By Ronald J. Riley
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George Santayana (1863–1952), U.S. philosopher and poet said "Those who cannot remember the past are condemned to repeat it." Study of the history of American inventors, especially inventors whose careers started between 20 and 40 years ago has been crucial to my success as an independent inventor. America's phenomenal economic success has been driven by a number of factors such as abundance of natural resources, a population of pioneers that were willing to take risks, and most important American inventiveness. Our patent system led to the formation of many great companies such as AT&T / Bell, Ford, GE, IBM, & Litton to name a few. The problem is companies who are birthed by inventors have a life cycle similar to, but generally longer, than man.
When young, these companies were run by the inventors who were willing to take big risks introducing new inventions. With success, and middle age, they became more rigid and less willing to take risk. They continued to invent but the inventions were not as dramatic as those that founded them. They also generally become predators on other inventors during their mid life. They use their huge resources and influence to crush the upcoming generation of inventors and generally do their best to not compensate the inventor.
Sustained success over a long time frame often leads to stagnation. Once stagnation sets in the companies lose the desire to innovate and are unwilling to take any risk. At this stage in their life they become very active politically, in an effort to legislate an environment where they can continue to profit without risk.
There were many opportunities, niches to fill, for inventors during the first 75 to 100 years of our history. During that time the difference in size and assets between the big and small companies was much smaller than today. The patent system worked very well to during this time.
The next 100 years was a bleak time for most solo inventors. By 1940 patents were virtually unenforceable for the solo inventor and small companies. The very companies that were founded by innovators became predators that did their best to crush any upstarts that dared to challenge them. During this time frame the only way an inventor was likely to succeed was by starting their own company. Things we so bad that some inventors committed suicide.
Those who attempted to sell patents generally died paupers, and those who started companies were usually displaced by a business manager type who was not creative and did not appreciate the value of invention. The inventor / founder generally suffered the same fate as their peers who simply tried to sell their patent. During this time the only inventors that succeeded were those that were in a niche market that were able to grow a company without crossing swords with an entity that was much larger than themselves.
Prior to the formation of the CAFC (Circuit Appellate Federal Court) it was next to impossible for any inventor to get justice. The courts ruled again and again that independent or small entity patents were not valid. If an inventor prevailed with a jury the judgments were inevitably overturned on a technicality on appeal.
The CAFC was established in 1982. Within three or four years it started handing serious defeats to those who copy and steal inventors property. Now our patent system is being attacked by the same entities who have been found guilty again and again. Their solution is not to start dealing in a reputable manner but instead to alter our patent laws so they can return to the good old days when they simply took what they wanted.
Which brings me to my study of a number of contemporary inventors who started their careers during the dark ages before the CAFC was established. I studied the following inventors:
Ray Damadian, MRI See: http://www.invent.org/book/book-text/28.html
Gordon Gould, Laser - Patent Fending See: http://www.invent.org/book/book-text/48.html
Wilson Greatbatch, Pacemaker See: http://www.invent.org/book/book-text/49.html
Doug Hougen, Metal cutting tools See: http://www.rjriley.com/inventors/Hougen/
Bob Kearns, Delay windshield wiper - Patent Fending See: http://www.rjriley.com/inventors/Kearns/
Jerome Lemelson, Machine vision, Automated warehouse, etc. Over 500 patents See: http://www.rjriley.com/inventors/Lemelson/ - Patent Fending
Petr Taborsky, Student inventor who was put on a chain gang by a disreputable university. Fortunately such conduct by a university is unusual, most are honest.
Each of these inventors continued to invent while their ideas were being stolen. Most fought protracted battles to protect their rights. Many of them lost battles in spite of the fact that they were right, yet they still pressed on to produce more inventions. And they persevered in spite of disappointments.
Both Gordon Gould and Jerome Lemelson have been the objects of industry smear campaigns. Gould prevailed, in spite of the fact that the whole Laser community was involved in the attack. Lemelson is currently being attacked by much of industry. NAM, AIPLA, and IPO are active in the attack. The auto companies have settled but the semiconductor industry is the subject of scores of lawsuits.
For anyone interested in the specifics I suggest you go to http://dejanews.com/ and select the old database. Do a search for "Lemelson", you can see for yourself. One of the worst offenders was Bruce Hayden, who apparently lost several battles at more than one employer with Mr. Lemelson. To see his postings put "Lemelson Hayden" in the search field without the quotation marks.
Bruce Hayden was employed by Motorola, who reportedly paid the Lemelson foundation several tens of millions of dollars to settle patent infringement claims. After Motorola was faced with a public boycott over Hayden's public comments, they and he parted company.
Gordon Gould is the inventor of the Laser. Jerome Lemelson is the third most prolific inventor in the history of our country (Edison is first, Land second, and Jerry is the most prolific inventor of our time). Jerry Lemelson passed away 10-1-97. Jerry was a good person who I was proud to call a friend (Tribute). Before his death, he and his wife Dolly set up a foundation to encourage invention. They became philanthropists who funded numerous historical and educational programs. See http://www.si.edu/nmah/lemel/start.htm
Ray Damadian and Doug Hougen are both examples of inventors who survived at a time when patents were virtually unenforceable by launching companies. The trick was to come in under the radar of the big companies, and use the cash flow from the inventor's company to fight the big companies who tried to steal the inventors work. In both cases a key reason for the inventors company's survival was that the inventor stayed ahead of the big companies by out inventing them, always a step or two ahead in the technology.
Ray Damadian fought a twenty year battle, often on the verge of going bankrupt. But in the end he won over $120 million in damages against GE, and collected many millions more from several Japanese companies who had been stealing his inventions.
Doug Hougen, a friend and mentor passed away 2-17-99. I, and many other people will miss him (Tribute). Doug Hougen fought Black and Decker and lost, spending over half a million dollars in the fight. But he also won in the market by producing better product at a lower cost than the would be competitors could.
Through their foresight and shear tenacity this generation of inventors blazed a trail and set an example that allows my generation to invent and gives us at least a fighting chance of being compensated for our inventiveness.
What I have learned, both from studying the history of other inventors and through hard knocks:
This is a long term enterprise, expect to spend five to ten years before you receive significant income.
Do not have the same attorney do the search and prosecute the patent. While most are honest why create an inherent conflict of interest.
Do not file your own patent, claim wording is a very complex specialty that must take all precedent into account. If you file your own patent do not expect it to be as strong as one that is written by a patent agent or attorney and expect lower compensation as a result.
It is best not to market a patent until you receive the notice of allowance, information you supply before then can be and often is used to create fraudulent evidence by an opponent.
Line up a contingency litigator before you start marketing. Litigators and filers are different breeds with different talents.
Do not attempt to market to the biggest company in the field. They are usually fat and happy and will not be interested, and if they are interested they are usually so impressed with themselves that they will try to steal your idea. Instead market to the second or third sized company who is striving to be first.
The sales group is usually the best place to market, recruit a champion in the sales department who is compensated based on performance. Engineering, upper management, or the legal departments are not usually good ways to get the company's support.
Expect 80% or more of the companies you deal with to be dishonest.
Conduct all contacts with potential partners as if you may have to slug it out with them later. That means you must thoroughly document every contact, because there is a good chance the organization will tell you they are not interested after they have obtained as much information as possible. And that they will introduce an infringing product within a year or two.
Don't trust trade organizations, they are usually run by the big boys.
Expect fairly low compensation for past infringement. Something on the order of 1% to 10% of the actual loss. Your goal should be to make them a long term customer. Do not let your anger over being wronged get in the way of good business judgment.
Build a fence around your idea with multiple patents. An infringer is more likely to settle if they face more than one infringed patent.
If your settlement exceeds $500,000 per infringed patent expect the opposition to try and invalidate the patent.
Make them a reasonable offer on royalties and stick to it. DO NOT demand more than your original offer because they agreed to it and now you think the market will bear more! That will kill your deal and sour the company on working with any inventor.
Do not execute any contract without legal counsel. Many companies have invention evaluation agreements which take away your right to enforce your rights and allow the company to do whatever they feel like with your invention. Two examples of companies with such agreements are Ford and Mattel.
I urge all inventors to contact the Alliance for American Innovation located in Washington, DC. The Alliance provides the only full time Washington presence for the independent inventor. It is time for us to band together to defend our rights. Multinational companies and foreign governments are attempting to weaken our patent system with a number of bills, that in combination, will make patents virtually unenforceable for independent inventors and small businesses.
Copyright 1997-2001 by Ronald J. Riley, copies made be made for individual use. This document may be posted on Web sites. Check with the author for the most current revision.
