It is easy to underestimate the importance of protecting intellectual property. During the startup phase, money is normally quite tight, and spending tens of thousands of dollars (or more) on patent protection might seem like a bad investment. Most of the time, it is the opposite. Not only can a patent turn a startup into a mega-corporation, but in the event of failure, the patent often has independent value — particularly if the patent is held in a separate corporation to protect against loss in bankruptcy. Let’s examine some companies that had patents as a key building block.
1. Bell Telephone: Alexander Graham Bell’s Foundational Patent
Corporation: Bell Telephone Company (which eventually evolved into AT&T)
Patent: U.S. Patent No. 174,465 (issued 1876)
How It Shaped the Company
- Breakthrough Invention: Alexander Graham Bell’s patent covered a method of transmitting vocal sounds telegraphically—effectively the telephone.
- Legal Battles: Bell’s patent was challenged many times, but the courts repeatedly upheld it, granting Bell Telephone a monopoly on the nascent telephone market in the U.S. for years.
- Market Dominance: Revenues from telephone licensing and equipment sales funded expansion and eventually led to the rise of American Telephone & Telegraph (AT&T) as a communications giant.
2. Google: PageRank and the Search Engine Revolution
Corporation: Google
Key Patent: U.S. Patent No. 6,285,999 (often referred to as the “PageRank” patent)
How It Shaped the Company
- Inventors: Larry Page and Sergey Brin, then graduate students at Stanford University, developed an algorithm that ranked webpages based on the number and importance of backlinks (i.e., references from other sites).
- Superior Search Results: The PageRank system delivered more relevant query answers than rival search engines of the late 1990s, catapulting Google.com to market dominance.
- Expansion: Revenue from targeted text advertising (another protected IP and business model) fueled Google’s growth into a global technology conglomerate, now part of Alphabet, Inc.
3. Eastman Kodak: Roll Film and User-Friendly Photography
Corporation: Eastman Kodak Company
Foundational Patents: Various patents on roll film and user-friendly camera design, notably George Eastman’s 1884 patent for a photographic film (U.S. Patent No. 306,594) and subsequent improvements.
How It Shaped the Company
- Innovation: Earlier cameras were bulky, using glass plates. Eastman’s system replaced these with roll film, making photography more affordable and accessible.
- Brand Dominance: The slogan “You press the button, we do the rest” epitomized Kodak’s consumer-friendly approach.
- Long-Term Success: Leveraging its patent portfolio, Kodak dominated film sales and camera manufacturing for much of the 20th century, though digital disruption posed challenges later on.
4. Polaroid: Instant Photography
Corporation: Polaroid
Core Patents: Edwin Land’s series of patents covering instant film and instant cameras, such as U.S. Patent No. 2,543,181 (issued 1951) and many subsequent enhancements.
How It Shaped the Company
- Instant Gratification: Polaroid’s unique chemical process developed photos in minutes—a cutting-edge concept in the mid-20th century.
- Market Monopoly: Polaroid’s carefully guarded patent portfolio ensured that would-be competitors faced hefty licensing fees or infringement actions (famously with Kodak in the 1970s–80s).
- Cultural Icon: The Polaroid “instant” camera became part of pop culture, used by everyone from families to professional artists like Andy Warhol.
5. Texas Instruments: The Integrated Circuit
Corporation: Texas Instruments (TI)
Key Patent: Jack Kilby’s integrated circuit invention, patented as U.S. Patent No. 3,138,743 (filed in 1959).
How It Shaped the Company
- Microelectronics Leap: The integrated circuit (IC) placed multiple electronic components on a small semiconductor chip, revolutionizing electronics manufacturing.
- First to Market: TI’s patent gave the company a tremendous advantage in licensing and production of ICs, fueling the rise of compact, low-cost devices.
- Expansion Beyond Calculators: While TI’s electronic calculators exemplified the commercial success of ICs, the technology eventually enabled everything from computers to embedded systems, making TI a major semiconductor player.
6. Other Noteworthy Mentions
- Xerox (Originally the Haloid Company)
- Based on Chester Carlson’s xerography patent from 1942, leading to the iconic Xerox 914 copier.
- Gillette
- King Camp Gillette’s safety razor patent, U.S. Patent No. 775,134, founded the modern shaving empire.
- Singer
- Isaac Merritt Singer’s improvements to sewing machines (e.g., U.S. Patent No. 8,294), sparking an industrial revolution in clothing manufacturing.
7. Lessons from Foundational Patents
- First-Mover Advantages: Controlling a powerful patent early in a market’s development can yield monopoly-like conditions, fueling rapid capitalization and expansion.
- Evolution Matters: Many of these companies had to reinvent themselves over time, as original patents eventually expire, and disruptive technologies arise.
- Innovation Pipeline: Ongoing R&D and portfolio building are essential to maintain market leadership when the founding patent’s exclusivity ends.
8. Further Reading
- Google Patent Database: Search for original patent documents, including scanned images and claims.
- WIPO Resources: Learn more about international patent protection and its role in fostering innovation.
Conclusion
Patents have long been catalysts for corporate formation and growth. From Bell’s telephone to Google’s PageRank, these defining inventions gave their owners a head start—sometimes forging entire new industries. Understanding how a single patent can propel a company to unprecedented heights offers insight into why intellectual property remains a pivotal business asset in the modern economy.
Disclaimer: The above summaries highlight key patents in the history of noted companies. Each story is more nuanced, with numerous incremental improvements and business strategies contributing to eventual success.
Weird trivia: Before the Google Pagerank patent published but after it was filed, I sent my patent lawyer a disclosure for a search ranking system that including backlinks as part of the ranking system. It wasn’t nearly as complete or functional as the ‘999 patent, but it hit on one of the major elements. Unfortunately for me, I’d invented it well after the ‘999 had been invented — even though it was not yet published or available to the public. This is how the patent world is supposed to work: They invented it first, they filed on it first, they get the patent. More than just weird trivia, though, it underscores an idea I’ve played with for a while: For some innovations, there comes a time when it will inevitably be invented by somebody. The heavy focus on search technology between 1999 and 2002 was such that I suspect hundreds of others (me included) came up with the backlinking innovation subsequent to the original invention (memorialized in the ‘999 patent). At some point I’ll write an article about what I call “The Inevitable Invention Rule” — a proposed rule to limit patent terms for foundational inventions that would have inevitably been invented by others just a few years after the first inventor to file invented it. I still remember sitting in the Amtrak station waiting for my commuter train to San Jose, CA and writing that disclosure… It was exciting but way too late.