[Smart Economics Reading] Protecting Invisible Property: Patents

Edison, the King of Inventors, Who Created a Global Company Through Patents

Many people know Edison only as the “King of Inventors” or as a “scientist,” but in fact he was also an outstanding businessman. This is clear from the fact that Edison founded not only Edison General Electric, the predecessor of today’s General Electric (GE), but also an electric automobile company and the world’s first silent movie theater. Edison’s remark that “an object sleeping in a drawer is not an invention,” along with the fact that he always considered practical application whenever he created something new, also reveals his exceptional business instinct and mindset.

Immersed in Research Without the Burden of Expenses Thanks to Patents

Moreover, the reason Edison filed patents for each of his inventions was not simply to set a patent record or to earn the title of “King of Inventors.” In total, he filed 2,332 patent applications, an amount that would take more than 20 years even if one filed 100 applications every year. Filing patents alone must have been no ordinary hassle. So why did Edison repeatedly apply for patents every time he invented something?

Edison said this:

“I keep inventing in order to invent.”

Put another way, this could be expressed as: “I keep filing patents in order to keep inventing.” No matter how great an inventor may be, without money he cannot continue inventing. But if he has to earn money to secure research funds, he will lack the time to focus on invention. Edison, however, was able to obtain around 1,000 patents through patent applications, and thanks to that, he was able to keep inventing without having to earn money separately. In the end, the secret behind Edison becoming the King of Inventors was not only “1% inspiration and 99% perspiration,” but also the fact that patents allowed him to keep securing the funds needed to continue his research.

Patents as the Fuse of Technological Innovation

Patent rights and copyrights recognize and protect rights to invisible, intangible property such as ideas, technology, inventions, music, and literary or artistic works. Patent rights (hereafter, “patents”) refer to the right to use technology or inventions exclusively under patent law, while copyright refers to the exclusive and monopolistic rights that authors hold over creative works in literature, art, and related fields. Among these, patents are of great help to economic development because they promote technological innovation. The fact that a single light bulb invented by Edison reshaped not only economic development but also the history of human civilization vividly shows the tremendous power of patent-driven technological innovation.

But what would happen if someone invested long effort, time, and resources to devise new technology or an invention, only for the benefits not to return to that person? No one would remain interested in creating new technology or making inventions. On the other hand, if rights to technology and inventions are recognized and protected, many people will willingly pour their passion and effort into developing new technologies. That is why patents serve to encourage the creation of new technologies and inventions. Edison, too, was able to create countless inventions and contribute to the prosperity of humankind because patents were guaranteed.

Of course, patents recognize monopoly rights, so granting patents too broadly can encourage monopoly or hinder future innovation. Yet if patents are recognized too weakly, no one may be willing to invest or devote effort to invention in order to obtain them. Therefore, if the patent system is operated rationally, including by setting appropriate time limits, patent rights do not become a harmful monopoly.

Moreover, patents do not merely protect the interests of patent holders; by driving technological innovation, they also greatly benefit the many individuals and businesses that use those technologies. In that sense, patents can be seen as a desirable institution that promotes economic development.

Flexible Problem-Solving Through the Market

Capitalism has evolved in better ways by responding on its own to changing environments as if it were alive, and unlike other systems, it is a system that solves problems flexibly. In a market economy, when economic changes occur, consumers and suppliers adjust demand and supply on their own and resolve problems flexibly.

This flexibility stems from the fact that capitalism is based on a democratic system. The capitalist economic system places the highest value on individual freedom and human rights, guarantees property rights and freedom of choice by law, and treats trust as the core of voluntary exchange. As a result, economic activity flourishes through voluntary transactions among market participants rather than through government intervention, ultimately allowing the flower of economic growth to bloom.

▲ Please remember

Patent rights and copyrights recognize and protect rights to invisible, intangible property such as ideas, technology, inventions, music, and literary or artistic works. Patents are of great help to economic development because they promote technological innovation. The fact that a single light bulb invented by Edison reshaped not only economic development but also the history of human civilization clearly shows the tremendous power of patent-driven technological innovation.

Sung-no Choi, President of the Center for Free Enterprise (CFE)

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Original title: [스마트 경제 읽기] 보이지 않는 재산의 보호, 특허

Author: Sung-no Choi

Date: 2020-10-19

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=6&idx=23177