Exclusive Rights Stimulate Design-Around: How Circumventing Edison’s Lamp Patent Promoted Competition and New Technology Development
46 Pages Posted: 11 Jul 2014 Last revised: 8 Sep 2020
Date Written: February 14, 2018
Designing around patents is prevalent but not often appreciated as a means by which patents promote economic development through competition. We provide a novel detailed empirical study of the extent and timing of designing around patent claims. We study the filing rate of incandescent lamp-related patents during 1878-1898 and find that the enforcement of Edison’s incandescent lamp patent in 1891-1894 stimulated a surge of patenting. We studied the specific design features of the lamps described in these lamp patents and compared them to Edison’s claimed invention to create a count of non-infringing designs by filing date. Most of these non-infringing designs circumvented Edison’s patent claims by creating substitute technologies to enable participation in the market. Our forward citation analysis of these patents show that some had introduced pioneering prior art for new fields. This indicates that invention around patents is not duplicative research and contributes to dynamic economic efficiency. We show that the Edison lamp patent did not suppress advance in electric lighting and the market power of the Edison patent-owner, weakened during this patent’s enforcement. We propose that investigation of the effects of design-around patents is essential for establishing the degree of market power conferred by patents.
Keywords: incandescent lamp; invent around; licensing; infringement; monopoly, General Electric.
JEL Classification: D21, D22, K11, K21, L11, L12, N61, O31, O32, O33, O34
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