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Illuminating Innovation: From Patent Racing to Patent War

Lea Shaver

Indiana University Robert H. McKinney School of Law

July 21, 2012

69:4 Wash. & Lee L. Rev. (2012).

Patent law assumes that stronger protection boosts 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 to patent law. The Article then offers such a case study focused on electrification. Specifically, this Article uses the history of patent prosecution and litigation surrounding the lightbulb to examine a recently articulated theory of “patent racing” as a justification for patent protection.

As put forth by Mark Lemley, racing theory suggests that patent protection raises the stakes of being the first to reach a technological milestone, and can thus encourage faster innovation. Edison’s experience suggests that Lemley’s racing model has substantial descriptive merit, capturing an important dynamic of patent law’s impact on innovation within a competitive field. Yet a fuller look at the lightbulb case study also shows the limits of the racing model. Looking past the initial “finish line” of patenting to later litigation, the competition looks less like a race and more like a war.

Building on this insight, the Article offers a new model of patent strategy resembling the board game Risk! in which 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 competitive field. As the industry matures, dominant players turn their patent portfolios into weapons for eliminating the competition. This new “patent warfare” model also helps to explain the impact of patent law on innovation today. Just as nineteenth-century companies in the early electrical industry fought to control the lightbulb, a new patent war is now emerging to control the smartphone.

Importantly, the patent warfare model offers a less optimistic view of patent law’s impact on innovation than the racing model. The initial benefits of patent racing may quicken innovation over the short term. But once the competition turns to patent war, a negative impact emerges. Patent litigation becomes the means to consolidate a highly competitive, dynamic, innovative industry into the hands of a single player. In this way, patent law ultimately brings to an end the very competitive pressure that initially motivated faster innovation under the racing model. This anticompetitive endgame raises concern for future innovation in the information technology (IT) industry, and calls into question the “innovation assumption” at the heart of patent law.

Number of Pages in PDF File: 60

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

Accepted Paper Series

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Date posted: August 15, 2010 ; Last revised: October 21, 2012

Suggested Citation

Shaver, Lea, Illuminating Innovation: From Patent Racing to Patent War (July 21, 2012). 69:4 Wash. & Lee L. Rev. (2012).. Available at SSRN: http://ssrn.com/abstract=1658643 or http://dx.doi.org/10.2139/ssrn.1658643

Contact Information

Lea Bishop Shaver (Contact Author)
Indiana University Robert H. McKinney School of Law ( email )
530 West New York Street
Indianapolis, IN 46202
United States

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