable the firm to be the sector’s trendsetter.

Intellectual Property Ownership

As of 2015, Tesla owned 746 registered patents majorly dealing with the electric vehicle charging system and batteries (Tesla Motors Inc., 2014). Despite the fact that the organization has a broad intellectual property portfolio the company does not have all the intellectual property that it needs to conduct its operations. It is worth noting that the motor industry is significantly dynamic, and new technologies are invented every other day. For instance, Tesla focuses on the manufacture of electric cars, but other companies like Toyota have come up with a hybrid technology that is a rival to Tesla’s pure electric car. Ideally, it is evident that as more innovations in the segment are being developed Tesla will have to employ the intellectual properties of other companies to ensure sustainable operations.

Relatively, the company has not conducted an intellectual property audit to ascertain that its actions conform to its patents without infringing the intellectual rights of other firms (Kelty, Tarpenning, and Kohn, 2010). Thus, there is a possibility that Tesla is employing innovation that is registered by other companies since the firm has not audited its operations to determine the authenticity of its industrial patents. When it comes to commercial agreements with partners, it is prudent that Tesla enters into a non-compete and non-disclosure agreements with its employees as well as all other third parties that work with the company. In that light, the partners are legally bound to enhance the confidentiality of the enterprise’s intellectual property in the course of their operations. Additionally, the company often assumes the ownership of patents that are developed by its employees during their tenure (Bessen, 2014). The organization is rather strict since it institutes measures that audit the past working experience of its employees to ensure they do not have a background that can jeopardize the firm’s trade secrets.

Knowledge of Competitors’ Intellectual Property Strategies and Portfolios

As a market leader in the electric car segment, Tesla has made elaborate efforts to analyze its competitors’ operations as especially the intellectual assets that they won. The move is aimed at assessing the activities of rival firms as well as protecting the company from infringing the intellectual property rights of other organizations. However, it is worth noting that the available information is limited in nature and thus cannot provide enough details for an elaborate competitive intelligence (Tesla Motors Inc., 2014). Ideally, a majority of the organization classify intellectual property details as confidential information thus making it difficult for rival firms to access their particulars with the objective of maintaining their competitive edge (Rimmer, 2014).

Tesla Motors has a comprehensive intellectual property policy that stipulates the manner in which these assets are sourced and managed for the benefit of the institution. The company recently liberalized its patents by making them open sourced to ensure it leverages maximum benefits from those resources. In that regard, rival companies are free to utilize those resources but within the stipulated regulations. The move is ideal since it will promote the company’s technology in the market to ensure the firm obtains value from the electric car infrastructure that it has already developed in the United States of America (Totaro, 2014).