This is my final blog posting, and I’d like to briefly raise an issue with the readers of this series about a complex policy and legal issue: antitrust and its impact on patent pools.

Among all the differences between the nineteenth century and the modern age that have been identified and discussed by VC commentators and others over the past week, this is perhaps one of the most consequential. Interestingly, it’s a difference in law, not in science or technology. Yet this may have the biggest impact on patent thickets, because it makes its private-ordering solution that much harder to form.

As I discussed in my posting about the Sewing Machine Combination, this patent pool and commercial trust was attacked in the popular press as a “grinding, pitiless monopoly.” In the Sewing Machine Combination’s patent infringement lawsuits, defendants repeated such arguments, such as calling its litigation war chest an act of “oppressive conduct.” Such arguments, however, fell on deaf ears in the courts. In one 1862 case, for instance, a federal court rejected this claim, asking rhetorically, “why they might not make a common fund for the purpose of protecting their common rights by prosecuting those they thought had infringed them, I am at a loss to conceive.”

After the enactment of the Sherman Antitrust Act in 1890, this was no longer a rhetorical question for a court to ask, as the federal government embarked on a campaign of “trust busting” (to use Teddy Roosevelt’s famous term).

I am not an antitrust expert, and so I am very much hoping for some substantial feedback from the VC readers. It’s my understanding that, for much of its history, antitrust law prohibited patent pools as anticompetitive -- they were deemed to be a form of collusion for the purpose of squelching competition. In more recent years, this hard line against patent pools has softened a bit, as the federal government now applies a “rule of reason” analysis to determine if patent pools are pro- or anti-competitive. This requires the courts to engage in a market-specific, context-sensitive, patent-specific analysis of the nature of the pool and its function, asking such questions as whether the patents in the pool are complementary or substitutes for each other, whether prices will rise or fall, whether the pool will facilitate a product coming to market or not, etc.

Now, I think there is a legitimate philosophical question to ask about whether such concepts are even valid, but that is beyond the scope of both my paper and this blog posting. Here, my inquiry is pretty limited in scope.

Antitrust scholars acknowledge that rule-of-reason analysis is “indeterminate,” which means that it is next to impossible for the firms to predict ex ante whether their actions will run afoul of the antitrust laws or not. So, here’s my question: How does this indeterminacy impact the use of patent pools to resolve paten thickets? If so, does this make patent thickets more or less problematic today? In other words, is one of the reasons for the problem of patent thickets today exogenous to the patent system -- is antitrust mucking up the workings of the patent system here?

I don’t know the answers to these questions yet, but it seems commonsensical that antitrust would be relevant to the patent thicket problem. The question would seem to be how much and in what way. I’m really interested in hearing from people who know more about antitrust than I do -- I'm currently researching it as part of my writing project on patent thickets -- and so any ideas, suggestions, pointers, cases, etc. would be greatly appreciated.

With that said, I’m now signing off from my guest-blogging stint here at The Volokh Conspiracy. I wanted to thank Eugene again for inviting me to do this. I had a lot of fun, and I hope you (the readers) did, too. I know that my final paper will be far improved as a result of this experience. In fact, I really enjoyed my engagements with the commentators, who are to be commended for their thoughtful and substantive remarks. The comments stayed on track and did not get sidetracked, and for that, thank you.

Some might conclude that “patent trolls” are a more serious problem today because of larger problems in patent litigation generally. We often hear reports of an explosion in patent litigation, problems with determining whether patents are valid, problems with determinig patent boundaries, and commercial products being held hostage to the threat of infringement litigation. Such complaints are particularly loud in the computer industry, as supported by academic commentators.

Here, we must be especially cautious in assuming that modern problems are necessarily different from those experienced in yesteryear. Of course, it goes without saying that there are differences between the 1850s and today; in fact, there are differences between 1995 and today. There are always differences between two distinct points in time. So it's important to always figure out if these are differences without a distinction, and, even more important, if there are any similarities.

In this respect, recall that many facets of the Sewing Machine War reflected many of the purportedly new problems with patent litigation today, such as massive and costly litigation and the threat of injunctions. And it’s not just cases from the Sewing Machine War that reflected these and other so-called modern concerns. As someone who has been immersed in historical patent jurisprudence for much of his academic career, including having read, among other things, all patent decisions in the Federal Cases reporter (approximately 1,460), I often hear today the echoes of long-forgotten patent disputes.

In 1862, for instance, a judge expressed his frustration at inventors being “frightened off the course by threats of ruinous litigation,” and that in the particular case before him, the “astute counsel and experts have been employed to surround this machine or invention ... with a fog of nebulous rhetoric, and to make this concrete machine appear a transcendental abstraction ....”

In 1855, in the midst of the Sewing Machine War, a judge instructed a jury in a patent trial unrelated to the swirling disputes over the sewing machine:

For the maintenance of his right [an inventor] is subjected to legal controversies, which, not infrequently involve him in an expenditure beyond the amount of his profits. Inventors and discoverers are proverbially poor. It is said that the man, by the operations of whose genius the streets of the city of London were first lighted, was a wanderer and a beggar in the streets.

In 1877, another judge complained in a patent decision that “litigation in regard to patents has been found so expensive and so wearisome to the courts.” Such problems arose from how each “contest involves an immense sum in value, and where the question turns mainly upon opinions of experts, there is no difficulty in introducing any amount of them on either side and yet this class of cases is one in which there is value to be attached to experts.” He further noted that it “is a sad thing to say that perhaps no class of cases coming before the courts have as much fraud, perjury, and wicked conduct, as patent cases. ... there is a large amount of false swearing and corruption in them.”

If anyone has a tendency to commit the anachronism of thinking that the inventions of yesteryear were simple compared to today, they need look no further than an 1855 decision from Justice Grier, riding circuit, in which he observed:

It is no reflection on juries or trial by jury to say that many disputes about the originality and infringement of patents depending upon complex mathematical calculations, upon a knowledge of the principles of chemical science, and of mechanical philosophy, cannot be satisfactorily decided by the verdict of twelve men, a majority, if not all of whom, have no knowledge or experience on the subjects they are called to decide on.

And, in 1841, Justice Story, one of the principal architects of American patent law, observed how “Patents and copyrights approach nearer than any other class of cases ... to what may be called the metaphysics of law, where the distinctions are, or at least may be very subtle and refined, and sometimes, almost evanescent.”

These are just a few of the many long-forgotten patent cases I have uncovered in my research (some of which I discuss in a previously published article) and which warn against several anachronisms in patent law today. These nineteenth-century complaints remind us that the inherent technical and legal problems in assessing complex innovation — such as distinguishing between different complementary contributions to a commercial product, determining imprecise contours of a patented invention, and litigating a case in a court system that moves at a plodding pace — are long-standing features of the American patent system.

The American patent system, as economist B. Zorina Khan has explained, was tremendously successful in the nineteenth century — as compared to older and more established patent systems in England, Germany, and France. As Professor Khan has shown, the American patent system excelled precisely because it did what none of these other patent systems would do: It secured inventions as property rights within an institutional framework governed by the rule of law.

It was within this framework that the first American patent thicket arose from the incremental invention of the sewing machine. It was this framework that also provided for the resolution of this patent thicket by the sewing machine patentees — exercising their rights of use and disposition in their property by contracting to their mutual benefit.

In my next (and final) post on the sewing machine patent thicket, I will raise an issue that is not yet discussed in my paper — antitrust. The impact of antitrust doctrine on how patent-owners contract with other patent-owners may create significant variances between the nineteenth century and today on how patent-owners may resolve patent thickets. I am still researching the relationship between patent pools and antitrust, and so I am especially keen on receiving feedback from the readers of this series.

One of the features of the Sewing Machine War that makes it appeal to our modern sensibilities is that it is the first patent thicket in American history in which a non-practicing entity — the inimitable “patent troll” — played a fundamental role at each important point in the story.

With respect to the role of “patent trolls” in patent thickets, and in patent litigation generally, the parallels between Howe and modern non-practicing entities are palpable. An oft-cited example of a “patent troll” at work was the recent Blackberry litigation. In this case, the patent-holding company, NTP, Inc., successfully sued Research in Motion Ltd. (RIM), the manufacturer of the Blackberry, for infringing NTP’s patents on wireless email communication. NTP was a non-practicing entity who was not actively commercializing its technology; its sole source of revenue was the royalties it was seeking from RIM. As such, many commentators believe that NTP is an exemplar of a modern “patent troll,” since it was a non-practicing entity that used an injunction to compel RIM to pay for a license. In fact, in the "patent troll" debates, NTP is the most commonly cited example of a "patent troll." Thus it seems that NTP is one of the few examples, if not the only one, to which this term best applies (or at least applies without generating tremendous controversy).

If NTP was a “patent troll,” then Howe certainly was a “patent troll” — a non-practicing entity using injunctions to compel licenses from actual manufacturers of the completed commercial product. As I noted in an earlier post, some commentators don’t believe that it is legitimate to call Howe a patent troll, because he tried to commercialize his invention, or, as some put it, he was acting in “good faith.” But if attempts to commercialize one's patented invention prevents one from being deemed a "patent troll," then NTP is not a patent troll either. NTP also tried to commercialize its technology, something it repeatedly pointed out in its court filings in its litigation against RIM. In fact, similar to Howe, NTP failed to find a firm willing to invest in its technology, and, similar to Howe, NTP belatedly discovered RIM’s Blackberry several years later and initially demanded a license from RIM. As in Howe’s lawsuit against Singer, NTP sought and successfully obtained an injunction against RIM only after RIM rejected NTP's request to enter into a license. Moreover, just as in Howe v. Singer, RIM tried to invalidate NTP’s patents in separate hearings at the Patent Office (called "reexamination proceedings"). The correlation between Howe v. Singer and NTP v. RIM is strikingly robust.

In sum, if Howe is not a patent troll, then NTP is not one either, and thus we're left with an epithet that refers to few, if any, actual patent-owners in the real world. One problem is that a "patent troll" is often defined simply as a non-practicing entity that has no intent on manufacturing a product. But the problem with this definition is that it includes universities that license technologies created by their professors. Yet, among those who use the term "patent troll," no one seems to consider universities to be bad actors deserving of this epithet. Universities, like Howe, seem to be imbued with that aura of "good faith" that makes the "patent troll" epithet seem inappropriate.

If one then (re)defines a “patent troll” as an entity that did not invent the patented invention, but rather bought it from the actual inventor for the sole purposes of licensing it, then this just creates other problems for using this term. As a preliminary matter, it would now exclude NTP, which was a corporation solely owned by the inventor. In fact, many individual inventors incorporate themselves, and then transfer their patents to these newly formed holding companies, for liability and tax purposes. Moreover, this new definition would now include many corporations, such as IBM, which collect patents, not for manufacturing purposes, but to use them as a shield against patent infringement lawsuits. (Coincidentally, two commentators to my prior post on incremental invention mentioned IBM's practice of hoarding patents.) In sum, IBM, which has long been one of the largest owners of patents in the country, uses patents defensively. Its policy has been one of “mutually assured destruction,” i.e., if someone threatens to sue it for patent infringement, then it promises that it can find a patent in its massive patent portfolio with which to countersue for infringement. This policy has worked marvelously well for IBM, which has mostly avoided patent infringement lawsuits and has been left free to devote its time, energy and money to developing new products and services that it offers in the marketplace. But IBM's policy of hoarding patents is certainly "patent troll"-like behavior — patents are being used solely for litigation purposes and not for development of actual products sold in the marketplace.

Another commentator mentioned that Jerome Lemelson was a patent troll, but this is mixing two different concepts in patent law — a “patent troll” and a “submarine patent.” Lemelson exploited procedural loopholes in the regulations governing how patent applications are processed at the Patent & Trademark Office. Traditionally, patent applications were kept secret until the patent issued. The result of Lemelson's procedural machinations was that he was able to keep his patent applications secret for decades, while firms invested hundreds of millions of dollars in technology that they believed was in the public domain. Lemelson then let his patents issue, and he sued the companies for patent infringement. Many of the firms settled, but some fought back. Ultimately, the courts dealt Lemelson (or, more precisely, the company formed after his death) a blow when they used the doctrine of laches to prohibit his enforcement of his patents. Moreover, Congress changed the law on patent applications in 1999, and now patent applications are publicly disclosed 18 months from the date of filing.

So, the problem with Lemelson was not that he was a patent troll, but that he was using submarine patents — patents that were kept secret and then surfaced to sink established companies with the threat of litigation — to game the system in his favor. Courts and Congress have now closed the legal loopholes that made Lemelson capable of using submarine patents. Moreover, Lemelson was the inventor of all of his patents, and thus he would fail the other feature of a “patent troll” — the patent-holding company is not the inventor.

In sum, the problem is that the term “patent troll” is so amorphous and protean in its usage that it’s effectively meaningless in conveying anything other than the fact that the person using the phrase thinks some practice in patet law is bad. But if this is the case, then one should precisely identify the practice that one thinks is improper, rather than use this epithet. The term "patent troll" is ambiguous and indeterminate, as its referents constantly change and nothing is constant except for its negative normative connatation. In this respect, the term "patent troll" is tantamount to what the logical positivists, such as A.J. Ayer, thought of all normative terms; in essence, the logical positivists believed that to call something “bad” was the cognitive equivalent of an emotional ejaculation, such as yelling, “Boo for that!” (Conversely, Ayer explained that to call something "good" was cognitively the same as yelling, “Yah for that!”)

It seems as if the term “patent troll” confirms the logical positivsts’ assessment of normative terms. It becomes impossible to respond to it, because whenever one thinks one has it nailed down in its meaning, it changes its referents to accommodate some other bad practice or to differentiate some practice people think is good for the patent system. The result is a game of normative whack-a-mole, and a vague general feeling that property-owners can act badly. But that's just a tautology, as the freedom provided by property rights permits people to act badly or properly, such as an annoying neighbor who uses property disputes (trespass, nuisance, etc.) as a proxy for his own personal grudges.

This point about landowners acting badly thus highlights the one feature of the "patent troll" debate that is noticeably absent — an actual sense of how bad "patent trolls" are and whether it's been empirically established that they now trump the benefits derived from the patent system generally. This is important, because most critics of "patent troll" behavior (whatever this might be) are calling for systemic changes to the patent system, whether it is changes to remedy doctrine, licensing rules, validity determinations, or all three. So, as Hamlet put it, here's the rub: Do we really want to make systemic and structural changes to the entire patent system based on an amorphous and ill-defined rhetorical epithet? Even assuming that "patent trolls" are an actual problem, are these calls for patent reform comparable to calling for systemic changes to our real estate system given the ability of some troll-like landowners to exploit trespass, nuisance and other doctrines so that they can harass their neighbors? Without definitive empirics to help us understand the scope of the problem — and the empirics will be almost impossible to come by as long as it remains virtually impossible to define the "patent troll" term with any precision — this is a dangerous game that we are playing with the system that is responsible for promoting and securing property rights in innovation.

In contrast to the widely accepted picture of difficult property-owners who hold out against all entreaties, requiring some type of public-ordering response from Congress, the courts or the Patent and Trademark Office, the Sewing Machine Combination confirms that voluntary patent pools are not just theoretically possible, but have occurred in the real world. There was no Patent Reform Act of 1856 that prompted the formation of the Sewing Machine Combination by eliminating Howe’s ability to get injunctions, limiting his royalty payments, or imposing restraints on his or other patentees’ commercialization rights. (At the time, such measures may have been deemed to have constituted an unconstitutional taking of the sewing machine patentees’ property under the Fifth Amendment. For further elaboration, see here.)

The Sewing Machine Combination was initiated by private actors for their private benefit — within the governing rules of a property system that provided strong property protections to the relevant entitlement owners. For this reason, the Sewing Machine War and its resolution in the Sewing Machine Combination is an important empirical case study that teaches important lessons for understanding the theory of how non-practicing entities function within patent thickets.

In my next post, I will discuss the concerns expressed in the patent literature and in many comments to my prior posts about the allegedly unique problems with patent litigation today, such as the difficulties in determining what is a patented invention for computers. Alas, nineteenth-century case law is replete with similar complaints, which perhaps suggests that the old adage — all things old are new again — is actually true.

The story of the sewing machine is an important empirical case study of how the American patent system has long dealt with incremental invention and resulting patent thickets. It's also a self-contained case study, which challenges the principal focus of the literature on recent inventions and recent changes in patent law, such as the rise of biotech patenting since the early 1980s. Given the cutting-edge nature of biotech research and its equally innovative commercialization, this new field presents a moving empirical target for patent scholars and economists. This perhaps explains why recently published studies on patent thickets, at best, have found none, or, at worst, have been inconclusive.

As a single case study, it cannot serve as the basis for drawing definitive conclusions, as more empirical studies will have to be done. The Sewing Machine War, however, does point toward some important lessons for the modern policy debates over patent thickets. One lesson is that the incremental invention of complementary elements of new technology seems to be a common feature of the type of cutting-edge discoveries that the patent system has promoted for more than two hundred years. From the sewing machine to automobiles to airplanes to radios, incremental innovation seems to be omnipresent in the historical evolution of science and technology.

There was even incremental innovation in the invention of the incandescent light bulb, which, contrary to popular myth, was not discovered by Thomas Edison. Just as Isaac Singer invented only the final few elements of a practical and successful sewing machine, Edison invented only the first practical incandescent light bulb. (Of course, both of these were tremendous achievements, and thus this is not meant to denigrate their inventive contributions.) In fact, Edison was even sued for patent infringement by one of the earlier inventors of the light bulb. Unlike Singer’s hapless luck with Walter Hunt, however, Edison was able to invalidate this earlier patent under one of the statutory requirements for a valid patent grant. Yet, decades later, the inventive cycle repeated itself again, as Edison was again embroiled in controversy, but this time it was with Nikola Tesla, who successfully patented and commercialized follow-on innovation to Edison’s own cutting-edge work in electrical power systems.

Professor Michael Heller and other scholars have given passing acknowledgements to a few of these historical examples of incremental innovation and resulting patent thickets. As I noted in my introductory post, much of the chapter on patents in Heller’s The Gridlock Economy is spent discussing alleged patent thickets in biotech. In fact, the only historical patent thicket to which Heller devotes anything more than a sentence or two is the airplane patent thicket of the early twentieth century. Coincidentally, this was also the only patent thicket that was solved through a public-ordering solution — a compulsory patent pool imposed on the patent-owners by federal legislation. In fact, Heller devotes more time to discussing this legislatively coerced solution to the airplane patent thicket than to the nature of the patent thicket itself. Again, the underlying assumption is that patent thickets are a property problem to which a public-ordering regulatory model is the best solution.

As commentators have pointed out in prior posts, especially in my first introductory posting (Who Cares About the Invention of the Sewing Machine?), there are important differences between the nineteenth century and our modern digital age. The computer revolution was spawned by the invention of the integrated circuit in 1958 by Jack Kilby and Robert Noyce, and innovation in computer technology and related fields, such as biotech, has grown exponentially. This is technological growth that surely outpaces anything humanity has seen before. This is undeniable.

But there are perhaps just as many myths about the significance of these differences as there are truths. For instance, one commentator claimed that a significant difference in the inventive activity between today and the nineteenth century is that hobbyists can work on computers in their garages today but that inventive work in the nineteenth century required massive capital expenditures. Yet Elias Howe and many other inventors in the nineteenth century, such as Charles Goodyear, Samuel Morse, Samuel Colt, and Eli Whitney, to name just a few, were what we would now call “hobbyists” — people without formal training or full-time employment in the field of technology in which they hit inventive pay dirt.

One could still argue that, compared with the potential success of a new computer technology, nineteenth-century industrial technology required massive upfront investment outlays — what economists call “sunk costs.” This is certainly true with respect to railroads, steamboat fleets and, later in the nineteenth century, steel mills and industrial factories. But the investment dollars were there to be had for those with new ideas.

Charles Goodyear, for instance, toiled for years after his invention of vulcanized rubber in 1839 to convince American firms of the value of his invention. Goodyear’s troubles were the same as those that affected Howe — both inventors faced skeptical investors and commercial firms who had already lost boatloads of money on prior inventors who had claimed to have solved the technological problem. In fact, the nascent rubber industry experienced in the 1820s and 1830s a bubble that was equivalent to our own “dot com” bubble at the turn of the last century. Hundreds of thousands of dollars in investments went up in smoke when products made from pure rubber lost their cohesion in hot weather or became brittle in cold weather. Goodyear’s invention of vulcanized rubber solved these problems, but it was difficult for him to convince firms and the buying public after so many failures — and such spectacular financial wipeouts. Goodyear struggled, but, more important, he succeeded.

The sheer number of patents and the increased amount of inventive activity in the twenty-first century is another important difference between today and the nineteenth century. For instance, some have pointed out that Sewing Machine War was a manageable thicket insofar as it was resolved through an agreement between only four entities: I.M. Singer & Co., Grover & Baker, Wheeler, Wilson & Co., and Howe. Today, a patent thicket may comprise thousands of patents, which are owned by individuals or corporations spread throughout the globe.

Yet the same technology that makes inventive activity and patenting more common also reduces the transaction costs in finding information and in coordinating commercial behavior. Word processing programs, email, and web-based searchable databases, such as at the U.S. Patent Office and Google, make it possible to research patents, communicate across the globe, and to reach deals quickly and efficiently in ways that Singer and Howe could have only dreamed about one-hundred-and-fifty years ago. Today, one can search every U.S. patent with a single click of a mouse, send email with proposed licenses as attachments, or FedEx a cease and desist letter in a fraction of the time it took in the nineteenth century. In the mid-nineteenth century, travel between Boston and New York City took a couple days, at best, by horseback (the most efficient method of travel over land). And, even after the telegraph was up and running by the mid-nineteenth country, it facilitated only minimal communication (via the dots and dashes of Morse Code). It is very hard for us today to imagine trying to search patents, negotiate licenses, litigate numerous lawsuits, or operate national commercial enterprises under such conditions — as the sewing machine patentees all had to do in the Sewing Machine War!

In sum, we must beware of anachronisms when we assess technological advances, commercial activities, and legal interactions in a bygone era that lacked, not just the problems of our technology, but also its benefits.

To be clear, it bears emphasizing the empirical merits of the Sewing Machine War and its related features, such as Elias Howe’s role as a non-practicing entity in this patent thicket. This is admittedly a single patent thicket involving a single commercial product. I would be committing the logical fallacy of a hasty generalization to draw definitive generalizations from this single data point. At a minimum, though, this case study serves as a cautionary tale against the assumptions that dominate the current discourse concerning patent thickets and closely related policy concerns, such as the impact of incremental innovation and the so-called complicating features of modern inventions. To wit, these are not modern phenomena that are necessarily best resolved with distinctly modern regulatory measures that restrict the property rights secured to patentees. They have long been features of the American patent system, which has long dealt with incremental invention and resulting patent thickets.

In my next post, I’ll discuss the issue of “patent trolls” and patent litigation, and whether these have proven to be insurmountable problems to the resolution of patent thickets, past and present.

UPDATE: Some minor spelling errors were corrected.

In this last of the purely historical posts, I'll discuss the success of the Sewing Machine Combination, not just in ending the Sewing Machine War but also in serving as a fountainhead for further innovation by its members.

Altough the Sewing Machine Combination was repeatedly attacked in court and in the popular press as a “grinding, pitiless monopoly” that engaged in “oppressive conduct,” it served a vital commercial function beyond simply resolving the Sewing Machine War. Even more important, it freed the sewing machine manufacturers to get down to the business of making and selling sewing machines. This was especially true with respect to Singer, who found motivation for his business acumen in “the dimes, not the invention.” Thus, he and his business partner, Edward Clark, were able to use the legal and commercial freedom secured to them by the Combination to create and to profit from several innovative marketing and business strategies.

First, Singer recognized very early on that the success of the sewing machine was predicated on his convincing the public that his new sewing machine was not merely a repeat of the past failures of prior inventors. He thus pioneered mass marketing and advertising; in essence, he was the nineteenth-century equivalent of Billy Mays and the "as seen on TV" approach to advertising. One historian has noted that, at that time, Singer's mass marketing techniques represented an entirely “new concept of selling.” This entailed a concerted and sustained marketing campaign directed to bringing his sewing machine to the public’s attention and to convincing them of its practical virtues. He traveled the country, giving free demonstrations at fairs, carnivals, and in rented halls. In addition to these free demonstrations, he performed renditions of Thomas Hood’s Song of the Shirt, reminding his audiences of the toils from which seamstresses would be freed by his new invention.

But Singer also recognized that he had to do more than just sell the public on the practicality of his sewing machine, he also had to address the prejudice that women were incapable of working machinery, or, if they could, that it was improper and unwomanly for them to do so. Driven by his own pursuit of fortune, and thus setting aside his own personal bigotry, Singer hired women to demonstrate his sewing machine, as well as teach other women how to use it. One of I.M. Singer & Co.’s first employees was Augusta Eliza Brown, who was hired in 1852 for solely these purposes.

Demonstrations of the sewing machine by Ms. Eliza and other women not only disproved the widespread belief that women could not work machines, they also played an important role in Singer’s new concept of splashy, eye-catching marketing. In 1852, Edward Clark wrote to a company agent that “we have got possession of a front window under our office [in Boston] at the moderate rent of one thousand dollars a year, and a nice little girl is operating a machine in it, to the great entertainment of the crowd.”

In addition to his innovative marketing campaign, Singer and Clark also pioneered novel business practices to increase the company’s sales and profits. A significant barrier to the widespread adoption and use of the Singer Sewing Machine was its price: It cost $125, which may not seem like much today, but in the 1850s, the average American family earned less than $500 per year. In response to this problem, Clark invented a new business method for selling their sewing machines: the installment-purchase program. The company’s newspaper, the I.M. Singer & Co. Gazette, explained the purpose of Clark’s rent-to-own sales program:

Why not rent a sewing machine to the housewife and apply the rental fee to the purchase price of the machine? Her husband cannot accuse her of running him into debt since he is merely hiring or renting the machine and under no obligation to buy. Yet at the end of the period of the lease, he will own a sewing machine for the money.

This was the first such installment-purchase program in American history, and it was a brilliant solution to the price problem in selling Singer Sewing Machines. In combination with Singer’s novel marketing schemes, this program should have had a tremendous impact on I.M. Singer & Co.’s bottom line. It did indeed have an impact, tripling the sales of Singer Sewing Machines from 1855 to 1856, but such successes were tempered by the massive expenses imposed on the company by the now-raging Sewing Machine War. Sales of Singer Sewing Machines were dismal from 1853 to 1855, which, in comparison to the explosion in its sales following the formation of the Sewing Machine Combination in 1856, is perhaps a result of the uncertainty surrounding the Singer Sewing Machine caused by the legal dispute between Singer and Howe, and then the start of the full-scale Sewing Machine War in 1854.

Following Potter’s creation of the Sewing Machine Combination in November 1856, Singer and Clark’s innovative efforts at commercializing their patented invention began to realize their full potential. In fact, the year after the Combination was created, Clark invented another new business method to further secure I.M. Singer & Co.’s place in the soon-to-be exploding sewing machine market: he conceived of a trade-in plan in which I.M. Singer & Co. would accept any older version of a Singer Sewing Machine, or any competitor’s sewing machine, in exchange for a $50 credit toward a new Singer Sewing Machine. Again, this was a brilliant marketing stratagem, as it killed two birds with one stone for I.M. Singer & Co. First, it reduced the price of a new sewing machine, increasing overnight the number of purchasing consumers (and revealing an implicit understanding of elasticity of demand on the part of Clark). Second, it effectively prevented the rise of a second-hand market for used sewing machines that would compete with sales of new sewing machines.

Singer and Clark’s innovation in both creating a sewing machine market and then securing I.M. Singer & Co.’s place as a dominant firm within this new market is a palpable example of the commercialization benefits secured by property rights in patented inventions. With the end of the Sewing Machine War and the formation of the Sewing Machine Combination in 1856, I.M. Singer & Co. immediately began reaping the fruits of its labors. Despite the severe economic recession of 1857, the members of the Combination flourished, including I.M. Singer & Co., whose sales almost doubled from 1857 to 1858. And, despite the tremendous economic and political tumult of the Civil War, sewing machine manufacturers continued to experience tremendous sales growth, helped in part by the fact that their machines were clothing Union soldiers. During the war, I.M. Singer & Co., which was renamed the Singer Manufacturing Company in 1863 (see the postscript below for an explanation of this), watched its sales grow each year from 16,000 machines in 1860 to 23,632 in 1864.

As a result of its constant focus on innovation, made possible by its patented inventions and its participation in the Sewing Machine Combination, the Singer Manufacturing Co. eventually overtook Wheeler, Wilson & Co. in 1867 as the top-selling sewing machine firm. By 1876, the Sewing Machine Combination’s records reveal that the Singer Manufacturing Co. sold more than double the number of sewing machines than that of its closest competition. When the Sewing Machine Combination terminated in 1877, the Singer Manufacturing Co.’s sales accounted for more than half of the total sales of sewing machines, and the company controlled 75% of the world market for sewing machines. In sum, Singer and Clark’s commercial innovation, made possible by Singer’s patented improvements to the sewing machine, not only ensured the success of Singer Manufacturing Co., it was largely responsible for the success of the American sewing machine industry writ large. By all accounts, Singer’s company was the most successful sewing machine company, and it justifiably served as the public face of the Sewing Machine Combination.

In my next couple posts, I will discuss some of the policy insights we may draw from this historical case study of the incremental invention of the sewing machine, the first patent thicket, the first "patent troll," and the first patent pool. In so doing, I'll also discuss and respond to some of the issues raised by commentators over the past week.

POSTSCRIPT: Some readers may be wondering about the 1863 name change of I.M. Singer & Co., to the Singer Manufacturing Co. This was a result of Singer’s characteristic intemperate nature — and his polygamy. After forming their business partnership in 1851, Clark and Singer worked very well together until 1860, when a public scandal erupted after one of Singer’s wives, Mary Sponsler, discovered Singer with one of his other wives, Mary McGonigal, in the middle of Fifth Avenue in New York City. Following this confrontation, Singer nearly choked Mary Sponsler to death, and he then fled to Europe for a brief respite from the public uproar. He eventually returned in 1863 to marry another woman, Isabella Boyer. Clark was of high birth and he could not abide by such behavior. Following Singer’s return in 1863, they formally dissolved the I.M. Singer & Co. partnership. Clark then incorporated the Singer Manufacturing Company, with Clark in control of the company and its assets and Singer receiving guaranteed income from his ownership of 40% of the stock.