In the new book Birdmen, author Lawrence Goldstone details the legal battles Orville and Wilbur Wright fought to monopolize and protect their biggest innovation--the airplane. Not much has changed in 111 years.
The Wright brothers, who made history when they successfully flew a plane over Kitty Hawk, N.C. on Dec. 17, 1903, spent years in court fighting fellow inventors (such as aviation pioneer Glenn Curtiss) who were busy designing and building their own versions of the airplane. In the video above, Goldstone tells Rick Newman there are a few lessons modern day companies can learn from the Wright brothers' experience with the patent system. Among other things, the nature of the patent system is that it will always be chasing innovation.
"The people who grant the patents and the judges who litigate it are never going to be as expert in the technology," Goldstone argues. "So what the Wrights did wrong and what many modern companies are doing wrong is that they are using the courts to protect an innovation when the process of innovation is just moving past them. It was a self-defeating strategy for the Wright brothers and it's a self-defeating strategy today."
Goldstone says companies can become too bogged down in "playing defense." When a company's focus switches from innovation to preservation, that company "will probably not keep its market share." Moreover, companies that "focused on litigation…were mature and started to fade and ultimately faded into oblivion."
What's Goldstone's take on Apple (AAPL) and Samsung, two smartphone rivals who are willing to spend billions of dollars in court suing each other over patent infringement? Watch the video to find out!
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