Innovation

Innovation: The Cotton Gin, Speed Dating, and the Patent System

Oct 1, 2013 • Behavioral Economics, Businesses, Demand, Supply, and Markets, Economic Debates, Economic Growth, Economic History, Entertainment, Government, Innovation, Labor, Tech • 419 Views    1 Comment

After graduating from Yale with no family fortune, Eli Whitney headed South to become a tutor in 1792. In the right place at the right time, he saw the missing link in cotton production. Whitney realized that the US cotton crop could be abundant and the manufacturing process had been developed. The problem was the seeds. It was prohibitively expensive to remove the seeds from the cotton plant because it took so much time and labor. Whitney’s cotton gin was the solution and his ticket to a fortune. As he expressed it, “I am now so sure of success, that ten thousand dollars, if I saw the money counted out to me, would not tempt me to give up my right and relinquish the object.”

It did not work out quite as he expected.

Word of his idea spread to his friends and beyond–a mistake that Whitney soon recognized. On plantations near the one where he lived, people were fabricating what he had designed. With the number of cotton gin copies multiplying, he decided to get a patent. But it was too late. Few thought the government would enforce Whitney’s right to his innovation and they were correct.

206 years later, another innovator had a similar problem.

The place is a Beverly Hills, California Peet’s Coffee Shop where a rabbi had gathered a group of Jewish singles. Acting as a 21st century matchmaker, he was experimenting with a “table hopping” dating game. He had an Excel spreadsheet, a noisemaker to signal it was time to move to the next person, and feedback cards. You get the picture. The first speed dating evening had begun and the rest is history. Like Eli Whitney, the Rabbi thought a patent could give him control over his invention. But here too, it was too late.

Thinking about the cotton gin and speed dating, we can decide how we feel about the patent system. The key is to encourage innovation. But does that mean patents should bestow long lasting far reaching rights on their owners? Should their definition be interpreted broadly so that others are constrained from innovating in similar territory?

Your opinion?

Sources and resources: My Eli Whitney information is based on research I did for Econ 101 1/2 from books that included Harold Livesay’s American Made (the source of my quotes). For speed dating, the NY Times Magazine told a brief history in its “Who Made That” column. All though take us to getting the patent system right. This article on patent trolls demonstrates the issue is so serious that the US Congress is investigating.

People who purchase patents from innovators and then enforce them have been called patent trolls.

People who purchase patents from innovators and then enforce them have been called patent trolls.

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  • Lauren Miller

    I think that protecting the ideas and innovations of entrepreneurs through patents is essential to sustained economic growth. Patents create incentives to pursue innovation because the expected pay-off is greater, which increases the supply of entrepreneurship and creates a wealth of innovations that can have a significant and positive impact on the economy. I recognize that there are many costs associated with patents, such as lawsuits and the possibility of monopolies, however, I think that US drug patents that last for twelve years before generics can be produced are an effective way of reducing the costs of patents while protecting the opportunity for pharmaceutical companies to profit off their new products.

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