More precisely, Musk’s Hyperloop OSS transportation. Just in case you don’t know who Elon Musk is let’s start by introducing one of the most amazing innovators and entrepreneurs of our time.

Musk is a man who once asked himself: What are the “important problems that would most affect the future of humanity?”. Whatever the conclusion it would define the rest of his life, “one was the Internet, one was clean energy, and one was space”. Co-founder of PayPal, the most popular service to send and receive payments online from all over the world. Co-founder of Tesla Motors (obviously named after one of his personal heroes Nikola Tesla), a company that designed an award winning electric car and is building the infrastructure to alleviate any disadvantages against internal combustion engines, recently Tesla Motors introduced battery swapping to kill what was perhaps the last standing obstacle to mass adoption (besides prices). Founder of SpaceX which, among many incredible instances of awesomeness, is the only private company to ever to send a payload into the International Space Station (ISS) on his fully reusable (and soon human-rated) Dragon capsule launched by the expected to be reusable Falcon 9, he“wants to die on Mars… just not on impact”. The following video will probably summarize how surrealistically successful this man has been at advancing the frontiers of bleeding-edge technology.

http://www.youtube.com/watch?v=ujX6CuRELFE

As a champion of clean energy and efficiency, he from time to time enjoys dissing other companies: “Boeing just took $20 billion and 10 years to improve the efficiency of their planes by 10 percent. That’s pretty lame. I have a design in mind for a vertical liftoff supersonic jet that would be a really big improvement.”

Is no wonder why Elon Musk is usually called a real-life Tony Stark (fact: It’s the other way around, Tony Stark is a fictional Elon Musk, since Jon Favreau declared his Iron Man was inspired by him). So why is all this important? Because of this:

@schadlu I really hate patents unless critical to company survival. Will publish Hyperloop as open source.

— Elon Musk (@elonmusk) July 15, 2013

So what is Hyperloop? Nobody knows yet. Musk has mostly only revealed details about what it can achieve instead of how to achieve it. Hyperloop is expected to be able to transport people from Los Angeles to San Francisco in about 30 minutes, i.e. an average of around 1,100 Km/h (685 mph). As if that was not impressive enough Musk added: “What you want is something that never crashes, that’s at least twice as fast as a plane, that’s solar powered and that leaves right when you arrive, so there is no waiting for a specific departure time.”. How expensive would be to build? One-tenth of the Californian bullet train he thinks. Cost for passengers? It will be cheaper than driving or taking an airplane or a bullet train, since he expects it to be completely or almost completely powered by solar energy.

All of that is dandy and exciting but the real business is in the how. There’s basically no details about its design, its known what it is not a vactrain, which makes this a physics puzzle, since without a vacuum air drag at such speeds become a serious issue, it has no rails and according to Musk it’s a somewhat of a mix between a railgun, a concord and an air hockey table. George Maise, fluid dynamics expert at Maglev 2000 said “If somebody other than Musk had proposed this, I would say it’s very suspect”.

The idea that such a hyped project, one that if it’s to achieve even half promised will need an incredible amount engineering, is going to be open source is quite frankly mind blowing. Elon Musk’s remark is an answer to a concerned follower, worried about plagiarism, yet the inventor responded with disdain to patents, perhaps, I don’t know, we should start discussing patent law more.

The case in favor of patents

Patents encourage innovation by given inventors profit incentives. A lot less people (presumably) will try to change the world if changing the world can’t feed their family. By granting inventor time-restricted monopolies we’re creating an innovation culture.

In some markets R&D is incredibly expensive, so developing a new product (say a new vaccine) may cost hundreds of millions or even billions of dollars, but copying it once it has been developed is extremely cheap. Patents protect companies that are investing in R&D, which are the ones really promoting innovation.

An innovative society and one in which R&D is protected promotes economic growth, creates new jobs, and increases life standards by introducing new products.

The case against patents

Patents discourage innovation because every single piece of new idea is constructed on top of old ideas, by introducing patents the costs of actually designing something new can become extremely high since the owners of patents have the right to set any licensing fee (for the most part, there are exception like FRAND) or denying you altogether a license.

The history of the small guy who comes up with an amazing idea and patents it, then becomes a billionare is far less common than that of a small guy who gets crushed by patent lawsuits.

Also, the only two ways in which a patent holder can profit from its patent is by (i) licensing its patent (ii) having a monopoly. The way (i) seems good enough, you invent something that uses someone else’s invention and you pay him a licensing fee (of course, how much is he charging you? Is it a reasonable amount? However, the costs in patent lawsuits against alleged infringers (not infringers) is exponentially higher than the amount of money paid for all patent licenses combined. It should be mathematically obvious that inventors (as a group) are losing tons of money by the means of method (i). Method (ii) is granting inventors the skill to create a monopoly and is very well known that monopolies screw with their customers by the means of monopoly pricing.

Patents mostly help multinationals that hold thousands by allowing to sue smaller companies while getting mostly protected from lawsuits (IBM published a study in which it stated that its patent portfolio biggest contribution was protecting IBM from lawsuits). So it mostly doesn’t benefit inventors as a group, it most certainly doesn’t benefit consumers and it doesn’t benefit at all small companies.

Is there some truth in the case for patents? Basically no. And that’s not a matter of stories but of macroeconomic data.

Elon Musk’s story.

Despite being an inventor he’s clearly against patents in general, he specifies he only wants such things when they are key to a company survival. Let’s ignore how should we deal with this exception and focus instead on why releasing something as the hyperloop as open source will without a doubt push more innovation than otherwise.

Say this was patented, it means that Musk would own the monopoly over any construction of the hyperloop. Obviously, licensing adds to the cost of developing or improving upon the original design of the hyperloop, let alone the construction of one, without actually increasing innovation in any sense. Worse yet, it may kill innovation off since the patent holder could choose not to license the patent at all.

This showcases why patents can be such a bad idea: They may seem brilliant if you believe nobody will innovative otherwise or if you pretend that future innovation isn’t built upon previous inventions.

Under an open source style of distribution innovation is actually encouraged as modifying and building is free from any licensing costs, once an idea has been stumbled upon free and universal access to do and play around with it as much as you wish is the best way to sparkle a sort of chain reaction, innovation that produces even more innovation.

Imagine how the smartphone market would like today if FRAND (Fair, Reasonable And Non-Discriminatory terms) didn’t exist, newcomers would be left out of the market by their sheer incapacity to pay unreasonable licenses or simply by not being granted the right to use it. Big Corporations may be able to get into terms with each other if a product is totally impossible to manufacture without each other patents (radios, displays, etc), but small entrepreneurs have little to no bargain power and would simply disappear. Instead of a thriving competitive market we will probably experience some form oligopoly with very little competition.

We don’t need to a moral argument to support the case against patents, the pragmatic argument is strong enough as it stands. If we want a world filled with Hyperloops open source is the way to go, Kudos to Musk for choosing this path and let’s hope what he presents matches his ambitious description.