Tuesday, April 08, 2014

Was Elias Howe a patent troll?

There was another issue in the story by Susan Decker for Bloomberg on patent trolls. It relates to Decker's reference to Elias Howe, considered by some patent reformers as an early example of a patent troll. The relevant text of Decker:

Even the idea of investors buying a stake in a patent litigation is old: It’s how Elias Howe, inventor of a unique type of stitch, funded his patent battles with sewing machine company founder Isaac Singer.

What is new is the speed with which technology changes in complex devices comprising hundreds of parts and features that are each a patent lawsuit in the making.

As awareness of patents as an asset class grows and industries change, companies are under pressure to find ways to get money from their patent portfolios, said Don Fancher, a principal of Deloitte Financial Advisory Services. That can come through licensing, sales and litigation, he said.

Lobbying groups that use the word “troll” say the term helps crystallize a complex issue for politicians.

“A lot of it’s the smell test,” said Michael Beckerman, CEO of the Internet Association, a lobbying group whose members include Amazon and Google.

“You know the difference,” he said, “between the company trying to make a business and some fake LLC, where their whole business model is figuring out how much people will have to spend in court.”

As mentioned in an earlier IPBiz post, as to Decker's text --investors buying a stake in a patent litigation --, Howe's initial investor was Fisher, who provided Howe with money to perfect the invention and a place for Howe and family to live.
Finally, Fisher had enough and sold his interests in the work, which finally ended up with Bliss, who as half owner of Howe's patent, did finance the patent litigations. For his money, Bliss took a mortgage on the farm of Howe's father.

Howe got his initial patent, number 4750, in 1846. Howe spent at least 8 hears in development and more than 5 in litigation. During this time Walter Hunt (an earlier inventor) was being paid by Isaac Singer to break Howe's patent claims. In fact, Hunt applied for a patent in 1853, but abandonment was an issue.

The final decision was in 1854. Howe died in the year 1867 at age 48; his father died that year, and his patent ran out (21 years after the initial issuance.)

Does Howe pass the smell test?

As to speed of technology change, there were all kinds of improvements on the sewing machine and a patent thicket developed.
It was resolved for a while by a pool/cartel. Part of the deal was that Howe could not compete in sewing machines for ten years.

There was a later patent pool on airplanes, largely a deal between the Curtiss interests and the Wright interests (Orville had sold out by then, and Wilbur was dead). In both cases (swing machine and plane)the pools benefitted the established players at the expense of the newer guys.

On Howe, see http://www.sewalot.com/elias_howe.htm


Post a Comment

<< Home