Thomas Edison Was a “Patent Troll”

The making of America.
May 19 2014 5:45 AM

Thomas Edison Was a “Patent Troll”

Patent litigation isn’t nearly as new as people think it is.

Thomas Edison, “patent troll.”
Thomas Edison, “patent troll.”

Photo illustration by Juliana Jiménez Jaramillo. Photos courtesy of LOC/Creative Commons.

Newspapers have reported a massive patent infringement campaign against individuals—almost 1,000 farmers were sued for patent infringement in just one courthouse in a single year! Even worse, the plaintiff is not a competing farmer or manufacturer; instead, it merely bought the patent rights and is now asserting them against unsophisticated defendants for the sole purpose of obtaining royalty payments.

In an increasingly rare moment of agreement, members of Congress, the president, lobbying groups, and others have found a common enemy. It’s the dreaded “patent troll.” Although this term has proven next to impossible to define, it usually refers to an individual or company who doesn’t manufacture a patented invention but instead authorizes others to make or sell the innovative technology. In more legalistic terms, these are entities whose business model is licensing others to manufacture and sell patented innovation, and they do so through either contract negotiations or patent infringement lawsuits.

Recently, the patent licensing business model has taken center stage in the public policy debates in a way not seen since the 19th century (when the popular rhetorical epithet was “patent shark”). In fact, the story of massive numbers of farmers being sued for patent infringement was not torn from today’s headlines—unless of course one is looking at headlines from the late 1880s.

Advertisement

Yet, many smart people assume that the patent licensing business model—and the buying and selling of patents themselves—is an entirely recent development. In 2006, for instance, Justice Anthony Kennedy stated as simple fact in eBay v. MercExchange that “An industry has developed in which firms use patents not as a basis for producing and selling goods but, instead, primarily for obtaining licensing fees.” Commentators now assert in prestigious law journals that the “patent marketplace is a relatively new secondary market.” Now we’re seeing calls that the patent laws should be changed in response to this “new” development by mandating that all patent owners manufacture or sell their patented innovations in the marketplace.

The problem, as I stated in testimony before Congress in the fall, is that the “patent troll” epithet would require us to condemn famous American innovators like Thomas Edison and Charles Goodyear who contributed immensely to America’s innovation economy in the 19th century. This is not hyperbole. This pejorative label has been applied to universities, such as the University of Wisconsin. It has also been applied to individual inventors who have had to sue commercial firms for infringing their patents. The reason is that they all license rather than manufacture their patented innovation. This has long been an essential feature of the American patent system in successfully and efficiently promoting new inventions and driving the innovation economy. This isn’t unique to patented innovation, as Adam Smith famously recognized in 1776; it is specialization and the division of labor that are the keys to a flourishing market—in the context of patented innovation, inventors should invent and businesspeople should manufacture and sell. This is why it was embraced by Goodyear, Edison, and others in the 19th century, and for this they would be condemned today.

Still not convinced?  Let the facts be submitted to a candid world (to turn a phrase from the Declaration of Independence).

Thomas Alva Edison

Thomas Edison both sold and licensed his patented innovations. As economists have reported, Edison sold many patents in his early career to fund his full-time research and development activities. Even after he became widely successful and famous—known as the “Wizard of Menlo Park”—Edison still participated in the secondary market, such as selling his patented innovation in incandescent light bulbs to the General Electric Co. (as discussed in a recent biography).

But Edison also manufactured and sold some of his patented innovations, such as his first efforts at commercially exploiting his electric light bulb and phonograph. These business ventures have been described as “shaky” and “dismal” by his biographers. The products that ultimately dominated the marketplace from Edison’s initially path-breaking inventions were oftentimes produced by his competitors, such as the Victrola record player. Henry Ford famously quipped that Edison was “the world’s greatest inventor and the world’s worst businessman.”

Edison would have been wiser to continue to embrace market specialization—inventing in his lab and selling or licensing his patents to others to manufacture and sell his innovative products. It was doing this that brought him his fame and fortune as a young innovator at Menlo Park, and ironically it would have brought him notoriety today as a “patent troll.”

TODAY IN SLATE

Frame Game

Hard Knocks

I was hit by a teacher in an East Texas public school. It taught me nothing.

What Hillary Clinton’s Iowa Remarks Reveal About Her 2016 Fears

After This Merger, One Company Could Control One-Third of the Planet's Beer Sales

John Oliver Pleads for Scotland to Stay With the U.K.

If You’re Outraged by the NFL, Follow This Satirical Blowhard on Twitter

Jurisprudence

Don’t Expect Adrian Peterson to Go to Prison

In much of America, beating your kids is perfectly legal. 

The Juice

Ford’s Big Gamble

It’s completely transforming America’s best-selling vehicle.

I Tried to Write an Honest Profile of One of Bollywood’s Biggest Stars. It Didn’t Go Well.

Here’s Why College Women Don’t Take Rape Allegations to the Police

The XX Factor
Sept. 15 2014 1:51 PM Here’s Why College Women Don’t Take Rape Allegations to the Police
  News & Politics
Frame Game
Sept. 15 2014 5:13 PM Hard Knocks I was hit by a teacher in an East Texas public school. It taught me nothing.
  Business
Moneybox
Sept. 15 2014 7:27 PM Could IUDs Be the Next Great Weapon in the Battle Against Poverty?
  Life
Outward
Sept. 15 2014 4:38 PM What Is Straight Ice Cream?
  Double X
The XX Factor
Sept. 15 2014 3:31 PM My Year As an Abortion Doula
  Slate Plus
Tv Club
Sept. 15 2014 11:38 AM The Slate Doctor Who Podcast: Episode 4  A spoiler-filled discussion of "Listen."
  Arts
Brow Beat
Sept. 15 2014 5:26 PM Robin Thicke’s Bizarre “Blurred Lines” Deposition Is Both Unflattering and Convenient
  Technology
Future Tense
Sept. 15 2014 4:49 PM Cheetah Robot Is Now Wireless and Gallivanting on MIT’s Campus
  Health & Science
Bad Astronomy
Sept. 15 2014 11:00 AM The Comet and the Cosmic Beehive
  Sports
Sports Nut
Sept. 15 2014 8:41 PM You’re Cut, Adrian Peterson Why fantasy football owners should release the Minnesota Vikings star.