How Many Patents Make a “Patent War”?
November 15, 2012
November 15, 2012
When I speak on today’s “smart phone war,” I often point out to the surprise of my audience that such patent wars are nothing new. Patent scholars call these wars by the more boring label of a “patent thicket” (proving once again that geeks like us just don’t know how to coin a good phrase). My research into the very first patent thicket — the Sewing Machine War of the 1850s — has made me the “sewing machine guy” in the patent and tech law world. I don’t mind; as I recently pointed out, as have others, there have been many patent wars since the 1850s, including the “diaper wars” and “stent wars” of the 1980s, which are all very well known within patent law circles. I must admit that I prefer being the “sewing machine guy” to being the “diaper guy.”
Yet, I keep hearing from some quarters that the Sewing Machine War wasn’t really a patent thicket because there simply weren’t enough patents covering the sewing machine to qualify it for this label. Of course, this is not the first time I heard this claim. A long time ago, when I passed around an early draft of my article to my fellow academics, some of them said the same thing. At the time, it was a valid comment because I didn’t address this point in my draft article. In response, though, I added several pages of material on why defining a patent thicket solely by the number of patents involved is both facile and wrong. This is all in the published version that came out in 2011.
But I get it that many people — especially lawyers, government officials and patent stakeholders who are busily engaged in the patent policy debates — have more important things to do than to mine a 50-page article for three pages of material, especially when this material is toward the back-end of the article. So, I thought I would reproduce this section here (sans footnotes except for one):
Scholars may not have mined the Sewing Machine War as a resource for understanding patent thickets because they may not think this legal conflict qualifies as a patent thicket. By the early 1850s, there were separate, complementary patents that covered the sewing machine, but by 1856 these patents were in the hands of four parties (Elias Howe and three corporations).
According to anticommons theory, it sounds as if transaction costs were not so exorbitantly high that they frustrated the ability of these four parties to commercialize their property rights. In fact, this limited set of parties suggests the exact opposite: the total transaction costs were quite low, which is why a private-ordering response was a viable solution to the Sewing Machine War. The formation of the Sewing Machine Combination [i.e., a patent pool] seems to confirm anticommons theory, but only because it seems like the original dispute was not a patent thicket.
This all-too-easy dismissal of the Sewing Machine War as a patent thicket reveals the degree to which modern patent thicket theory has self-imposed empirical blinders. It assumes that the conditions of our high-tech era are a necessary feature of the inventive and commercial context for creating a patent thicket. In a modern age defined by computer-based word processing, telephones, faxes, email, Internet-based research (especially of patents), and myriad other high-tech forms of communication and commercial transaction, four owners of patents on complementary features of a commercial product hardly constitutes “a dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology.”
But there was no such transaction-cost-reducing technology in the 1850s. Howe personally had to visit Isaac Singer to make his royalty demands, risking his life and limb to be on the receiving end of Singer’s infamous temper (and he did so twice). Today, Howe would not be threatened in person to be thrown down the stairs; rather he would receive a hotly worded email or a letter drafted on a word processer and mailed by FedEx. Moreover, it was only the fortuitous gathering of the four patent owners in 1856 on the eve of the trial in upstate New York that permitted Orlando Potter to make his proposal for the Sewing Machine Combination. No such in-person gatherings are required today for innovators like Potter to propose such business ventures—or to negotiate them, as any transactional attorney can attest.
In this way, the Sewing Machine War is significant, not just because it is a patent thicket, but because it highlights an often-overlooked aspect of patent thickets: they are contextual, depending on such things as time, available technology, and even commercial or legal norms. Contrary to the definition of patent thickets that dominates the literature today, this phenomenon is not defined solely by the number of patents. The Sewing Machine War makes clear that patent thickets are also defined by, among other things,[footnote, see below] the capabilities and costs of communication between the relevant parties and the means and costs in commercially exploiting the technology. Today, for instance, the ease of communication and of negotiation of commercial deals between the relevant patent owners ups the ante on the number of parties necessary to frustrate its ultimate commercial resolution into the thousands. Flash forward 150 years—the equivalent of the time span between the Sewing Machine War and today—and patent thickets may require tens of millions of patents, and scholars at that future date may scoff at the notion of a mere couple thousand patents frustrating a commercial deal.
Footnote: Other factors that play an important role in patent thickets are the nature of the owners of the legal “property” interests, and the operative norms of trade professions, culture, politics, and law. See Richard A. Epstein & Bruce N. Kuhlik, Is There a Biomedical Anticommons?, 27 Regulation 54, 54–56 (2004) (critiquing Heller’s reliance on the “permit power” of state bureaucrats in the post-Soviet Russian economy as a primary example of an anticommons); F. Scott Kieff, On Coordinating Transactions in Intellectual Property: A Response to Smith’s Delineating Entitlements in Information, 117 Yale L.J. Pocket Part 101, 107 (2007) (“More recent work claiming an anticommons problem for patents mistakenly stresses this fragmentation of interest—that is, how many different people have a say over an asset’s use—as the key to the anticommons effect. More important than the number of people who have a say, however, is the type of people with a say and the type of say they have.”).
There’s lots of other good stuff in my article on the Sewing Machine War, and so as bloggers are wont to say: read the whole thing.