How Do Open Patents Affect Follow‐On Innovation? Evidence from Tesla

ABSTRACT In the past, high‐tech enterprises aimed to apply for patents to protect their innovation and obtain a competitive advantage. However, Open Innovation models encourage enterprises to open and exchange knowledge to accelerate technology development because of higher innovation complexity. Nonetheless, the impacts of open knowledge on follow‐on innovation are unclear. Tesla's patent openness event provides a better opportunity to observe a causal relationship between open knowledge and follow‐on innovation as it is an exogenous shock for the whole Electric Vehicle (EV) field. Against this backdrop, this poster uses patent data of Tesla and EVs before and after the open‐patent events from Derwent Innovations Index (DII) between 2003 and 2020. The difference‐in‐difference regression results show that patent openness has an inhibition effect on follow‐on patents and patentees and the high‐value open patents will strengthen this inhibition effect. Surprisingly, once technologies were shocked by openness, more open patents would stimulate them to boost in the future.