Tuesday, August 11, 2015

The Economist flashes back to 1851

In a post titled Amendment of the patent laws, the Economist had a quote from July 1851:

A leader in our July 26th issue that year thundered that the granting of patents “excites fraud, stimulates men to run after schemes that may enable them to levy a tax on the public, begets disputes and quarrels betwixt inventors, provokes endless lawsuits [and] bestows rewards on the wrong persons.” In perhaps our first reference to what are now called “patent trolls”, we fretted that “Comprehensive patents are taken out by some parties, for the purpose of stopping inventions, or appropriating the fruits of the inventions of others.”

link: http://www.economist.com/news/business-and-finance/21660769-second-leader-1851-about-patents-amendment-patent-laws#wJs3EY37ODBkDyY6.99

Footnote 9 of the article Mgbeoji, Ikechi (2001) "Patents and Traditional Knowledge of the Uses of Plants: Is a Communal Patent Regime Part of the Solution
to the Scourge of Bio Piracy," Indiana Journal of Global Legal Studies: Vol. 9: Iss. 1, Article 9 notes the same text as mentioned by the Economist:

The patent system

'inflames cupidity,' excites fraud, stimulates men to run after schemes that may enable
them to levy a tax on the public, begets disputes and quarrels betwixt inventors, provokes useless lawsuits, bestows rewards on the wrong persons, makes men ruin themselves for the sake of getting the privileges of a patent.
Amendment of the Patent Laws, ECONOMIST, July 26, 1851, at 811.

Separately, from The Betrayal of Patent Reexamination: An Alternative to Litigation, Not a Supplement, 19 Fed. Cir. B.J. 177 (2009):

Over 150 years ago, some claimed the prevailing wisdom of the American public was that "[t]he granting [of] patents inflames cupidity, excites fraud, stimulates men to run after schemes that may enable them to levy a tax on the public, begets disputes and quarrels betwixt inventors, [and] provokes endless lawsuits." n266 In the minds of some, "[t]he principle of the law from which such consequences flow cannot be just." n267 In turn, "[i]nventors . . . were looked upon as a class of long-haired, dreamy-eyed persons suffering in a greater or less degree of some mental obliquity." n268 The journey of patent law, and our nation's collective respect for the contributions of inventors, has thankfully evolved since that time. In fact, "[i]t distinctly marked . . . a great step in the progress of civilization when the law took notice of property in the fruit of the mind." n269 Today, "[t]he role of intellectual property is changing from that of an asset used by businesses for their own purposes to that of an input for webs of innovation among clusters of firms. Intellectual property is moving [*226] from enabling a transfer of knowledge to creating a market for it." n270 And the United States is richer for it.

with footnote 266: Kenneth Cukier, A Market for Ideas: A Survey of Patents and Technology, ECONOMIST, Oct. 22, 2005, at 3, available at http://www.economist.com/printedition/displaystory.cfm?story_id=5014990 (second alteration in original) (internal quotations marks omitted).

Inventor Thomas Edison said some interesting things about patents on batteries. In 1883, he noted that the storage battery was a mechanism for swindling the public by stock companies. More specifically, from The Electrician (London) Feb. 17, 1883, p. 329,

"The storage battery is, in my opinion, a catchpenny, a sensation, a mechanism for swindling the public by stock companies. The storage battery is one of those peculiar things which appeals to the imagination, and no more perfect thing could be desired by stock swindlers than that very selfsame thing. ... Just as soon as a man gets working on the secondary battery it brings out his latent capacity for lying."

link: http://www.its.caltech.edu/~matsci/btf/EdisonText.html

John Petersen wrote:

Edison understood innovation problems well, but he didn’t understand innovation problems in the battery industry until he tried to develop a better battery for use in electric cars and failed to win the hearts and minds of a grateful nation.

The essential truth most battery developers fail to recognize is that the problem isn’t their products or even their development plans; it’s the fertile imaginations of investors and potential users who read about gee-whiz discoveries in research laboratories, overestimate the importance of the developments and make wildly optimistic leaps from the possible to the absurd. Battery developers don’t lie to investors and potential users; but the investors and potential users lie to themselves and then blame the industry for failing to meet their patently unreasonable expectations.

link: http://www.altenergystocks.com/archives/2011/08/lithiumion_batteries_and_8track_tapes_1.html

*** In passing, some cases relating to Edison:

THOMAS A. EDISON, Inc., v. WATERBURY BATTERY CO., 281 F. 254 (1922)

And, on appeal, in 287 F. 320:

In this court especial emphasis is laid on the invention of Thomson (866,748) as showing, if not invalidity, certainly noninfringement. The use of Thomson's device on this appeal is a good example of the ease with which mere form tends to assume undue importance. Thomson shows a circular plate somewhat like defendant's. He also discloses and claims what he calls a "lip" upon each of the vertical edges of his circular zinc; that is, he turned back the zinc plate upon itself, and he did it "to preserve the life of battery zincs and to save at least half their value, which, as at present used, is wasted." But examination of the patent shows that Thomson's sole concept, his desired result, was to prevent in a partially submerged zinc the more rapid wearing away of the plate at the surface of the electrolite. Let it be assumed that Thomson prevented his plate from being eaten in two or severed at the electrolytic surface, as soon as it otherwise would have been, and that he did so by means of his turned-over lip. But this is a different thing from changing the structure of the entire plate in such wise as to present to electrolytic action an entire plate surface thickened and thinned at the places where each would be most serviceable for maintaining both effective area and structural strength.

As to the Hudson patent, we entirely agree with the court below that no infringement is shown; but we are also of opinion that the patent itself is invalid. Starting with the knowledge that in any zinc plate holes would certainly appear in time, this patentee (at most and best) deliberately made a weak spot -- i.e., a thin place -- in the plate of the prior art. He thinks that zincs "wear away during electrolytic action quite evenly"; therefore he made a thin place, how thin he does not say, but thin enough so that, when it wore through, the user would be advised that the plate would "have to be renewed shortly, say in from two or four weeks' time." He then put a raised rim around the thin spot, [**7] so that an observer would know where to look for the expected hole.

**As to licensing, from 200 F. 342 :

It is also to be noted that the defendant, against whom a decree for a specific performance is prayed, is the Patents Company, which was under no contractual relation with the complainant, having had a merely verbal understanding with the other defendant, the Edison Manufacturing Company, that it, the Patents Company, would issue licenses to such of the licensees of the Edison Manufacturing Company as were in good standing and were not in default in any of the terms and conditions of the license agreement theretofore made with the Edison Company, or whose licenses were in full force and effect. We do not think that this was such a contract as was made for the benefit of the complainant, and therefore entitling it to the decree prayed for. The Patents Company had no contract with the licensees of the Edison Company, but had merely consented to issue its license to such of them as the Edison Company should point out as in good standing and not in default in their agreements with that company. We think [**27] the court below was clearly right in the exercise of its judicial discretion, when it refused the relief sought by the complainant.

** One can find an interesting review of inventions in US v. Western Electric, 531 F. Supp. 894 (1981)

**Merely fyi: This court takes notice of the fact that various publicly traded corporations, chiefly electric utilities, contain the name Edison: for example, Boston Edison Company, Commonwealth Edison Company and Consolidated Edison of New York. In contrast, it may be observed that Thomas Edison during his lifetime secured an injunction against an automobile manufacturer using his name in its trade name. Edison Storage Battery Co. v. Edison Automobile Co., 67 N.J.Eq. 44 (Ch.1904).


we are unwilling to say that an unissued patent on an unproven process can be given the same value, or, under the circumstances of this case, even an amount approaching the same value, as when the patents are finally issued and the process has proven a success. We shall not repeat what we have heretofore said as to the unfavorable situation existing on March 1, 1913, with respect to the issuance of the patents, but even aside from this feature we think that we would be imputing too much to one, however skilled in the art here concerned, to say that he could have foreseen on March 1, 1913, the ultimate outcome of the Adams process to the extent that he would have purchased or would have the company he represented purchase on the basis of a valuation at that time [**98] of $25,000,000, even though such payment should be on the installment basis.


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