Patents are valuable at every stage of a company’s lifespan. This axiom is especially true during the startup stages, when a strong patent portfolio can be a differentiator between success and failure. An interesting story was published last week about how Elon Must leveraged Tesla’s patents to secure prime real estate for Tesla’s first showroom.

Patent Attorneys Love Teslas

It is no secret that at Smith & Hopen, we are avid Tesla supporters. Each of our partners drives a Model S, and our office has dedicated Tesla chargers. As patent attorneys, we are interested in innovation and creative ways of applying intellectual property law to protect and foster that innovation. Tesla Inc. is very prolific on both fronts. In fact, we recently published a video about automotive design patents, which included a segment focusing on several Tesla’s patented features.

Tesla’s Offer Rejected

Like many startups, in 2008 Tesla was not in the greatest financial situation. Nevertheless, Tesla founders had a vision that involved a high-end showroom to showcase Tesla’s iconic roadster. Tesla’s early founders began searching for a suitable location and, eventually, found a perfect commercial space in Los Angeles.

Red Tesla Model S inside a showroom.
Tesla showrooms are frequently located in high-traffic, premium real estate locations.

However, to their great disappointment, Tesla’s offer to lease this prime commercial space was rejected due to weak financials.

The Patent Show

Unsatisfied with this outcome, Elon Musk stepped in. The CEO of Tesla is known for his unorthodox approach to many aspects of his business, and intellectual property is no exception. In 2008, Tesla might not have had the greatest financials, but it did have an impressive patent portfolio. So, Elon Musk laid out Tesla’s patents in front of the owner of the commercial space to convince him that Tesla’s balance sheets do not tell a full story. The strategy worked. Impressed with the patent show, the owner of the commercial space agreed to lease his property to Elon Musk. This is how the first Tesla showroom became a reality. The rest is history.

Takeaway

The moral of the story: patents are valuable in more ways than one. Our society rightfully perceives a patent as a testament of one’s innovation, determination, creative genius, and ability to succeed. As evident from this story, simply showing a stack of patents can be a powerful negotiation tool.