Thomas Edison and the Consumer Welfare Benefits of Patent Enforcement

By Ron Katznelson, Ph.D.
September 1, 2021

“GE’s enforcement of the Edison patent by injunctions did not stifle competition nor did it endow GE with undue market power, let alone a ‘monopoly.’ Instead, it resulted in clear and tangible consumer welfare benefits.”

Thomas Edison, perhaps the greatest US inventor.

Thomas Edison

Would you believe the following scenario could happen under our patent system? An inventor of a fundamental technology receives a patent less than three months after filing; despite the public disclosure of the patent, industry contemporaries fail to appreciate the invention’s significance for nearly two years; once appreciated, widespread adoption and infringement of the patent ensues. Commanding 50% market share in unit sales of the patented product, the patent holder prevails in patent infringement suits obtaining court injunctions against all major rivals and maintaining a strict no-licensing policy. What happens next during the patent enforcement period would defy all conventional anti-patent narratives:

(1) successful patent enforcement not only fails to deter market participants, but the number of active manufacturers of the product doubles;

(2) total annual product unit sales in the market doubles;

(3) enforcement of the patent holder’s exclusive right fails to make it a “price maker” — it becomes a “price follower,” reducing its product prices three times as product unit prices in the market fall precipitously by two-thirds;

(4) the patent holder loses market share down to less than 50%; and

(5) the fundamental technology gains widespread use in consumer households and ushers-in the electrical revolution.

This indeed happened under our patent system—in the previously-unrecognized case of Thomas A. Edison’s incandescent lamp patent. His patent covered the electric incandescent lamp with extremely thin carbon filament of high electrical resistance, enclosed in a single glass globe sealed under near-perfect vacuum, as described in U.S. Pat. No. 223,898 issued on January 27, 1880. Contrary to historical folklore, Edison did not invent the electric lamp—decades before him, others had produced electric incandescent lamps, but employing low resistance, thick carbon illuminants, which lasted only several hours of operation. Edison was the first to recognize the commercial importance of illuminants made of extremely thin carbon filaments enclosed in near-perfect vacuum, resulting in over 1,000 hours of operation. With this pioneering recognition, Edison experimented with over 6,000 filament compositions, ultimately converging on the use of carbonized bamboo fibers that he patented in U.S. Pat. No. 251,540 filed on August 6, 1880. Edison did not invent the electric lamp; his pioneering invention claimed in the `898 patent did, however, unlock the field of commercial electric lighting.

After 1882, all incandescent lamp manufacturers followed Edison’s teaching. How then, despite the enforcement actions, injunctions, and refusal to license, were the competitive market activities described in (1) – (5) above possible? The answer lies in “design around:” the important feature of our patent system recognized by the U.S. Supreme Court, as it acknowledged the role of “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). When the Edison patent was enforced, competitors were able to use Edison’s basic teaching while circumventing the patent by designing around the patent claims to avoid infringement.

Designing Around Patents is an Underappreciated Benefit of the Patent System

Designing around patent claims is prevalent but not often appreciated as a means by which patents promote economic development through competition. In a paper pulished in August 2021 in the Journal of Competition Law & Economics that my co-author John Howells and I authored, we provide a novel detailed empirical study of the extent and timing of designing around patent claims, as exhibited in the Edison patent case. The Edison patent owner, General Electric Co. (“GE”), did not license the patent and when it enforced the patent, the following occurred in the enforcement period:

  • Patenting surge of non-infringing lamp technologies, designing around Edison’s patent claims. Patenting rate of non-infringing designs rose from an average of 3 patents per year prior to enforcement to 17 per year during the enforcement period.
  • The number of active manufacturers nearly doubled.
  • A precipitous decline in unit price of electric incandescent lamps from about 60 cents to 20 cents, as market leader GE reduced its price 3 times.
  • Unit lamp sales doubled as GE lost unit market share.
  • Some design arounds Edison’s patent gave rise to new lighting technologies such as electromagnetic-induced lamps, gas-filled lamps, non-carbon filaments leading to the modern tungsten filaments, and the forerunners of modern fluorescent lamps.
  • The efforts to design-around Edison’s claims also resulted in patentable inventions that pioneered new technologies in their own right, later applied in technological fields other than electric lighting. These included hermetically-seal connectors, the Tesla Coil, and Chemical Vapor Deposition (CVD) used today in semiconductor device fabrication.

GE and Westinghouse were the major suppliers of incandescent lamps, with effective duopoly pricing. Edison’s patent was upheld against Westinghouse and others, and injunctions issued. Thus, Westinghouse was put back at square one with a need to employ its design-around to remain in the market. It did so by employing prior art stopper lamp technology that it owned. This signaled opportunity to any new entrants who could stand up to the new technological challenge—a prospect for lucrative market position for those who found first and patented cost-effective solutions for circumventing Edison’s claims. The invention-around surge after 1891 can be seen as a patent race for capturing a competitive edge among those vying for a share of the incandescent lamp market that was effectively redefined as circumvention competition. This precipitated a break of the GE-Westinghouse de facto duopoly.

Despite the legal setback for Westinghouse and others, there was no economic setback. GE’s enforcement of the Edison patent by injunctions did not stifle competition nor did it endow GE with undue market power, let alone a “monopoly.” Instead, it resulted in clear and tangible consumer welfare benefits. Investments in design-arounds resulted in tangible and measurable dynamic economic efficiencies by (a) increased competition, (b) lamp price reductions, (c) larger choice of suppliers, (d) acceleration of downstream development of new electric illumination technologies, and (e) collateral creation of new technologies that would not have been developed for some time but for the need to design around Edison’s patent claims. These are all imparted benefits attributable to patent enforcement.

Evidently, this contradicts some contemporary legal scholarship on the Edison patent case. That literature is replete with made-up parade of horribles attributed to Edison’s patent and its enforcement: that “competition … suddenly became impossible;that Edison’s patent was so basic as to “block others from entering the market;” that it “limit[ed] post-patent innovation;” and that “filament development and lamp development more generally virtually stagnated.” See the survey of these sources in our main article, bottom footnote on p.3.

Vilifying Individual Pioneer Inventors by Deflecting to Imaginary Harms

The narratives based on mythical harm to innovation inflicted by enforcers of pioneer patents is not unique to the Edison case. It is commonplace in many historical accounts of individual inventors’ efforts to enforce their pioneer patents. Most notoriously, it is alleged that the Wright Brothers’ pioneer airplane patent “seriously retarded” progress in aviation and that “the American aeronautics industry ground to a halt.” We debunk this manufactured nonsense in our article on the “Myth of the Early Aviation Patent Hold-Up.” In this case, we show that in fact aircraft manufacturers faced no patent barriers in a market dominated by government demand. Aircraft manufacturing and investments grew at an even faster pace after the assertion of the Wright Brothers’ patent than before. We show that the notion of the aircraft patent hold-up is a myth created by U.S. government officials in 1917 to persuade Congress to authorize eminent domain condemnation of basic aircraft patents. Scholars have since cited these government allegations and propagated the aircraft patent hold-up myth for a century. Authors of popular books have since made a career by vilifying the Wright Brothers based on these mythical fables of harm to American aviation development.

The same conventional but demonstrably false scholarly wisdom that economic harms and technological retardation prevailed has been debunked in our work on pioneer patents in early radio and the early automobile industry. These cases are remarkable for the fundamental pioneering technologies developed at the time with accompanying benefits they brought to our society. Yet many legal scholars appear to work in a cross-citation “echo chamber” that generally vilifies inventors for daring to seek and assert patents. When faced with a clear patented fundamental advance, many contemporary scholars seem to prefer posing as thoughtful and original contributors to “innovation scholarship” by deflecting to alleged social harms that they attribute to patent enforcement—a narrative which has no basis in fact in these cases. This deflection has also been used to manufacture the “patent hold-up” conjecture on standard-essential patents that was thoroughly debunked in a 2018 comprehensive review.

Today, such false narratives are bolstered and fueled by a chorus of companies that routinely free-load on patented technologies for which they take no license. Of course, it is annoying to infringers when patentees seek compensation or damages. The infringers’ rhetoric prevails in public discourse by sheer numerical and lobbying power. Unfortunately, this suppresses information on the positive aspects of patent enforcement, such as the design-around effects that we study in our article. Hopefully, this will help to put the record straight.

For more information, read the full article here.

The Author

Ron Katznelson, Ph.D.

Ron Katznelson, Ph.D. is the Founder and President of Bi-Level Technologies in Encinitas, CA. He is a technology entrepreneur, named inventor on 26 U.S. patents and applications and an independent scholar of the patent system. He is also a member and past Chair of the Intellectual Property Committee of the IEEE-USA, a member of the Federalist Society, and also serves as an advisor to high technology startups. This article expresses his personal views only and does not represent any position taken under his official capacity at IEEE. From 1990 to 2005, Ron was Chief Technology Officer, Founder and Chairman of Broadband Innovations, where he led the company’s entry into the digital RF CATV industry. Prior to that, he was with the VideoCipher Division of M/A-COM Linkabit Corp., later acquired by General Instrument Corp. (GIC), where he served as Director, New Technology Development. At GIC, he directed R&D in the areas of Advanced Television Systems that led to GIC's video compression technology, now forming the core of the MPEG-2 standard and a basis for the ATSC High Definition Television standard. His responsibilities also included the management and development of the VideoCipher Division's intellectual property portfolio as well as representation in industry groups and standard bodies.

Prior to his work in industry, Dr. Katznelson was a Professor of Electrical Engineering at the University of California, San Diego (UCSD). He taught courses in Linear System Analysis, Probability and Stochastic Processes.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 19 Comments comments. Join the discussion.

  1. TFCFM September 1, 2021 9:23 am

    I draw a distinctly different conclusion from the Edison/incandescent light situation than does the author:

    Because Mr. Edison received a patent that ‘covered’ what Mr. Edison actually invented (and not a modern, garbage-y “anything and everything that has a filament and makes light” patent), other folks who invented other ways of achieving the same goal were not inhibited by Mr. Edison’s patent (even though those other inventors made light using something that had a filament, albeit one distinct from Mr. Edison’s).

    Thus, I see the Edison example as promoting the notion that it is a great social benefit to grant patents which match in scope the scope of what was actually invented and disclosed.

  2. Anon September 1, 2021 12:21 pm

    Your mantra also does not fit here, TFCFM.

    You remind me of an empty wagon, clattering down a jagged sidewalk.

  3. Julie Burke September 1, 2021 2:57 pm

    Thank you, Ron, for this insightful article illuminating the importance of our patent system in promoting economic development through competition.

    Note that in its own way, the USPTO recognized the importance of

    ‘1. Claims of broad or domineering scope…
    2. Applications with pioneering scope.’

    by secretly and selectively flagging such cases for *special treatment* under the decades old, unauthorized and now purportedly suspended Sensitive Application Warning System (SAWS), as Corps-wide Potential SAWS Subject Matter, items 1 and 2.

    Perhaps inventors whose pioneering applications did not survive the secret gauntlet of SAWS-level scrutiny deserve recognition as some of America’s Lost Einsteins?

  4. Anon September 1, 2021 5:09 pm

    Julie,

    You can change that “purportedly” to being an affirmative closure of that program — at the same time realizing that (as admitted to by the Patent Office, SAWS was only one of many such “out of the sunshine” programs — in apparent violation of 37 CFR 1.2 (in critical part: “The action of the Patent and Trademark Office will be based exclusively on the written record in the Office.”)

  5. ipguy September 1, 2021 9:19 pm

    “Edison did not invent the electric lamp”

    He was also viewed as a thief. Not just for things said to be invented by others that he patented under his own name, but for his IP piracy (e.g., George Melies’ A Trip to the Moon).

    Like Steve Jobs who followed him, Edison understood the value of publicity and public acclaim.

  6. Concerned September 2, 2021 12:03 pm

    TFCFM has it all wrong. It would not be possible to determine which patents “match in scope to great social benefit” in a vacuum before it is tested in the market and the courts? Edison did not understand the “great social benefit” of Tesla’s AC power inventions (Edison concentrated on DC power), it had to be tested by the market and the courts. It would not be possible for a bureaucrat, who did not understand the market value of a narrow high resistance filament in a vacuum (it sounds small and unimportant), to determine the “great social benefit” of the Edison electric lamp invention, it had to be tested by the market and the courts. It was not a bureaucrat, who did not understand the market value of aircraft stability (so what, just turn the wheel), to determine the “great social benefit” of the Wright Brothers’ wing warping invention, it had to be tested by the market and the courts.

  7. Benny September 2, 2021 2:40 pm

    Anon, thank you for your lucid and eloquent rebuttal of TCFMs notion that a patent claim should match the actual invention in scope.

  8. Pro Say September 2, 2021 3:17 pm

    Thanks Ron, for once again shining the powerful spotlight of patent facts and truth that sends the anti-patent cockroaches scurrying for cover.

    For the good of America, may every member of Congress, the Biden administration, SCOTUS, CAFC, the District Courts, and the PTAB read this article and your paper.

  9. Anon September 2, 2021 5:56 pm

    Benny,

    You quite obviously have misconstrued the mantra that TFCFM vomits forth.

  10. IP conscience September 2, 2021 8:52 pm

    TFCFM is wrong again. Edison was working in a crowded field, he could not broadly claim an electric light or even a carbon filament or “anything and everything that has a filament and makes light”. He had to claim his invention narrowly. It is wrong to try to limit a patent to a specific version of an invention that was “actually” built; i.e., Robert Noyce’s original integrated circuit was very primitive. Basic inventions might have primitive test versions, but they can embody revolutionary capabilities which are entitled to broad patent coverage. Regardless of the fact that Dr. Noyce’s original integrated circuit was very primitive, his integrated circuit invention makes the World go round.

  11. TFCFM September 3, 2021 11:48 am

    Concerned@#6: “It would not be possible to determine which patents “match in scope to great social benefit” in a vacuum before it is tested in the market and the courts?

    To what are your quotation marks intended to refer? Surely not to what I said which was (note correct use of quotation marks):

    TFCFM@#1: “… it is a great social benefit to grant patents which match in scope the scope of what was actually invented and disclosed.

    That is, I propose that the scope of granted patent claims should mirror the scope of the invention that was actually made and (adequately) disclosed in the corresponding patent application.

    Setting up and knocking over straw men of your own misquoted design demonstrates only your lack of an intelligent counter-argument.

  12. TFCFM September 3, 2021 11:58 am

    IPC@#10: “Edison was working in a crowded field, he could not broadly claim an electric light or even a carbon filament or “anything and everything that has a filament and makes light”. He had to claim his invention narrowly. It is wrong to try to limit a patent to a specific version of an invention that was “actually” built…

    I don’t think that you are actually disagreeing with me. Both you and I recognize that Mr. Edison operated in a ‘crowded’ field and that his patent was relatively ‘narrow.’

    Even if Mr. Edison had been the only one working on incandescent-filament electric light bulbs, his disclosure did not support “anything and everything that has a filament and makes light,” and that claim would have still been inappropriate. (Whether or not the claim might have been granted, assuming a really dumb examiner, remains a matter of conjecture, given that patent practitioners tended not to flout the patent law so much back then by trying to obtain allowance of anything-and-everything-that-works type claims.)

    If your objection is merely to the form of my proposed example of a non-enabled claim as overlapping potential prior art, then I’ll rephrase to specifically call out the improvement that (as I understand it) Mr. Edison satisfied:

    (Bold text added below to the quotation from my original message)

    TFCFM@#1: “Because Mr. Edison received a patent that ‘covered’ what Mr. Edison actually invented (and not a modern, garbage-y “anything and everything that has a filament and makes light with a useful lifetime of at least X hours” patent), other folks who invented other ways of achieving the same goal were not inhibited by Mr. Edison’s patent (even though those other inventors made light using something that had a filament with a useful lifetime of at least X hours, albeit one distinct from Mr. Edison’s).

    The point remains the same: Mr. Edison did not invent every single yet-to-be-invented filamented light bulb with a useful lifetime of at least X hours — he made the ones he made and was therefore entitled to the ones he made and the ones that a POSA can make relatively directly from what Mr. Edison disclosed in his application. This does not include not-yet-invented ones.

  13. Concerned September 4, 2021 8:25 pm

    TFCFM can’t even get to first base.
    An applicant does not have to make a working model to file an application or to get a patent. And an adequately disclosed broadly stated embodiment can be patented because the filing of an adequately disclosed application is a constructive reduction to practice.
    And it is the market and the courts that will decide what was actually invented and its value, if any.

  14. Curious September 4, 2021 9:39 pm

    Claim 1 of Edison’s Patent (223,898)

    “An electric lamp for giving light by incandescence, consisting of a filament of carbon of high resistance, made as described, and secured to metallic wires, as set forth.”

    Product by process claim?

    Regardless, an interesting question arises as to how narrow or broad is this claim? Excluding the “made as described,” this claim is exceptionally broad. The big question therefore is how limiting is the “made as described” limitation. No attorney would use such language today and that language would likely be considered indefinite. Does “made as described” only part of the process has to be “made as described” or does the entire process have to be “made as described” (with no variations)? If the former, then this claim is exceptionally broad. If the latter, then this claim is exceptionally narrow.

    Thus, I see the Edison example as promoting the notion that it is a great social benefit to grant patents which match in scope the scope of what was actually invented and disclosed.
    Showing, yet again, that your understanding of mechanical claims, how the claim language is construed, and the potential pitfalls regarding the use of certain language is exceptionally limited. Stick to biotech.

    I don’t mean to pick on you but your posts are nearly always an exceptionally target-rich environment.

  15. Benny September 7, 2021 9:55 am

    Concerned,
    US patent examiners have a poor track record when it comes to recognizing what an adequately disclosed application is. I’ve seen plenty of granted patents in the field in which I am an expert, which do not contain enough information to enable me to reduce the claims to practice but are full of chaff telling me stuff I learned in middle school.

  16. Anon September 7, 2021 1:40 pm

    Curious,

    You are aware of the historical difference in claims from the earlier days in which “as described” was common place to claims actually staking out the perimeter of the legal scope, right?

    While I feel slightly soiled with providing a Lemley reference, this is one discussing this: https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article=1202&context=penn_law_review

  17. TFCFM September 8, 2021 9:26 am

    Curious@#14: “Excluding the “made as described,” this claim is exceptionally broad.

    The same can be said of any claim: “The claim is broader if you ignore the limitations.”

    Your comment is meaningless for that reason. Mr. Edison’s claim was quite narrow, limited (prepare to be shocked) by the limitations expressly and inarguably present in his claim.

  18. Night Writer September 8, 2021 5:15 pm

    @14 Curious

    I agree.

  19. ipguy September 13, 2021 2:38 pm

    @15

    Benny, the vast majority of US patent examiners could not determine the level of ordinary skill in the art to save their life so how are they supposed to know if any application isn’t sufficiently disclosed? The way the USPTO operates in some instances rises to the level of a fraud on the public. Plenty of well-intentioned examiners without a clue as to how to properly do their jobs because the USPTO does not adequately train them to do their jobs.

Post a Comment

Respectfully add to the discussion.

Name *
Email *
Website