The best IP protection is to innovate fast enough

The real way I think you achieve intellectual property protection is by innovating fast enough. If your rate of innovation is high, then you don’t need to worry about protecting IP, because other companies will be copying something you did years ago. That’s fine. Just make sure your rate of innovation is fast. Speed of innovation is what matters.

That was Elon Musk at the 2020 Air Warfare Symposium. And Musk put his money where his mouth is:

At Tesla we open sourced our patents a few years ago. Anyone can use our patents. We haven’t really tried to protect intellectual property in that sense. We’ve tried to actually smooth the path. The overarching goal of Tesla is to advance sustainable energy. So if we created a patent portfolio that discouraged other companies from making electric cars, that would be inconsistent with our mission. So we open sourced all the patents to help anyone else who wants to make an electric car. I guess that’s the opposite of protecting IP.

I think it’s an incredibly confident statement to open up patents. It constantly puts pressure on the organization to innovate on faster cycles, always staying out front. It also fuels the spread of an ecosystem of companies that can transform the economic paradigm.

I think this makes sense in the framework of combining Clayton Christensen and some Carlota Perez. You have disruptive innovations which initially start out worse performing, or higher cost, than what is economically prevalent. But they find a niche, and the acceleration of the rate of innovation puts it on path to surpass the sustaining innovation. Patents provide the incumbents no protection from the disruption coming out of left field.

But one company can’t change an economic paradigm. It needs to support a general exuberance. That will draw in capital and many new companies. Open source IP will accelerate this, which lays the foundations for a new economic paradigm to supplant the old. Usually the process hits financial volatility to due the uncertain nature of the transition, but the groundwork is done.

The aerospace companies had a patent pool in the years after World War II. I read this in Burgos’ “Engineering the F-4 Phantom II: Parts into Systems,” but haven’t been able to find any other information on the topic.