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Patent Pledge and Technological Innovation: The "Good Faith" of Tesla

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  • Wang, Z.

Abstract

On June 12, 2014, Tesla declared that it would refrain from initiating patent litigation against any party that, in good faith, seeks to utilize its technology. The stated intention behind this move was to stimulate the market for electric vehicles. This research presents the first empirical analysis of the impact of patent pledge for pledgor’s entire patent portfolio as a corporate strategy on both the pledgor's innovation and follow-on innovations. The result indicates that adopting this strategy increased technology similarity for innovations associated with Tesla’s innovation and raised Tesla’s patenting activity, suggesting an expansion of ecosystem surrounding Tesla. Nonetheless, no significant impact has been observed on Tesla's innovation activities and the extensive margin of follow-on innovations, which may be attributed to the good faith condition that distinguishes Tesla's patent pledge from a patent expiration or mandatory royalty-free licensing. This paper offers implications for managers considering incorporating patent pledge in their strategic toolkit to augment their firm’s ecosystem. Meanwhile, policymakers should also treat firms’ patent pledge carefully, including evaluating the social implications of the conditions attached to their patent pledge.

Suggested Citation

  • Wang, Z., 2025. "Patent Pledge and Technological Innovation: The "Good Faith" of Tesla," Cambridge Working Papers in Economics 2532, Faculty of Economics, University of Cambridge.
    • Handle: RePEc:cam:camdae:2532
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    More about this item

    Keywords

    Patent Pledge; Intellectual Property Strategy; Ecosystem; Invention Diffusion; Electric Vehicles; Tesla;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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