Electric car manufacturer Tesla decided to do what many have longed for in the current industry: they’ve decided that, in the spirit of innovation, to open up their patents to everyone and remove the restrictions that come with those patents.

Tesla CEO Elon Musk made the announcement at the Tesla blog on Thursday: “Yesterday, there was a wall of Tesla patents in the lobby of our Palo Alto headquarters. That is no longer the case. They’ve been removed in the spirit of the open source movement, for the advancement of electric vehicle technology…technology leadership isn’t defined by patents, which history has repeatedly shown to be small protection indeed against a determined competitor, but rather by the ability of a company to attract and motivate the world’s most talented engineers. We believe that applying the open source philosophy to our patents will strengthen rather than diminish Tesla’s position in this regard.”

Musk’s statements about Tesla show that, contrary to popular belief for many companies, opening up your patents freely doesn’t diminish your position but can enhance it. The Tesla announcement is worth reading, particularly because Musk points to the fact that, with the patents in place, few companies are innovating in electric vehicle technology. Only about 1% (if that) of the cars on the road are electric vehicles.

The reason why the numbers for electric vehicles is so small has to do with company’s treading on “someone else’s patent turf.” You announce a technology for your line of vehicles that someone’s patented, they can take you to court and tie you up in paperwork and money. At the end of the day, the new company can’t innovate because, each time they come out with something that lies under a patent, the patent owner will take the new company to court. The destination of patents and lawsuits is litigation rather than innovation. As Musk said in his statement regarding his early days in business, “And maybe they [patents] 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.”

What does the open-source patent decision mean for Tesla?

Tesla benefits from its new open-source patent decision in that, it becomes one of the few corporations on the worldwide market today that understands that innovation can only come about with fair sharing. That’s a novel thing for some corporations who’ve spent billions trying to protect their innovations.

It seems somewhat counterintuitive that a corporation wants to make devices for the worldwide market but stifle others from using their technology to do the same. And yet, this seems to be the prevailing view in the patent market. Companies often file patents for features that are now deemed a convenient part of the user experience – whether it be for vehicles, mobile devices, or other endeavors. The end result of patents is that companies seek to protect themselves and ward off similar innovations. What happens, however, is that, with little incentive or desire to innovate (due to patent laws), companies cease to develop or research in an intended area (say, electric cars) – leaving patents to mean little when no one attempts to innovate in the patent area.

Patent owners who get patents issued in technology often do so with the hopes that they can make money off of others who’ll dare to innovate in the same area; unfortunately, the opposite happens. Instead of seeing individuals and companies innovate and monies flow from their patents, patent owners often see few innovating in the intended area and thus, few dollars and cents from the endeavor. Patents are designed to encourage innovation and see cross-licensing fees, but they end up stifling innovation and reaping few (if any) financial rewards.

Tesla’s decision benefits the company because it can now devote itself to research and development, and encourage other companies to embark upon the same journey. The result of all of this encouragement in R&D is that Tesla will implement features that will be further developed by other manufacturers (and vice versa). In the end, electric vehicles will thrive and grow, helping to clean the air in our smoggy atmosphere and preserve our environment. Tesla will both benefit and receive benefit from other innovators. If that’s Tesla’s goal, then open-source technology is the way to go.

What tesla’s decision means for the World ?

Tesla’s new open-source decision means that the world will see more electric vehicles on the road say, within the next five years – and more companies will be motivated to innovate further in this area.

Electric vehicle technology is like any other realm of technology; you can’t have a market without consumers, and you can’t have consumers (plural) unless you’ve companies (plural) that are allowed to innovate within the same tech space. In order to have competing companies, you must allow competition to exist. Tesla’s one of the frontrunners in electric vehicle technology, but there’re few manufacturers that will even dare to innovate in this space currently. You can’t create a demand that doesn’t exist, and you must allow demand to grow by encouraging it. Few corporations can afford to invest in an area in which they make little money, and patent lawsuits only rob novel companies of the small funds they’ve. It’s the equivalent of taking someone’s last ten cents in poker when they can’t even afford a single meal.

Fortunately, the company has come to its senses. What this means is that the world will benefit from the technology Tesla has created and implemented into its electric cars. All innovations must start from somewhere, in the same way that all artistic drawings start from understanding basic shapes. If one doesn’t know what a circle is, how can he or she draw a pair of truck wheels – or put a sun in the sky in his or her drawing? Likewise, Tesla’s technological innovations will now become the building blocks for others interested in developing electric vehicles. Building on the basics of electric vehicle technology, smarter and more efficient electric vehicles can be developed. This will benefit consumers, who expect their electric vehicles to become smarter, tougher, and safer as the years go by.

Some corporations have gone on record as saying that they’re not developers for the whole world, but Tesla’s actions show otherwise. When a corporation develops something that’ll benefit the world, it’s no longer the corporation’s right to decide if it benefits many or a few. If the developed technology in question will enhance the world, how can a company decide to hide it behind paperwork and rob others of that same technology? Understanding that patents stall innovation is the first step to becoming a more progressive company. Tesla has figured this out, but, in light of the recent Apple-Samsung lawsuit, it’d be nice to see the same outcome with the two smartphone giants in the mobile industry.

Isn’t it better to benefit the world than to simply make profit? Believing that your business is about a larger cause than yourself is the key to answering this question.