The 4 forces of Globalization:How monopolies diminished US dominanace:Issue 02

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The 4 forces of Globalization :

How monopolies diminished the US technological dominance Issue 02


In the year 1985, a U.S. Court, at the end of a nine year old legal battle on patent infringement, ruled in the favour of the American instant photography giant, Polaroid, directing Eastman Kodak to stop manufacturing and selling all instant cameras. The damages claimed by Polaroid were a mammoth $ 14 billion. Two years later the Japanese company Sumitomo Electrical Industries had to shut down its multimillion dollar fibre optic plant, as Corning Gas another U.S. Company won a patents infringement suit.

The danger of Intellectual Property Rights all encompassing provisions, is that it forces innovation by people who do not have the access to restrictive patents, often creating disruptive technologies that change the end game. Though the West still is far ahead in the knowhow game, as far as global corporations are concerned, the Asians on a man to man basis today have attained the intellectual and knowledge level of their European & American counterparts.

Intellectual Property Rights Infringement is no longer a deterrent for Asian entrepreneurs, but a challenge that they must overcome, with innovation, to stay abreast. Often with limited resources at their disposal, these alternative technologies dominate local geographies and do not reach the critical mass required for scalable solutions to achieve global dominance. However at times they do. They do mostly under the pressure of competitive domestic markets, and when that happens they achieve dominance.

It was this motivation, the urge to be at par globally, that made the Japanese innovate to redesign the automobile completely and eventually break the near 100 year old American dominance in the segment. The severe restrictions the U.S. patent system placed on foreign licensees due to the provision of extension of patent rights on introducing modifications or any advancement of the original invention showed that a never ending hegemony was being fostered from which it was impossible to break off .

The Japanese were virtually left with no options but to “literally redesign the wheel.” No wonder the Japanese rack and pinion steering gear systems in cars, the magnetic shift type starters, the disc type braking, the pressurised engine cooling technology, the three box body design of the eighties were so radically different from the U.S. automobiles. Soon it created a distinct niche of low cost vehicles initially and finally swamped the market on account of its highly efficient design.

Pervasive patent laws are retrograde to human development. For as they exist today they do not ensure feeding best designs into the market, but only designs from early entrants the moneybags who have got it all in their bandwagon. Pioneers like Henry Ford and Edwin Armstrong ( Radio ) have been known to oppose it.

For patents are today used to create and protect monopolies and bring disproportionate profitability for those who are able to control the patent market by buying them. During the fifties and sixties American companies like GE & Westinghouse aided by Bechtel corporation, IBM, Honeywell, HP & Rockwell International minted money by selling custom built nuclear power plants charging the utility companies exorbitantly for patented designs in each field and creating lavish redundancy and unquestioned safety factors far more than needed. These technologies soon became unwanted as the French came up with competitive products with much more efficient use of resources and soon captured the nuclear power market worldwide.