Economics of Technology – Page 50

France Lacked Good Patent Laws; Great French Inventors “Died Penniless”

(p. 367) If one secret to sustaining an inventive culture was making inventors into national heroes, it was a secret that didn’t translate well into French. Between 1740 and 1780, the French inclination to reward inventors not by enforcing a natural right but by the grant of pensions and prizes resulted in the award of nearly 7 million livres–approximately $600 million today–to inventors of largely forgot-(p. 268)ten devices, but Claude-François Jouffroy d’Abbans (inventor of one of the first working steamboats), Barthélemy Thimonnier (creator of the first sewing machine), and Airné Argand (a partner of Boulton and friend of Watt whose oil lamp became the world’s standard) all died penniless.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.

Kappos Says Private Company Would Have Run Patent Office Better

“David Kappos of the Patent Office, with an Edison bulb.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) “There is no company I know of that would have permitted its information technology to get into the state we’re in,” David J. Kappos, who 18 months ago became director of the Patent and Trademark Office and undersecretary of commerce for intellectual property, said in a recent interview. “If it had, the C.E.O. would have been fired, the board would have been thrown out, and you would have had shareholder lawsuits.”

Once patent applications are in the system, they sit — for years. The patent office’s pipeline is so clogged it takes two years for an inventor to get an initial ruling, and an additional year or more before a patent is finally issued.
The delays and inefficiencies are more than a nuisance for inventors. Patentable ideas are the basis for many start-up companies and small businesses. Venture capitalists often require start-ups to have a patent before offering financing. That means that patent delays cost jobs, slow the economy and threaten the ability of American companies to compete with foreign businesses.

For the full story, see:

EDWARD WYATT. “U.S. Sets 21st-Century Goal: Building a Better Patent Office.” The New York Times (Mon., February 21, 2011): A1 & A3.
(Note: the online version of the article is dated February 20, 2011.)

Patent Importance Survives the Results of Moser’s Worlds Fairs Data Analysis

(p. 264) Petra Moser, now a professor at MIT’s Sloan School of Management, spent four years examining more than 15,000 different inventions exhibited at nineteenth-century worlds fairs, and their equivalents, and discovered a fact that seems at first glance to discredit the idea that patent protection was essential for innovation: Nations without patent laws were in many cases just as inventive as those with them. Or even more inventive; some of the nations best represented at those industrial fairs actively discouraged the patenting of inventions.

The reason seems to be that whether or not they enforced a patent law, smaller nations or domains, such as the Netherlands and Switzerland, were vulnerable to the theft of their innovations by competitors in larger nations. The bargain of patent protection runs two ways: The state, in return for making an idea public, offers legal recourse to its creator should someone within the state steal the idea. Since making one’s invention public in a nation with patent protection offered protection against theft only up to its own borders, only a large nation offered a large enough market to make the deal a good one, and (in Moser’s words) the small nations “would have been silly to patent [their] innovations.”
This logic inhibited investment in entire categories of innovation. Those nations that relied on secrecy rather than patent tended to specialize in the sort of inventions that cannot be easily reverse–engineered, such as chemicals or dyes.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: italics and bracketed word in original.)

Chinese Encyclopedia Was Burned to Protect Monopolies Granted by Emperor

(p. 262) As with Tudor England, government monopoly of patronage meant control. Virtually all copies of the seventeenth–century Chinese encyclopedia, the T’ien Kung K’ai-wu or Exploitation of the Works of Nature, which included illustrations of everything from hydraulics to metallurgy, were destroyed because, according to Joseph Needham, much of the material touched on industries that had been granted monopoly status by the Qing emperors: “The absence of political competition did not mean that technological progress could not take place, but it did mean that one decision-(p. 263)maker [i.e. the Emperor] could deal it a mortal blow.” It is therefore no surprise that a high percentage of both the inventions and inventors we associate with China from the time of the Han Dynasty to the Qings were government sponsored and employed.

Another liability of a strong central government is that it is, well, strong. Europe’s fragmented system of sovereign states made it possible for innovative minds such as Paracelsus, Leibniz. Rousseau, and Voltaire to “shop” for more congenial places whenever they skated too close to heretical or otherwise challenging notions; in China, one had to travel a thousand miles to a place where the empire’s writ ran not.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: italics and bracketed words in original.)

Did Bell, or Gray, Invent the Telephone?

Source of book image: http://www.xconomy.com/wordpress/wp-content/images/2008/01/telephone-gambit.jpg

A great and important debate is occurring about the desirability of the patent system. Should it be abolished, or reformed? If The Telephone Gambit book is right, one of the spectacular failures of the system is in the awarding of a patent to Bell for the telephone.
That’s a big “if”: some of the reviewers on Amazon give reasons for doubting Shulman’s story.
I hope to have time to look into this further.

(p. D10) It was a brilliant concept. But was it Bell’s? What had happened during his trip to Washington that allowed Bell to abandon the blind alleys he had been exploring and to suddenly, not incrementally, find the technological solution?

The answer to that question is a tale involving high-powered Washington lawyers, political influence, a patent clerk with a booze problem, and improper access to Elisha Gray’s patent filing, where Bell found the secret to making the telephone work. Mr. Shulman lays out the evidence — documentary, scientific, chronological and psychological — piece by damning piece. He shows most impressively how Bell’s subsequent behavior and actions are entirely in keeping with those of a decent and honorable man having to live most of his long life (Bell died in 1924) with the knowledge that behind his fortune and his fame lay a single instance of brazen dishonesty, of intellectual theft.
“The Telephone Gambit” is solid history, and Seth Shulman makes it as much fun to read as an Agatha Christie whodunit by using the techniques of historiography the way Hercule Poirot used his “little gray cells.” That’s no small accomplishment.

For the full review, see:
JOHN STEELE GORDON. “False Claim, Future Fortune.” The Wall Street Journal (Fri., JANUARY 16, 2008): D10.
(Note: ellipsis added.)

The book being reviewed, is:
Shulman, Seth. The Telephone Gambit: Chasing Alexander Graham Bell’s Secret. hardback ed. New York: W. W. Norton & Company, 2008.

Internet Enabled Creative Destruction

(p. R4) To understand the challenges that faced businesses the past 10 years, consider the household names that didn’t make it through the decade: Anheuser-Busch, Compaq, Gillette, Enron, Lehman Brothers, Merrill Lynch, WorldCom.
. . .
As the decade rolled on, the Internet came to be known for destroying businesses. It upended decades-old business models in fields such as media, advertising, travel and entertainment, as consumers and advertisers migrated to the digital world.
But that same shift created opportunity. No one epitomized that better than Google Inc. A mere 15 months old at the beginning of the decade, it morphed from a startup technology company into an advertising and media powerhouse and is now plotting a move into communications. There, it will clash with Apple Inc., which was reborn following the return of co-founder Steve Jobs in 1997. Apple’s iPod and iTunes reshaped the music industry; its iPhone revolutionized communications by opening itself to independent innovators.
“This is what [Austrian economist Joseph] Schumpeter had in mind with his term ‘creative destruction,'” says Paul David, an economic historian at Stanford University. Industrial collapse is a “messy, messy process,” Mr. David says. “It’s a great drama, and watching it play out in this decade has been very interesting.”

For the full story, see:
SCOTT THURM. “Creativity, Meet Destruction; The Decade Rewrote the Corporate Handbook, Thanks to the Web, Globalization and the Collapse of Two Bubbles.” The Wall Street Journal (Mon., DECEMBER 21, 2009): R4.
(Note: ellipsis added.)
(Note: the online version of the article is dated DECEMBER 22, 2009.)

“It Isn’t the Consumers’ Job to Know What They Want”

“Steven P. Jobs has played a significant role in a string of successful products at Apple, including the iPad, shown above, which was introduced last year.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. B1) Shortly before the iPad tablet went on sale last year, Steven P. Jobs showed off Apple’s latest creation to a small group of journalists. One asked what consumer and market research Apple had done to guide the development of the new product.

“None,” Mr. Jobs replied. “It isn’t the consumers’ job to know what they want.”
For years, and across a career, knowing what consumers want has been the self-appointed task of Mr. Jobs, Apple’s charismatic co-founder. Though he has not always been right, his string of successes at Apple is uncanny. His biggest user-pleasing hits include the Macintosh, the iMac, iBook, iPod, iPhone and iPad.
But as he takes a medical leave of absence, announced on Monday, the question is: Without him at the helm, can Apple continue its streak of innovation, particularly in an industry where rapid-fire product cycles can make today’s leader tomorrow’s laggard?
. . .
(p. B4) With the iPad tablet, Apple jump-started a product category. But with the iPod (a music and media player) and iPhone (smartphone), Apple moved into markets with many millions of users using rival products, but he gave consumers a much improved experience.
“These are seeing-around-the-corner innovations,” said John Kao, an innovation consultant to corporations and governments. “Steve Jobs is totally tuned into what consumers want. But these are not the kind of breakthroughs that market research, where you are asking people’s opinions, really help you make.”
Regis McKenna, a Silicon Valley investor and marketing consultant, said employees at Apple stores provide the company with a powerful window into user habits and needs, even if it is not conventional market research.
“Steve visits the Apple store in Palo Alto frequently,” said Mr. McKenna, a former consultant to Apple.
. . .
In a conversation years ago, Mr. Jobs said he was disturbed when he heard young entrepreneurs in Silicon Valley use the term “exit strategy” — a quick, lucrative sale of a start-up. It was a small ambition, Mr. Jobs said, instead of trying to build companies that last for decades, if not a century or more.
That was a sentiment, Mr. Jobs said, that he shared with his sometime luncheon companion, Andrew S. Grove, then the chief executive of Intel.
“There are builders and traders,” Mr. Grove said on Tuesday. “Steve Jobs is a builder.”

For the full story, see:

STEVE LOHR. “The Missing Tastemaker?” The New York Times (Weds., JANUARY 19, 2011): B1 & B4.
(Note: ellipses added.)
(Note: the online version of the article is dated January 18, 2011 and has the title “Can Apple Find More Hits Without Its Tastemaker?.”)

REVISE THIS ONE: Patents Needed to Provide Money for “the Many Fruitless Experiments”

(p. 234) . . . ; together, Watt and Arkwright wrote a manuscript entitled “Heads of a Bill to explain and amend the laws relative to Letters Patent and grants of privileges for new inventions,” essentially a reworking of Coke’s Statute of 1623 that had created England’s first patent law. In addition to its policy prescriptions, which were largely an unsuccessful argument against the requirement that patent applications be (p. 235) as specific as possible, the manuscript offered a remarkable insight into Watt’s perspective on the life of the inventor, who should, in Watt’s own (perhaps inadvertently revealing) words, “be considered an Infant, who cannot guard his own Rights”:

An engineer’s life without patent is not worthwhile . . . few men of ingenuity make fortunes without suffering to think seriously whether the article he manufactures might, or might not, be Improved. The man of ingenuity in order to succeed must seclude himself from Society, he must devote the whole powers of his mind to that one object, he must persevere in spite of the many fruitless experiments he makes, and he must apply money to the expenses of these experiments, which strict Prudence would dedicate to other purposes. By seclusion from the world he becomes ignorant of its manners, and unable to grapple with the more artful tradesman, who has applied the powers of his mind, not to the improvement of the commodity he deals in, but to the means of buying cheap and selling dear, or to the still less laudable purpose of oppressing such ingenious workmen as their ill fate may have thrown into his power.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.
(Note: the second ellipsis and the italics in original; the first ellipsis added.)

Fluorescent Bulbs Burn Out Much Faster than Utility Predicted

(p. A5) When it set up its bulb program in 2006, PG&E Corp. thought its customers would buy 53 million compact fluorescent bulbs by 2008. It allotted $92 million for rebates, the most of any utility in the state. Researchers hired by the California Public Utilities Commission concluded earlier this year that fewer bulbs were sold, fewer were screwed in, and they saved less energy than PG&E anticipated.

As a result of these and other adjustments, energy savings attributed to PG&E were pegged at 451.6 million kilowatt hours by regulators, or 73% less than the 1.7 billion kilowatt hours projected by PG&E for the 2006-2008 program.
One hitch was the compact-fluorescent burnout rate. When PG&E began its 2006-2008 program, it figured the useful life of each bulb would be 9.4 years. Now, with experience, it has cut the estimate to 6.3 years, which limits the energy savings. Field tests show higher burnout rates in certain locations, such as bathrooms and in recessed lighting. Turning them on and off a lot also appears to impair longevity.

For the full story, see:
REBECCA SMITH. “The New Light Bulbs Lose a Little Shine; Compact Fluorescent Lamps Burn Out Faster Than Expected, Limiting Energy Savings in California’s Efficiency Program.” The Wall Street Journal (Weds., JANUARY 19, 2011): A5.

When Yarn Was Scarce There Was Less Incentive to Develop Power Looms

(p. 223) Though power looms had existed, at least in concept, for centuries (under his sketch for one, Leonardo himself wrote, “This is second only to the printing press in importance; no less useful in its practical application; a lucrative, beautiful, and subtle invention”), there was little interest in them so long as virtually all the available yarn could be turned into cloth in cottages. This fact reinforced the weaver’s independence; but it also encouraged another group of innovative types who were getting ready to put spinning itself on an industrial footing.

Source:
Rosen, William. The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention. New York: Random House, 2010.