You can argue anything you like, black is white, the sky isn't blue, corporate exceptions mean it isn't "open at all" - but it clearly is at least more open then other than totally closed designs. If open means total freedom, including selling on at a lower margin; then yes, people might do express that freedom and undercut you - I can't see any way around that by definition, but I also don't see it as a problem - what's value is lost exactly?
I think what is a problem is that people can't use a subset of you design to make their own stuff. Maybe the solution to that is a common library of totally free design-pattern, but that still requires integration into a finished product?
> Allow your competitors to use your design ... they just must contribute back improvements.
won't this just lead to trivial improvements? perhaps a bug bounty, or similar, would be better? or even licensing the original design for either a set fee, or a %?