Back in 2015, Toyota announced it would grant royalty free access to 5,680 fuel cell vehicle (FCV) technology patents through 2020. Earlier this month, Toyota made an announcement to offer royalty free access to 24,000 of its hybrid vehicle patents. This includes hybrid electric, plug-in hybrid electric vehicles and fuel cell electric vehicles.
Then, earlier this week, Toyota announced a major tie up with Beijing Automotive Group (BAIC) to supply it with fuel cell equipment. Based on Fortune 500 figures from 2017, BAIC Group generated $69B in revenues. This is a major move by Toyota to expand its fuel cell technology into the world’s largest automotive market.
A quick look at all patents and published patent applications filed since January 1, 2010 assigned to Toyota and BAIC Group reveals interesting data on the how the each company is looking at the world:
It is quite possible that Toyota’s initial foray into publicizing its intent to offer competitors a royalty free license to its fuel cell patents back in 2015 was to attract relationships exactly like this one.
Toyota has already sunk the costs into the R&D involved with developing the technology, the costs associated with filing, prosecuting, and maintaining the patents, and the costs involved with manufacturing the parts and establishing the supply chain.
The alternative would be to charge a license fee to its competitors for access to its technology. However, the good-will that comes with marketing “royalty free” licenses, along with the revenue from selling equipment and know how likely makes up for any lost profits stemming from licensing fees.
For Toyota, this deal appears to be a winner: it benefits from positive headlines promoting, “Toyota’s Royalty Free Patents” while increasing hybrid electric vehicle fleets, all while incurring minimal expenses.