While not as momentous as its introduction of the Prius in 1997—the first mass-produced hybrid vehicle—Toyota Motor Corp (TM) quietly took another bold, industry-leading step toward technological innovation last month.
The world’s largest automaker ponied up a one-time fee—believed to be $20 million—and became the eighth full member of a consortium that most people do not associate with the auto industry at all.
It’s called the Open Invention Network, and its other members are Google, IBM, Red Hat (RHT), NEC (NEC-ELECTRONICS), Philips (PHG), Sony (SNE), and SUSE (a unit of Britain’s Micro Focus). Fortune is the first to report Toyota’s startling move.
Formed in 2005, OIN’s mission is to protect and encourage the collaborative development and use of open-source software, like the Linux operating system, which can be freely copied, altered, and distributed, and which no one person or company owns. OIN pursues a variety of strategies aimed at protecting the users and developers of such software against the threat of patent suits by proprietary software manufacturers, like Microsoft and Apple. Such suits, if successful, could deny users the freedoms that make open-source software desirable.
That Toyota would now join the group reflects the growing importance that software is playing in cars, and the growing number of automakers who believe that open-source software is the best approach to providing many of the needed solutions for its vehicles. Open-source champions say such software is cheaper, more flexible, and of higher quality, because it benefits from the pooled resources of collaborative input.
“Toyota’s assumption of a full membership in OIN and its participation in critical open source projects … evidence its leadership in the global automotive industry,” OIN chief Keith Bergelt told Fortune in an email. “Technology and market leaders like Toyota that are pioneering the expansion of Linux into new and important markets are driving innovation and helping to shape OIN’s future as a vital safeguard of patent nonaggression and continued freedom of action in Linux.”
A Toyota representative did not return an email seeking comment, but on Wednesday the company’s name will begin to appear on OIN’s website as its eighth member, according to Bergelt. The last new member was Google, which joined in 2013.
The leading open-source automotive software project is Automotive Grade Linux (AGL), which involves engineers from about 70 companies. They are working to provide a platform for infotainment and navigation systems but plan to broaden their mission eventually to provide digital instrumentation panels, too. The ultimate goal, according to a spokesperson, is to have virtually all the code in a vehicle be based on Linux, including autonomous (self-driving) systems.
Auto maker participants in AGL include Toyota and Mazda, at the highest “platinum” level of financial commitment ($500,000 per year), followed by Honda, Nissan, Ford, Hyundai, Jaguar/Land Rover, Mitsubishi, and Subaru. Other participants include parts maker Denso, electronics giants Panasonic and Fujitsu, and semiconductor manufacturers Intel and NXP.
Auto-related companies—including, in the past year, Ford, Hyundai/KIA, Beijing-based truck company Beiqi Foton Motor, and semiconductor maker NXP—have also begun to sign up as “licensees” of OIN, which are participants in the community that OIN has created to accomplish its mission.
As originally conceived in 2005, OIN buys fundamental patents in the internet and e-commerce space that it pledges to hold defensively for the benefit of the open-source community. Any company that signs up as an OIN licensee—which costs nothing—gains permission to use those patents. Licensees also pledge not to use any of their own patents relating to certain OIN-defined areas against other licensees. If some aggressor company does bring a patent suit against an OIN licensee relating to Linux or another covered open-source project, OIN may transfer a patent from its own portfolio to the licensee for use in making a counterclaim against the aggressor.
Though there were only 32 OIN licensees when Bergelt became the organization’s CEO in 2008, the number has grown rapidly in recent years. Today, there are more than 2,000 OIN licensees, according to a press release issued Wednesday. Though many are small, nonprofit projects, there are about 40 public companies among them, including Cisco Systems, Fujitsu, LG Electronics, Twitter (TWTR), Seagate (STX), SolarCity (SCTY), and SpaceX (SPACE).
(Meanwhile, Microsoft and Apple have each been developing proprietary automotive software. Microsoft’s Windows Embedded Automotive 7 has been used by Ford, Fiat, Nissan, and Kia, while Apple’s CarPlay is available on nearly 30 brands, according to the company. Google’s Android Auto, which is Linux-based, is currently available in about 20 brands. Though open-source, Android’s development is largely supervised by a single company, Google, which differentiates it from most open-source projects.)
Although OIN originally saw its mission as being focused around its defensive patent portfolio, it has broadened its approach over the years. It now supports programs that enable open-source software developers to publish their inventions—preventing others from later trying to patent their ideas—and programs that try to persuade patent officials to reject patent applications or invalidate issued patents on the grounds that they were based on ideas that were actually invented earlier by someone else.
OIN does have its detractors. Its most outspoken has been Florian Mueller, an IP analyst and app developer who runs a blog called FOSS Patents. Mueller, who in the past consulted for Microsoft and Oracle, has called OIN “a myth and a mystery.” He argues that OIN has not succeeded in sparing several phone manufacturers, including Samsung, HTC, and LG, the obligation to pay licensing fees to Microsoft for the right to package Linux-based Android in their phones—as much as $2 billion in some years. (HTC and LG are OIN licensees; Samsung is not.)
Bergelt has responded that those companies are licensing large and diverse patent portfolios from Microsoft, and that, in any case, “We’re not trying to prevent people from doing what they think is prudent. That doesn’t stop us from working behind the scenes to reduce the effect of these patents that are yielding royalties right now, in so far as they support an anti-innovation agenda.”
(In April, Microsoft announced that its patent revenue had dropped 26% year over year. A Microsoft investor relations officer told Business Insider that the reduction reflected the rise of low-cost Android handset manufacturers in China and India that are not paying licensing fees.)
