If you look through the history of economic innovation (at least over the last few hundred years), you notice a pattern: for all the talk about how patents are required for innovation, true innovation only seems to occur after key patents expire. The history of the steam engine is quite instructive on this, but it's true of many other inventions as well. For Memorial Day this past weekend, the Associated Press ran an article all about the sudden rise in popularity of infrared grills for home use. Despite the technology first being invented in the 60s (for drying paint on cars), it was a very limited market until the key patent expired in 2000 and real innovation could occur that would allow such grills to be produced economically for backyard use. Chances are the market is a hell of a lot bigger today than it was before the patent expired. However, there's an even bigger point hidden towards the end of the article. The traditional patent defenders always claim that without a patent, the original inventor will simply get left behind. However, that's not at all what happened here. Char-Broil, makers of popular backyard grills could have gone out on its own and produced their infrared cookers without the help of Thermal Electric Corp., who held the patent. However, knowing that Thermal Electric Corp. understood the technology better than anyone else, they still formed a strategic alliance with them for the production of Char-Broil's grills. In other words, the patent slowed down the production of backyard grills in the space, which have only enlarged the market. At the same time, the loss of the patent hasn't destroyed Thermal Electric's ability to profit. Far from it: it's opened up new opportunities for it.
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