Inspiration, Perspiration Or Manipulation?Otis Port
On Mar. 29, Washington's Smithsonian Institution will host a gala event with all the trappings of the Nobel Prize ceremonies in Stockholm. The occasion will mark the presentation of the first "Nobel" for U.S. inventors: the Lemelson-MIT Prize, a $500,000 annual award funded by Jerome H. Lemelson, a private inventor. Scores of dignitaries from industry, government, and academia will gather to honor the automotive engineer--his identity is now a secret--picked by a Massachusetts Institute of Technology committee as the best American inventor of 1995.
Behind all the expectant smiles, however, swirls an ugly controversy. It stems from the source of the new-found wealth that enabled Lemelson to create the prize: a $500 million windfall from a patent that covers automated systems for reading bar-code labels. These systems have become a mainstay in industry for tracking the flow of parts in factories and the movement of finished goods in the distribution chain--and for totaling purchases at supermarket checkout stands. Yet Lemelson was granted a patent in 1992, nearly four decades after he filed the application in 1954.
The companies that use and make bar-code reading systems are incensed at the prospect of paying royalties on such a mature technology. They're among the critics who charge Lemelson with manipulating the U.S. Patent & Trademark Office to get "submarine" patents. The game that Lemelson and a few others practice, detractors assert, involves intentionally delaying patents--by periodically filing changes and amendments--until the technology is worth far more than it would have been had the patents been issued earlier.
Lemelson argues that his critics are exaggerating to soften resistance to patent reform. He points out that the technology in his bar-code patent was covered by related patents that he won 18 to 20 years ago and that several companies licensed those patents. There is evidence to back Lemelson. Ronald J. Riley, an inventor in Grand Blanc, Mich., hired a patent attorney to check into Lemelson's bar-code patent. The lawyer found that Lemelson's revisions accounted for fewer than three of the 38 years it took the patent to be granted. "But the people who cite me for submarine patents don't bother to tell you that," Lemelson says. "Besides, it's absurd to think that I'd delay a patent until this age." Lemelson, who lives in Incline Village, Nev., will turn 72 in July.
Carmakers were Lemelson's initial target for back royalties, because the worldwide auto industry now relies heavily on bar-coding. Detroit's Big Three dug in their heels and have refused to pay. Lemelson is suing them. But most Japanese and European auto makers, including Honda, Toyota, BMW, and Volvo, signed a multipatent package deal, accounting for the bulk of Lemelson's $500 million bonanza.
TRADE SECRETS. It's a relatively modest price to pay for the auto makers. But that's not to say they're happy. In fact, the Lemelson patent fanned long-standing efforts by foreign companies and U.S.-based multinationals to change the U.S. patent system and bring it more in line with those of Europe and Japan. Since Congress has repeatedly ignored such proposals, the reformers made an end run around Capitol Hill and got a remedy included in the General Agreement on Tariffs & Trade. When GATT takes effect in June, U.S. patents will be valid for 20 years from the date an application is filed, not for 17 years from the date they are granted. "The main reason...is to eliminate the problem of submarine patents," says John J. Kloko, associate general counsel at DuPont Co.
The Patent Office also is moving to publish patent applications within 18 months of their filing date instead of keeping them confidential until a patent is allowed. This is to ensure that new technology enters the public realm quickly. Both of these provisions are common in other developed countries--but are strenuously opposed by many inventors and biotechnology companies. They fear what the changes might bring. "In Europe and Ja-
pan, individual inventors are are almost nonexistent," says Riley.
Were it not for the uniqueness of America's patent system, Lemelson wonders if he might still be tinkering in a garage. In the early days of his 40-year career as a lone inventor, Lemelson scrimped by, acting as his own patent attorney while his wife, Dorothy, kept food on the table as an interior decorator. He started out dreaming up new toys, including a Velcro dart-board game and a sticky "putty" that kids could use to lift a printed picture and apply it to another surface.
TECHNO-WONDER. In the 1960s his patents included technology for magnetic recording, fax machines, and in 1967, a toy vehicle that ran on bendable tracks--the subject of a 22-year legal battle with Mattel Inc. over its Hot Wheels toy, introduced in 1968. Lemelson won the case in 1989, but it was later reversed.
One of Lemelson's major coups came in 1974, when Sony Corp. bought a license to his touch-controlled tape drive for its Walkman tape recorders. All told, Lemelson has notched some 500 U.S. patents--making him No.4 on the invention hit parade, after Thomas A. Edison, Elihu Thomson, and Edwin H. Land. And at his typical rate of a new patent every month, he could soon top Polaroid Corp.'s Land, who has racked up 533.
Lemelson is sympathetic to other independent inventors, but he would
really prefer to remain aloof from the politics. So he is concentrating on various efforts to promote an entrepreneurial spirit, especially among college students, and to raise public awareness of the contributions that inventors have made to American industry. And the Lemelson-MIT Prize is just small change. So far, he's dipping into his piggy bank for $15 million in awards.
There's a $6 million gift to MIT over three years to fund a Lemelson Chair, organize Entrepreneurial Teams of students to work on real-world innovations, and provide all-expense scholarships of up to $30,000 a year. "The idea is to match what the schools pay star athletes," he says. A quintet of Massachusetts colleges, headed by Hampshire College, is getting $3.2 million to develop better ways of teaching innovation and to nurture budding inventors. And soon, Lemelson hopes to announce that the Smithsonian will house a Lemelson center of innovation, which he'll fund with $5 million over five years.
"Without doubt, I'm the most successful inventor in history," Lemelson says. And he gives absolutely no thought to retirement. So, if he eclipses Land's 533 patents, there's always Thomson's 696.
THE FUROR OVER `SUBMARINES'
Is inventor Jerome Lemelson a champ of the so-called submarine patent? The technique allows inventors to prolong for years the life of their patents by making periodic changes to their patent applications. A provision in the GATT treaty would eliminate the practice.
In 1992, Lemelson was granted a patent that covers computer-read bar codes--38 years after he filed it. He has collected $500 million in royalties and license fees from Japanese and European auto makers. U.S. carmakers have refused to pay, and Lemelson is suing them.
Lemelson blames most of the delays of his bar-code patent on the U.S. Patent & Trademark Office. He and other inventors argue that GATT will cut the protected lifespans of the most important inventions, since winning a patent on a major breakthrough can take several years.