Illuminating Innovation: From Patent Racing to Patent War

Abstract

Patent law assumes that stronger protection promotes innovation, yet empirical evidence to test this “innovation hypothesis” is lacking. This Article argues that historical case studies hold unique promise to provide an empirical foundation for modern patent policy. Specifically, this Article uses the history of patents surrounding the light bulb to examine a recently articulated theory of “patent racing” as a justification for patent protection. Thomas Edison’s experience confirms that Mark Lemley’s racing model has substantial descriptive merit. Yet this case study also reveals the limits of the patent racing model. Looking past the initial finish line of patent filings to later litigation, the competition looks less like a race and more like a war. The Article then proposes a new model of “patent warfare” resembling the board game Risk. In the game, competing parties assemble strategic assets, then turn to battle their rivals for world domination. Similarly, innovative technology companies assemble patent portfolios — initially for defensive purposes in the context of a dynamic and competitive field. As an industry matures, however, dominant players convert their shields into weapons to eliminate their competition. Just as nineteenth-century companies in the early electrical industry battled to control the light bulb, a new patent war is now emerging to control the smartphone. This anticompetitive endgame diminished next-generation innovation in electric light and now threatens the future of innovation in mobile computing. A new appreciation of patent warfare should prompt increased skepticism of the “innovation assumption” at the heart of patent law. Patent protection clearly provides short-term benefits to innovation, but it also produces unanticipated longterm costs to competition and next-generation innovation. Further empirical research is needed to ascertain whether the benefits outweigh the costs or vice versa and what tweaks to the patent system might allow us to continue to capture the benefits while lowering the costs. In this continued effort, historical case studies will prove particularly helpful because they permit insight into the complex workings of patent law on an industry over a longer time horizon, revealing not only the short-term benefits but also the long-term costs.

Keywords: patents, technology, innovation, competition, case studies, lightbulb, light bulb, Edison, myth, invention, innovation hypothesis, innovation assumption, smartphone, patent war, patent warfare, Risk

JEL Classification: O30, O31, K20, K23, L40, N00, N41, N81