The Power Of Patents

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In a decision of far-reaching significance, a federal circuit court in 1985 ruled that the Eastman Kodak Company had infringed the instant-camera patents held by Polaroid. The court ordered Kodak to cease making and selling its own instant camera, a product on which Kodak had sunk many millions of dollars in an effort to beat out Polaroid and bolster its position as a camera and film manufacturer. The ruling, which capped a nine-year legal battle between the two concerns, stunned the financial world and came as a severe blow to Kodak, while allowing Polaroid to breathe a vast sigh of relief. Damages have yet to be set as of this writing, but they could go as high as fourteen billion dollars.

The dispute was only the most recent proof that the U.S. patent system continues to play a major role in the world’s economic affairs; two hundred years after its inception in 1790, its rulings reach into everyone’s lives. The system also accomplishes what it was set up to do: By providing an incentive for creativity, it promotes the advance of commerce and industry in the United States.

The Kodak ruling possessed one unusual feature: The two industrial behemoths that clashed in the suit both had been founded by inventors, George Eastman and Edwin H. Land respectively. In Eastman’s day such continuing control was not unusual. Energetic and resourceful inventors could still start their own companies without too much difficulty, although it was never easy. One of the most notable was Alexander Graham Bell, whose efforts culminated in the mammoth American Telephone and Telegraph Company. By Land’s time it was difficult and becoming more so; only a person with the drive and keen business sense of a Land was likely to make it.

In the storied old days a person invented something in the attic or basement, got a patent on it, began building it and selling it, and made a pile of money, all pretty much alone. Today’s inventor, with some isolated exceptions, is likely to be a salaried lab hand working in almost complete anonymity for a large corporation. If he or she gets any reward for building a better mousetrap, it may only be a smile and a pat on the back from the supervisor. Those few individual inventors who do make it big today—like Land, or Steve Wozniak of Apple Computer, or William Hewlett and David Packard of the company that bears their name—are all the more exceptional for being successful entrepreneurs and industrialists as well as inventors.

This is certainly not what the men who designed the patent system in 1790 had in mind. The change is an outgrowth of the Industrial Revolution during the nineteenth century and the accompanying proliferation of complex technologies plus the growth of powerful corporations that moved in to control the new technologies. As it happened, the major turning point came just when George Eastman was introducing the first Kodak camera—about the turn of the twentieth century. What the founders set up in the early days of the Republic was a system, in the words of Article I, Section 8, of the Constitution, to “promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Our forefathers had just triumphed over an overbearing monarchy and were not only committed to defending individual liberties but dead set against monopolies. They did think, however, that deserving writers and inventors should be encouraged by being given temporary monopolies on the fruits of their labors, so that they could keep on working creatively and, in the case of inventors, could start successful innovative businesses, thus benefiting the fledgling nation.

A patent gave inventors a monopoly for a period of years but required them to disclose the workings of their inventions publicly for the well-being of society. Disclosure revealed to society what the inventor had devised while specifying what others must not make lest they infringe the patent. Patent holders could market the product themselves, lease (or license) the patent rights to others, or sell the patent entirely; they could also do nothing at all with it if they so chose. After the period was up (it has usually been seventeen years), the rights expired, and anyone could make the gadget. The arrangement, as Abraham Lincoln once remarked, “added the fuel of interest to the fire of genius.”

The system started on a small scale after the first patent act became law in April 1790. The first patents (No. 1 was issued on July 31 of that year) had merely to be okayed by two of the three officers of the patent board: the Secretary of State, the Secretary of War, and the Attorney General, who were expected to perform their patent work in addition to executing all their other duties. By 1802 a more formal arrangement was needed, and a separate Patent Office was set up under the jurisdiction of the Secretary of State. So great was the flood of applications that the office allowed inventors to omit any claim that their devices or processes were novel; all they had to do was register them. The flood naturally increased. Finally, in 1836, a formal examining procedure was set up, and the rules were once again tightened; applications were scrutinized far more rigorously than at any previous time. In 1849 the Patent Office was taken from State and put under the jurisdiction of the Department of the Interior; in this century it was transferred again, to Commerce, where it now resides.