A Legal Showdown: AutoStore vs Ocado Group

We recently wrote about the power of opensource software where a community of volunteers – like The Apache Foundation – can create billions of dollars in free software that helps advance technology in society. A similar ethos has been applied at Tesla where an open source patent pledge made in 2014 promises to “not initiate patent lawsuits against anyone who, in good faith, wants to use its technology.”

The main goal of the patent system is to protect innovation and spur growth. That’s according to a paper by Kellogg School of Management which states, “whether this goal is achieved depends on how patents are defined and protected, which itself depends on how the legal system resolves intellectual-property disputes.” The paper goes on to argue that increasing the rights of patent-holders may actually serve to decrease innovation. In other words, companies that spend all their time duking it out in the court system aren’t focused on innovation. It’s a simple opportunity cost.

Whenever we’re rooting around in SEC filings documents we often come across lawsuits that companies are involved in. We used to view these as a red flag until someone raised an interesting point. The bigger the size of the opportunity, the more likely companies will be willing to fight for it. A large number of lawsuits also hints that an opportunity is massive.