On Monday, February 5th, American economic organization The Mises Institute published an article online by Mises alumnus and economic historian Chris Calton titled How the Patent-Troll Wright Brothers Fought to Stifle Innovation. The article provides a historical look at patent litigation stemming from the Wright Brothers’ invention of an airplane control system to argue that the government’s grant of a patent serves to stifle innovation more than it incentivizes further innovation within an industry.
The argument that patents stifle innovation is not new, and it continues to be as wrong every time it resurfaces in some desperate attempt to claim that innovators who patent revolutionary technologies are somehow villainous. Of course, the Wright Brothers were not patent trolls, and they did not stifle innovation. Had Calton actually done meaningful research, and allowed the facts to guide his conclusions, he couldn’t help but conclude that the Wright Brothers did not stifle innovation.
Starting at the beginning of this biased piece, in the first sentence of the article the author falls prey to a misconception often parroted by those with anti-patent viewpoints, namely that patent protection is a “government-granted monopoly.” Yes, the patent is granted by the government, and yes, it offers an inventor the right to exclude others from the market, but a patent provides no promise of a monopoly or any market success whatsoever. More than 90 percent of patents cover technologies that will not be commercialized. If there’s no market, there’s no monopoly. Instead, patents help to create markets by creating an enforceable property right capable of attracting investment and warding off free-riders if in fact a market does ultimately exist.
Then the author continues on to make the argument that the aviation industry of the early 20th century is perhaps the best example of the innovation-stifling effects of patents. It was at this time that the Wright Brothers began a well-known litigation campaign against foreign and domestic aviation entities. One of their most frequent patent litigation targets in the United States was Glenn Curtiss, an American innovator in both aviation and motorcycling. According to Calton, it was Curtiss who came up with the more meaningful innovations in flight, which he displayed to the public while the Wright Brothers “jealously” guarded their own innovation.
First of all, the entire act of patenting involves the public disclosure of an innovation developed in private, so if the Wright Brothers did not want any public disclosure, they wouldn’t have patented in the first place. Further, the author contends that it was Curtiss who developed the aileron, a hinged surface in the trailing end of an airplane wing which is meant to control lateral balance. However, the Wright Brothers’ U.S. Patent No. 821393, titled Flying Machine, claimed:
“In a flying-machine, a normally flat aeroplane having lateral marginal portions capable of moving to different positions above or [below] the normal plane of the body of the aeroplane, such movement being about an axis transverse to the line of flight, whereby said lateral marginal portions may be moved to different angles relatively to the normal plane of the body of the aeroplane, so as to present to the atmosphere different angles of incidence and means for so moving said lateral marginal portions.”
The Wright Brothers may not have used the word “aileron” in their patent application, but the patent claims appear as though they would cover such a device as a hinged surface capable of being positioned along the length of the wing and angled across (i.e.: transverse to) the line of flight. Indeed, many times throughout the patent, the description discusses how the invention improves the lateral control of the flying machine. Further, the patent notes that, “We wish it to be understood, however, that our invention is not limited to this particular construction, since any construction whereby the angular relations of the lateral margins of the aeroplanes may be varied in opposite directions with respect to the normal planes of aeroplanes comes within the scope of our invention.”
The Mises Institute’s author may also have benefited from doing some more research into the history of how the patent litigation campaign between the Wright Brothers and Curtiss began in the first place. Curtiss’ early aircraft designs came as a member of the Aerial Experiment Association (AEA), an aviation research group led by Alexander Graham Bell, which was founded in 1907, the year after the ‘393 patent was issued, and operated for two years. One of the AEA’s members, Thomas Selfridge, corresponded with the Wright Brothers to ask for information on aircraft construction. The Wright Brothers reportedly referred Selfridge to their patents and publications on the subject under the belief that a group led by Bell, a famed inventor himself, would respect the patent rights. Although the first plane designed by Selfridge for the AEA, the Red Wing, did not incorporate wing-warping features, which could have reasonably been covered by the Wright Brothers’ patent, other planes developed by AEA members began incorporating ailerons.
The AEA itself did not commercialize any of its developments but, as an AEA member, Curtiss designed an aircraft known as the June Bug, which won the first ever aeronautical prize offered in the United States after Curtiss flew the craft for more than one kilometer in July 1908. Although the ailerons used by the June Bug and other AEA-designed planes were configured differently than the lateral control system on the Wright Brothers’ plane, the scope of the patent owned by the Wright Brothers was not limited to that particular construction. After Curtiss won this award, Orville Wright reportedly told Curtiss that no permission had been given for use of the control system “for exhibitions or in a commercial way;” the aeronautical prize won by Curtiss came with a $25,000 cash award.
Actual litigation wouldn’t be filed by the Wright Brothers until 1909 after Curtiss sold a plane called the Golden Flier to the Aeronautic Society of New York. The legal battle was lengthy and very costly to both sides; Wilbur Wright died of typhoid fever in 1912, the year before the final verdict vindicating the brothers’ patent rights was issued. After the final verdict issued in favor of Orville Wright, Curtiss took the advice of a lawyer suggested by automaker Henry Ford, who had faced similar patent issues with inventor George Selden, to bait Orville into further litigation, which was then used as a basis to stay the earlier verdict. The fact that Curtiss would encourage further litigation as a way to draw out the case even longer makes him seem like less of a victim than the Mises Institute seems to suggest.
Finally, there is some scholarly dispute as to whether the patent battles waged by the Wright Brothers actually stifled innovation in the overall aviation market. The Wright Brothers’ company did suffer from the protracted litigation and research and development at that firm lagged behind its competitors. But the Mises Institute’s author even notes that Curtiss continued to design aircraft control methods that wouldn’t infringe on the Wright Brothers’ patent. Obviously, this was an unwitting recognition that the Wright Brothers did not stifle innovation. How could one stifle innovation when innovations were made despite the Wright Brothers’ patent?
Indeed, what Calton stumbled on to here is the truth that patent protection encourages innovators to find ways to invent without infringing on a patent. In that way patents foster innovation by encouraging, if not demanding, other creative individuals design around patents. This is how and why patents push innovation forward. This same impetus to engineer around a patent innovation is simply not present when patents are weak and the patent system incapable of offering strong protections to innovators. That is why innovation stalls when patents are perceived as weak. Why both innovating on your own and designing around a patent when you can simply copy with impunity?
In any event, Calton is factually mistaken when he claims the Wright Brothers held up innovation. A 2013 study published by Industrial and Corporate Change challenged the notion that a “patent hold-up” among private aircraft manufacturers necessitated the U.S. government’s creation of an aviation patent pool in 1917 at the start of World War I. The study’s authors found that there was no significant patent barrier preventing aircraft manufacturers from entering the market created by government demand, despite the existence of basic aircraft patents.
Instead, the authors of this 2013 study argue that the notion of a “patent hold-up” was used by the government to induce aircraft patent owners to enter into a cross-license agreement imposing near costless tech transfer upon patent owners and benefiting the government’s position as the single buyer in a market, or monopsonist. The Wright Brothers had won a 20 percent royalty rate in their patent infringement case against Curtiss but the government’s patent pool drastically reduced royalty rates to one percent. So it appears that, if innovation in the aviation industry of the early 20th century was stagnant, government price controls may have done more to stifle innovation than any patent enforcement campaign. Amazing that an alum of the Mises Institute couldn’t pick up on that basic premise of free markets.
Join the Discussion
17 comments so far.
Roger HeathFebruary 13, 2018 07:13 am
Tesia – ditto!
Roger HeathFebruary 13, 2018 07:07 am
Angry Dude #10
Sorry, I was “shooting from the hip” when I posted the similar observation.
Now reading others posts.
#12 – agreed! I may trickle out some innovation (trying to keep food on the table) but the very best – when I feel like it or never.
Roger HeathFebruary 13, 2018 06:59 am
In honor of Mr. Calton I am going to copy his works, change a few words and phrases and publish it as my own – but wait!
That would be unethical and even illegal! What was I thinking?
Roger HeathFebruary 13, 2018 06:37 am
As posted on their website:
Patent “Ogres” ply their trade in hogwash.
The greatest innovation comes from the independent inventor. So much so, that they are being stifled for political and/or Corporate benefit.
“Great” leaps in technology obsoletes the Corporate best seller and would have to be purchased or prevented. For the “anti-capitalist” a patent prevents controlling and dolling out preferential disposition of technology.
Even China recognizes the benefit of invention and IP better than IP denigrators (while still swiping all they can). While U.S. innovation is stifled they have more time and more people working at innovation to try to exceed the U.S. while patent death squads put even more lost IP on their plate.
Many countries (in the greatest need) do not have IP treaties and could use such technology to their benefit if they cared to. The supposed innovations suppressed by the original IP owner in treaty countries would not apply to those countries but you don’t see the (copycats and infringers racing to those countries). The treaty counties are competitors for ideology and market. None of them are going to take their blades away from the others throat any time soon. IP Innovation is the life blood for creating good jobs.
In the “no country, no brand, lowest bidder” market; batteries explode, parts break, children’s toys are toxic, Pet food is poison, and wages are minimal.
This is just an example of “one of our own” whacking away at our own jugular for (ideological, academic, foreign favor or personal) indulgence.
Has “he” invented anything of any value to offer to society, dwelled on hundreds or thousands of designs and simulations, put his future on the line?
BennyFebruary 13, 2018 06:00 am
Sequel – in 1929 Curtiss and Wright merged.
angry dudeFebruary 12, 2018 08:24 pm
Ron [email protected]
“…invention will abound even without a patent system”
it will not, dude
(from my own independent inventor’s perspective)
Ron KatznelsonFebruary 12, 2018 07:59 pm
The author affiliated with the Mises Institute apparently misses the institute of our patent system and some basic economic principles pertaining to patents. But the author is not to blame – he merely recites the false narratives and historical myths created by both patent bashers and certain U.S. government officials in 1917, fables that misled even this well-meaning author on what libertarians of his creed would regard as one of the most offensive and disingenuous government intervention in the market.
First, the author misses the purpose of the patent system: the justification for patent protection is not because inventors would cease to invent without it – invention and ideas will abound even without a patent system. However, risky investment in commercialization and bringing to market these new inventions will be substantially reduced absent the exclusive patent right. Inventors are collaterally compensated for their toil when their investors realize adequate returns.
Second, the author should read my 2015 ICC article on the early aircraft industry that Gene cites above (thank you Gene). The reader will discover uncontroverted evidence that (a) the Wright patent was not a barrier to innovation but instead that the head of a government agency (NACA) falsely alleged at a congressional hearing that the Wright patent stopped aircraft manufacturers, and (b) that the Secretaries of the Navy and the War Departments misled Congress, successfully inducing it to authorize by law the condemnation of aircraft patents. Instead of being outraged by false patent troll myths, this libertarian author should be outraged by this fabrication of the patent hold-up myth to justify the pernicious government taking of private property.
angry dudeFebruary 12, 2018 06:43 pm
me thinks I should publish this nonsensical drivel under my own name as an author, but change some words to opposite meaning … like “innovation” to “stagnation” etc.
this bs organization will be really happy bout their copyrighted “work”
It FlewFebruary 12, 2018 03:15 pm
Under today’s 101 jurisprudence, the “abstract idea” of controlling flight by changing the effective shape of an airfoil may not have extended from wing warping (one method) to ailerons (a whole other method).
A case could be made out for the obviousness of ailerons, since they are just sideways rudders, which are ancient devices, and lighter-than-air craft prior to the Wrights used rudders.
The Wright’s real innovations were the wind tunnel and realizing that props were sideways wings (not remotely obvious at the time) plus fabricating a lightweight engine. They possibly patented the wrong stuff, but there is also a litigation lesson to be had that is evergreen. Serious litigation is not easy or predictable, even when everything is on your side.
Tesia ThomasFebruary 12, 2018 12:33 pm
Mises Institute is pretty much a gatekeeper.
Let’s duplicate their website. It’s only fair and free market-like.
Kevin R.February 12, 2018 12:27 pm
You don’t get to critize both the Wright Brothers’ secrecy and their patent enforcement and call yourself a student of anarcho-capitalism.
By advocating for abolishing the patent system, an anarcho-capitalist would be arguing for government marching rights on every invention of value in the name of “so we can improve upon it.”
From my reading of David McCullough’s book on the pair, the Wright brothers weren’t just enforcing patent rights–they felt someone stole their decade’s worth of data collection, testing, measurements, and injuries from accidents. That’s theft of property in Mises-based Austrian School of economics’ ideas of “working the land.” What if Curtiss was farming on the Wrights’ land? Should Orville and Wilbur have just allowed him? What if the government stepped in to allow Curtiss to farm on their land at a rate set by bureaucrats?
The alternative to patent rights is not open competition and free markets, it’s forcing a private citizen to dedicate her invention–i.e., giving her time and money invested in research and development–to the public. You are mandated to fund your competitors with your R&D.
The other result of eliminating a patent system is secrecy. Without a reward for disclosing, you spend valuable R&D money on protecting your secret (and spies). Once the secret is out (or reverse engineered) the value of your property is worthless. Is that a free market? Is forcing secrecy a part utilitarianistic ideas and natural law?
The Wrights were notoriously secret because of their lack of trust in the government’s ability to stand down in the competition–that the government had a horse in the race and would share the products of their hard-earned work and development.
Again, how can a student of the Mises Institute support the essence of crony capitalism over an intellectual property system designed to incentivize *disclosure* of innovation.
AnonFebruary 12, 2018 12:27 pm
Joachim’s post does not come out and say it (directly), but the lesson is (or should be) clear:
A patent system works best with a Carrot AND Stick approach, and using the stick of actually enforcing exclusivity is something that PROMOTES innovation rather than as the Efficient Infringers would spin it, as “blocking” innovation.
When given the choice to pay or do without, there is a PROMOTION to come up with some new innovative way; even – or perhaps especially when the innovation seems to be a “solid block.”
The adage of “necessity is the mother of invention” rings true for a reason.
Joachim MartilloFebruary 12, 2018 11:41 am
I have worked for a corporation, which was successful in non-infringing reverse engineering. If we had existed back then and set a goal of non-infringing reverse engineering of manned heavier-than-air free flight, we would have developed a practical helicopter about 30 years earlier than it appeared.
By interfering with patent rights the US government set helicopter development back by decades.
Paul MorinvilleFebruary 12, 2018 10:28 am
Is Josh Malone holding up the water balloon market? Or is he being ripped off by a huge corporation?
Would Josh have spent the time and resources fiddling with the invention if he could not protect it? Or would he have just gone fishing if he would have no protection from the huge serial infringer, Telebrands?
The folks at Mises are academics. They theorize in their bubble. And they take donations from large corps.
They do not startup companies with stuff they invented and try to get funding.
Tesia ThomasFebruary 12, 2018 09:28 am
Maybe we should knock off all of Mises’ stuff, not attribute anything, and see if they sue.
Maybe they’ll become copyright and trademark trolls.
Everybody has this ‘holier than thou’ we-hate-govt-monopoly attitude until their stuff that they spent tons of money on is being stolen!!
So I say bring the heat. Let’s see just how much they hate govt monopolies – enough to not defend theirs?
EGFebruary 12, 2018 09:11 am
Thanks for revealing this nonsensical article. Calling Calton a “historian” is an oxymoron.
The Wright brothers could be stubborn and contentious in terms of their patent litigation, especially with Curtiss, but to call them “patent trolls” is absurd in the extreme. The book The Bishop’s Boys shows that.
Tesia ThomasFebruary 12, 2018 09:01 am
After Rothbard, all Mises-ian views on IP went to heck.
After reading the comments:
Mises is trademarked and copywritten.
So are blockchain startups’ names and likely some code. Whether they use IP in the form of patents, trademarks, copyrights, or trade secrets usually ALL BUSINESSES USE SOMETHING!
ALL BUSINESSES WANT THE GOVT MONOPOLY ON SOMETHING – their name, website, product photos, etc.
That article is the most unsubstantiated drivel I’ve ever read.
If it is true, the author could’ve and should’ve cited sources.
Whoever believes an unsubstantiated story on ANYTHING is a lemming.