Inventing around Edison s incandescent lamp patent

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1 Introduction, On November 4 1879 Thomas A Edison filed a patent application entitled Electric Lamp with the U S. Patent Office which was granted as U S Pat No 223 898 on January 27 1880 hereinafter called the 898. patent This patent was one of Edison s 424 patents on electric light and power generation3 and its. significance was not readily apparent for several years This paper presents an original analysis of the. inventive activity directed at designing around Edison s 898 incandescent lamp patent We show that the. attempt to enforce the Edison patent stimulated much downstream development work of varied commercial. and technological significance The originality of this study lies in the data we collect that reveals surges of. patenting activity in the incandescent lamp patent classes after key events in the legal trajectory of Edison s. patent after his filing suit against an infringer in 1886 and especially after 1892 when the appeal court. affirmed the 1891 decision and upheld the validity of Edison s patent We analyze the patents that constitute. the surge of patents after the 1891 court decision and find that much of the surge can be understood as a. stimulated effort to design around particular elements captured in Claim 2 of Edison s patent the then. hardest claim in Edison s patent to circumvent Furthermore our novel forward citation method and reading. of a selection of these patents reveals that while some design around work did not yield commercially viable. alternatives to Edison s lamp new technologies of later commercial significance were introduced to the public. record such as the Tesla coil hermetically sealed connectors chemical vapor deposition process tungsten. lamp filaments and phosphorescent lighting that led to today s fluorescent lamps. We complete our analysis of the role of this patent by compiling relevant indicators of the 898 patent s. holder General Electric GE s control of the incandescent lamp market The data for the number of lamp. producing competitors for lamp prices and market share reveal this patent to have been largely ineffectual in. improving GE s commercial position in the incandescent lamp market or blocking others. Our result contradicts a widespread characterization of the Edison 898 patent as a broad scope patent that. blocked downstream technology development a characterization that contradicts the generally accepted. rationale for the existence of the patent system to provide an incentive for innovation and investments in. new technologies 4 The view that patents block downstream development is now a staple in the patent. literature on the basis of allegations that a series of individual patents such as the Edison 898 patent have. actually blocked development Howells and Katznelson 2012 Therefore the allegation that the 898 patent. blocked downstream development deserves a detailed analysis in its own terms In Section 6 of this paper we. provide such an analysis for specific assertions of downstream development block made by Robert Merges. and Richard Nelson Merges and Nelson 1990 Merges and Nelson 1994 We structure this section in the. manner of a formal proof first we derive from general market and economic principles a standard of proof. including several criteria for determining whether development block has taken place We then systematically. apply each of these criteria to all of Merges and Nelson s allegations that there was development block. downstream of the 898 patent We use the evidence we collected and documented in Section 4 to show that. there is no basis in fact for assertions that the Edison patent blocked downstream development We. conclude that if as Merges and Nelson state the Edison case constitutes their best example Merges and. Nelson 1990 908 it is clearly ill advised to entertain their policy recommendation that the granting and. enforcing of broad pioneer patents is dangerous social policy Merges and Nelson 1994 16. This paper is organized as follows Section 2 discusses the literature case law and reviews the empirical. studies regarding design around Section 3 introduces our new empirical methods for analyzing design. around outcomes and our empirical data Section 4 describes the legal and commercial history of the Edison. patent compiling evidence on design around activity the competitive environment in the incandescent lamp. industry and price decline and market share records We have used a variety of source material for this study. with emphasis on primary sources such as patent disclosures legal court decisions contemporaneous trade. 3 Electric Light and Power Patents The Thomas Edison Papers Rutgers University http edison rutgers edu elecpats htm. 4 We acknowledge that some unaccountably neglected business and technology historians do not view the enforcement of Edison s. patent as having had such an effect See references to the books by Bernard Carlson and Harold Passer discussed in Section 6. publications and documents from the Thomas Edison Papers collection 5 We discuss our finding that. improved certainty of Edison s claim boundaries after the court rulings spurred design around investments in. Section 5 In Section 6 we refute the assertions that the enforcement of Edison s patent stifled downstream. development by marshaling the evidence assembled in Section 4 We conclude in Section 7 that the study of. Edison s patent is the study of a patent system that works as intended to promote the progress of the useful. 2 Design around patents an essential element of competition and innovation. A patent is a barrier to direct commercial entry but not a barrier to competition and innovation in the field to. which the patent pertains Of course improvers who wish to sell a competing product during the term of a. patent must avoid the scope of the patent s claims in order to avoid infringement Yet when it is. commercially feasible the ability to design around a patent protects improvers and permits them substantive. commercial participation and leadership in the field Their commercial design around developments may also. advance the extant patented technology by building and improving upon it When such advancement. produces patented inventions we may use the more established term invention around but in general a. design around does not require invention and patenting as the prior art may suffice to achieve its object. Recognition of this function of the patent system makes it no longer possible to assert as several authors. have6 that a patent inevitably reduces the output of the technology it subjects to exclusive control. The importance of the design around function of patents has been and sometimes continues to be. recognized The National Academy of Sciences in its 1962 report on the role of patents in research. acknowledged that while it may lead to duplicative research one of its positive effects is that new and. superior products or processes are frequently developed that probably would not have been developed at. least as soon in the absence of the need to invent around National Research Council 1962 14 Courts. have also recognized designing around and inventing around activities as important innovation inducing. aspects of the patent system The U S Supreme Court has noted the difference between the intentional. copyist making minor changes to lower the risk of legal action with the incremental innovator designing. around the claims yet seeking to capture as much as is permissible of the patented advance. Warner Jenkinson Co v Hilton Davis Chem Co 520 U S 17 36 1997 The Court of Appeal for the Federal. Circuit has observed that d esigning around patents is in fact one of the ways in which the patent system. works to the advantage of the public in promoting progress in the useful arts its constitutional purpose. Slimfold Mfg Co v Kinkead Indus 932 F 2d 1453 1457 Fed Cir 1991 The court emphasized that designing. around patents promotes technological progress by encouraging beneficial competition 7. It is not widely recognized that public policy regulations and the patent statute in the U S expressly protect. and encourage designing around patents For example the Hatch Waxman Act has the goal to encourage. generic drug developers to design around the existing approved drugs pioneer patents by the statutory means. of a 180 day period of marketing exclusivity for generic drug manufacturers who seek U S Food and Drug. 5 Throughout this paper we often refer to online resources of the Thomas Edison Papers collection by an alphanumeric string. hyperlinked to particular records The reader can use the alphanumeric reference string in the Document ID field in the form. at http edison rutgers edu singldoc htm to retrieve the image of the reference. 6 For a review of literature on this topic in the context of downstream improvements see Lemley 1997 996. 7 State Indus Inc v A O Smith Corp 751 F 2d 1226 1235 36 Fed Cir 1985 Conduct such as keeping track of a competitor s. products and designing new and possibly better or cheaper functional equivalents is the stuff of which competition is made and is. supposed to benefit the consumer One of the benefits of a patent system is its so called negative incentive to design around a. competitor s products even when they are patented thus bringing a steady flow of innovations to the marketplace See also. Hilton Davis Chem Co v Warner Jenkinson Co 62 F 3d 1512 1520 Fed Cir 1995 The ability of the public successfully to design. around to use the patent disclosure to design a product or process that does not infringe but like the claimed invention is an. improvement over the prior art is one of the important public benefits that justify awarding the patent owner exclusive rights. to his invention rev d 520 U S 17 1997 In re Alappat 33 F 3d 1526 1553 Fed Cir 1994 Even after a patent has been. awarded for a new useful and nonobvious practical application of an idea others may learn from the underlying ideas theories. and principles to legitimately design around the patentee s useful application Yarway Corp v Eur Control USA Inc. 775 F 2d 268 277 Fed Cir 1985, Administration FDA approval for their follow on products 8 Designs around are thus made possible. because Congress recognized and codified through the Hatch Waxman Act the difference between. therapeutic equivalence bioequivalence and claimed subject matter equivalence under patent law 9 Another. example of an agency regulatory process that helps innovators validate specific design around solutions to. avoid infringement liability is the availability of the U S International Trade Commission s ITC advisory. opinions rendered on specific designs around in Section 337 patent infringement import investigations 10. U S jurisprudence widely protects efforts to design around extant patent claims Courts have recognized. technology standard development organizations needs for full disclosure of their members patents and. pending patent applications in order to facilitate designs around patented technologies in developing industry. standards 11 have limited the availability of punitive damages to claims of willful infringement following good. faith design around efforts reasoning that such infringement remedies can deter designs around 12 and held. that a party alleged to have repeated infringement when found to have attempted a new design around the. patent should not be held in contempt of court 13, On the other hand not all scholars agree on the net benefits of the patent system s design around feature. There are those who argue that competitors compelled to design around patent claims waste resources in. finding non infringing ways of achieving the same results as patented inventions diverting resources from. other productive efforts 14 However these authors provide no evidence that the costs of designing around. patents exceed the benefits Nor is it always clear whether the often used term in the economic literature. imitation in fact entails designing around patent claims Although analytical models have been constructed. to account for R D waste by imitators who invent around the original patent Kaplow 1984. Gallini 1992 neither model introduces the possibility of imitators who contribute valuable improvements. or new innovations that would not have been otherwise introduced but for the incentives to solve a problem. in a different and new way Nor do these models address the contribution to consumer welfare from the. increased competition of successful designs around It is a purpose of this study to fill the empirical gap in. current scholarship by demonstrating an anatomy and reach of the advantageous outcomes of invention around. patented technology that of Edison s incandescent lamp patent U S Patent No 223 898. 8 Drug Price Competition and Patent Term Restoration Act of 1984 Pub Law No 98 417 98 Stat 1585 1984 The 180 day marketing. exclusivity provision is codified in 21 U S C 355 j 5 B iv. 9 FTC 2002 7 The 180 day exclusivity period under the Hatch Waxman Act provides an increased economic incentive for. companies to challenge patent validity and to design around patents to find alternative non infringing forms of patented drugs. and get to market, 10 19 C F R 210 79 Advisory opinions For details on ITC design around advisory opinions see Blakeslee and Meservy 2007. 11 Qualcomm Inc v Broadcom Corp 539 F Supp 2d 1214 1229 S D Cal 2007 noting that intentional concealment of IPRs deprived. Standard Development Organization of opportunity to design around patented technologies in developing a standard aff d in. 1 Inventing around Edison s incandescent lamp patent evidence of patents role in stimulating downstream development Ron D Katznelson1 and John Howells2 ABSTRACT We provide an anatomy of the influence of Edison s incandescent lamp patent U S 223 898 on downstream development and show how subsequent inventor activity adjusts to the improved certainty provided by court decisions as to

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