Myth 3 - Edison’s Incandescent Lamp patent retarded lamp development

This post exposes the myth that Edison’s Incandescent Lamp patent created a monopoly and retarded lamp development.

The Myth

The economic myth is that the enforcement of Edison’s US patent 223,898 provided Edison/General Electric (GE) with '…a virtual monopoly of the domestic supply in electric lamps.' [1] Bright describes the alleged result: 'For twelve years competition had been possible [the patent issued in 1880]; it suddenly became impossible' [2] and further alleges that 'the lengthy and expensive patent struggle in the lamp industry from 1885 to 1894 was a serious damper on progress in lamp design' (our emphasis).[3]

The economic myth has likely been given support by the misconception that Edison’s patent was broad and 'incandescent lamp field-controlling.' Historical accounts of the 1891 district court decision include the erroneous interpretation that this court found 'the high-resistance filament… to be patentable.' [4] Patent scholars have been misled to believe that this was a 'basic patent… covering the use of a carbon filament as the source of light.' [5] Such ideas lend credence to the popular misconception that 'Edison invented the light bulb'. 

The Facts from Ron Katznelson and John Howells  

It was the case that Edison/GE’s enforcement policy was not to license others and to obtain injunctions to close the plant of infringing manufacturers. Knowledge of this policy allied to the mistaken belief that the 223,898 patent was field-controlling likely encouraged the belief in the economic myth.

The myth derives from a misunderstanding of Edison’s actual invention as captured in the patent claims of his 223,898 patent. A patent’s claims capture the novel and non-obvious subject matter that are the invention. Edison’s 223,898 patent claims do not include a claim for a carbon filament because carbon filaments were old prior art. It was only claim 2 of Edison’s patent that the appeal court found to be infringed in 1892 and which provided the legal obstacle to would-be market entrants: 'The combination of carbon filaments with a receiver made entirely of glass, and conductors passing through the glass, and from which receiver the air is exhausted, for the purposes set forth.'

This 'combination claim' (novel in the combination of otherwise known design elements) could be legally-evaded if a would-be market entrant succeeded in designing-around at least one of the italicised design-elements above. Successful design-around would yield a non-infringing, substitute lamp design with the potential to enable market entry.

We found many patents on substituting, non-infringing lamp designs and a steep rise in rate of patenting of such designs and improvements upon them immediately after the appeal court found for Edison in 1892. This tells us that inventors understood (given the no-license policy) that the appeal court decision clarified that market entry would now only be possible through design-around. Indeed some of these non-infringing design-around lamps did enable market entry. Analysis of market data during the 1892–1894 enforcement period shows that new entrants steeply rose, that Edison/GE lamp market share did not increase and Edison/GE lamp prices declined steeply during this period. We observed low lamp pricing by new entrant design-around lamps and inferred that this prompted Edison/GE to cut their prices in competition.

Not all designs around were of immediate commercial value; a forward citation analysis showed some, such as the Tesla Coil, were important as prior art to future technologies. Some failed to achieve commercial development during the enforcement of Edison’s patent but some were of pioneering value for later lamp innovation; eg. De Lodyguine’s 1893 patent disclosed the first use of tungsten as a filament material. 

Find a fuller discussion in 'Exclusive rights stimulate design arouund: How circumventing Edison's lamp patent promoted competition and new technology development' Journal of Competition Law & Economics (Advance online publication, August 2021) - which you can access here.

Conclusion

The Edison/GE policy of no-licensing and enforcement did not yield an economic monopoly and did not retard development. On the contrary, it stimulated design-around invention, some of which enabled substituting lamp designs to enter the market so increasing competition. Other design-arounds contributed to later lamp innovation and still others to entirely novel but commercially important technologies. 

 

[1] U.S. v. General Elec. Co., 82 F. Supp. 753, (D.NJ. 1949) at 771
[2] Bright, Arthur A (1949), The Electric Lamp Industry Macmillan: New York, 89.
[3] Bright 1949: p138-139.
[4] Passer, HC (1953), The Electrical Manufacturers 1875-1900, Ayer: Salem, New Hampshire, 154-155.
[5] Merges, Robert P and Richard R Nelson, (1990), 'On the Complex Economics of Patent Scope', Columbia Law Review, 90, (4), 885.