Today, scholars would refer to this conflict with less rhetorical flourish, identifying it simply as a patent thicket in sewing machines. A ?patent thicket? exists when too many patents covering individual elements of a commercial product are separately owned by different entities. This concept is not unique to patent law; it is based on Professor Michael Heller‘s theory of the anticommons in real property, which arises when there is excessive fragmentation of ownership interests in a single parcel of land. According to economic theory, the problem of such excessive fragmentation of ownership interests is straightforward: it increases transaction costs, accentuates hold-out problems, and precipitates costly litigation, which prevents commercial development of the affected property. Additionally, a patent thicket can block new research into follow-on inventions, preventing the “Progress of . . . the useful Arts.“
There is now a debate raging in the literature as to whether patent thickets in fact lead to such problems, and vivid anecdotes abound about obstructed development of new drugs or problems in distributing life-enhancing genetically engineered foods to the developing world. Given this heightened interest among scholars and lawyers concerning the existence and policy significance of patent thickets, a historical analysis of the first patent thicket and its resolution in the first patent pool is important.
In modern patent and property theory, this historical study fills a gap in the scholarship on patent thickets in at least two ways. On one hand, it serves as an empirical case study of a patent thicket that (temporarily) prevented the commercial development of an important product of the Industrial Revolution. There can be no doubt that the Sewing Machine War was a patent thicket. As one historian has observed: “The great advantage of the sewing machine, from the lawyers’ point of view, was that . . . no one complete and entire working sewing machine was ever invented by one person unaided.” The sewing machine was the result of numerous incremental and complementary inventive contributions, which led to a morass of patent infringement litigation given overlapping patent claims to the final commercial product. This is important, because, as Professer Heller has observed, “[a]nticommons theory is now well established, but empirical studies have yet to catch up.” The Sewing Machine War confirms that patent thickets exist, and that they can lead to what Professor Heller has identified as the tragedy of the anticommons.
On the other hand, the story of the sewing machine challenges some underlying assumptions in the current discourse about patent thickets. One assumption is that patent thickets are primarily a modern problem arising from recent changes in technology and law. Professor Heller explicitly makes this point in The Gridlock Economy:
There has been an unnoticed revolution in how we create wealth. In the old economy — ten or twenty years ago — you invented a product and got a patent . . . . Today, the leading edge of wealth creation requires assembly. From drugs to telecom, software to semiconductors, anything high tech demands assembly of innumerable patents.
In fact, Professor Heller‘s first foray into patent thicket theory was assessing a potential anticommons in “biomedical research” that he and his co- author, Professor Rebecca Eisenberg, predicted would occur given extensive patenting of biotech research tools (a prediction that has not yet been borne out). Continuing this focus on biotech, The Gridlock Economy discusses biotech research and development almost exclusively in its analysis of anticommons theory in patent law. Despite some off-hand references to earlier patent thickets, such as a thicket in the first airplane patents that was resolved through Congress‘s enactment of a “compulsory patent pool” in 1917, the focus of the theoretical and empirical studies of patent thickets is on very recent inventions in high-technology and science — computers, telecommunications, and biotech.
A second assumption is that patent thickets are a property problem — too much property that is too easily acquired that results in too much control — and so they are best addressed by limiting the property rights secured to patentees. As Professor Heller euphemistically puts it, “Cutting-edge technology can be rescued from gridlock by creatively adapting property rights.” More specific proposals have called for limiting conveyance rights in patented drugs, authorizing federal agencies to terminate patent rights to avoid patent thickets, and “excluding patentability of genetic inventions for reasons of morality or public order.” Many scholars concerned about patent thickets hail the U.S. Supreme Court‘s recent decision in eBay Inc. v. MercExchange, L.L.C., because the Court made it more difficult for patentees to become hold-outs through threatening or obtaining injunctions. Although Professor Heller, the Founding Father of anticommons theory, acknowledges that “the empirical studies that would prove — or disprove — our theory remain inconclusive,” this has not stopped the numerous proposals of various regulatory or statutory measures to redefine and limit property rights in patents.
The story of the invention and development of the sewing machine challenges these two assumptions insofar as it is a story of a patent thicket in an extremely old technology, but, more important, it is a story of the successful resolution of this thicket through a private-ordering mechanism. The Sewing Machine War was not brought to an end by new federal laws, lawsuits by public interest organizations, or new regulations at the Patent Office, but rather by the patent owners exercising their rights of use and disposition in their property. In so doing, they created the Sewing Machine Combination, which successfully coordinated their overlapping property claims until its last patent expired in 1877. Moreover, the Sewing Machine War is a salient case study because this mid- nineteenth-century patent thicket also included many related issues that are often intertwined today with concerns about modern patent thickets, such as a non- practicing entity (i.e., a “patent troll”) suing infringers after his demands for royalty payments were rejected, massive litigation between multiple parties and in multiple venues, costly prior art searches, and even a hard-fought priority battle over who was the first inventor of the lockstitch.
In this respect, the existence and tremendous commercial success of the Sewing Machine Combination of 1856 — a private-ordering solution to the Sewing Machine War — suggests that the current discourse on patent thickets is empirically impoverished. The Sewing Machine Combination reveals how patent owners have substantial incentives to overcome a patent thicket without prompting by federal officials or judges, and that they can in fact do so through preexisting private- ordering mechanisms, such as contract and corporate law. Heller, to his credit, recognizes that there are “market-driven solutions” to patent thickets, but his writing reveals a deep skepticism about such solutions vis-à-vis his more favorably considered “regulatory solutions.” The Sewing Machine Combination is an example of how patent owners can rescue themselves from commercial gridlock, which unleashed an explosion in productivity and innovation in a product that was central to the success of the Industrial Revolution in nineteenth-century America.
For the complete article, as well as the footnote citations for what is presented herein, please see The Rise and Fall of the First American Patent Thicket: The Sewing Machine War of the 1850s.