My colleague, Alberto Galasso has a post at HBR on whether Apple’s patent wars are a PR rather than a legal strategy.
The first one is the marketing effect of IP litigation. “Apple says Samsung copied iPhone” was the typical news headline during the first weeks of litigation. The case was not only mentioned on specialized business press; it was front page news material for major newspapers around the globe. International news channels devoted several minutes of their prime time to the patent case. The opening statements by Apple’s lawyer, Harold McElhinny, alleging that “Samsung copied the iPhone” and that “Samsung went far beyond the world of competitive intelligence and crossed into the dark side” were translated in a multitude of languages and displayed next to pictures of Steve Jobs, one of the most charismatic CEOs of all time. How much would it cost to have similar media coverage through a traditional advertising campaign? Probably way more than Apple’s lawyer bills.
That certainly seems like a compelling case. You want to signal to the market that your were the inventor and, whatever the outcome of patent litigation, it can help provide that message.
No sooner had that post appeared that Elon Musk of Tesla Motors went precisely in the opposite direction announcing that Tesla would no longer assert patent rights that it had previously displayed with pride. His post is so wonderfully constructed that I am going to reproduce it here in full:
It is 448 words that I believe (despite its length) may well become the Gettysburg Address for entrepreneurship and innovation. Yes I know I am calling it early but it is incredible in its clarity; so much so that I posted it to RapGenius to ensure it is properly annotated.
If Apple’s patent strategy is PR, then what is this? Basically, it is the same thing. Tesla have clearly decided that patents would not likely protect them from anything. The response could have been to just leave them as be. However, instead, they have positioned themselves in a different way — as open and encouraging of all innovation on electric vehicles rather than gasoline. Leaving alone claims is consistent with an image of caring more about the environment than about corporate profits. In other words, it is pure PR.
What we are down to then is that IP strategy — whether to assert patents or relinquish them — is PR regardless.
[Update: A point of clarification. Just because I think it is good PR does not mean (a) I believe that this was a poor decision from Tesla’s perspective — in fact, it was a great decision as patents were not doing them any good and (b) this could have benefits in terms of encouraging innovation on electric cars which no economist is going to oppose. My point was that, regardless of these other things, any announcement of anything can be taken as good PR. In this case it was entirely appropriate as it reinforced Tesla’s identity as being committed to the environment. For Apple, their action reinforced their identity of being innovators.]
7 Replies to “Intellectual Property Strategy as PR”
Tesla did not do this for altruistic reasons. Indeed if they did, their shareholders would be very unhappy.
They now have such a leading premium position in the electric car market that they need other players to come in with cheap bulk electric cars to make the market bigger, increase pressure for electric car infrastructure (charging stations etc), much of which may very well end up using their patented plug/adaptor designs etc.
They need electric cars to become mainstream to maintain their growth. As a boutique operation (relatively) they will always hit barriers from the path-dependence of our cities and infrastructure on petrol cars. And indeed, they will hit vested interests that will be upset along the way (e.g., dealer distribution in some US states). With the whole auto-industry on board, they can push through these barriers.
Google gives free stuff away all the time. The economic logic is that the more people they can attract to their services, the more time people spend online, the more money they make because they essentially hava a monopoly on online advertising.
Same with Tesla. The more people able to switch to electric cars, the more people are likely to consider the switch to premium electric cars, or upgrade from cheaper electric cars.
Look I think it’s a good thing for society in general, but don’t think it isn’t also a good thing for Tesla.
Non-altruistic reasons to do this:
– grow market (battery buyers) for gigafactory output
– grow EV charger network (to serve more EV vendors) thus making Tesla products more useful
– attract passion-driven engineers: people will work for less, and longer hours, for passion more than profit