The board game Monopolyâ is an interesting example of a patented, trademarked product that is still earning a substantial profit after many decades. (1) The word "monopoly" goes back hundreds of years, but Monopoly (the game) is the registered trademark of Parker Brothers, now a unit of Hasbro. The origin of modern Monopoly traces to Elizabeth Magie, a Quaker from Virginia. She invented the game in 1904 to advance the cause of Henry George, who advocated a single tax on land rent. Like Monopoly, Magie’s game had forty spaces, four railroads, two utilities, and twenty-two rental properties. The folk game was commonly played on the eastern seaboard, particularly within Quaker communities. The streets in the game were named after those between Inlet and Park Place, along the Boardwalk in Atlantic City. (2) In the early 1930s, Charles Darrow of Germantown, Pennsylvania, copied and commercialized the game, selling it through Philadelphia department stores. Demand was so great that he could not keep up with the orders, so in 1934 he contacted Parker Brothers, a toy company, to see if they had any interest in it. Parker Brothers initially rejected the game, pointing out that it lasted too long, had rules that were too complicated, and contained fifty-two fundamental design errors. But Monopoly continued to sell briskly in Philadelphia. F. A. O. Schwarz, a New York toy store, ordered 200 sets of Monopoly from Darrow. Legend has it that a friend telephoned Sally Barton, the daughter of the founder of Parker Brothers, to rave about a new game she had purchased at the New York store. It was called Monopoly. Sally relayed the information to her husband, Robert Barton, who was president of Parker Brothers. Barton purchased a copy of the game the next day and ended up playing Monopoly until 1:00 A.M. The next morning, he contacted Darrow and several days later Darrow agreed to sell the rights to his version of the game in return for royalties on each set sold. Through copyright and trademark, Parker Brothers in effect gained a worldwide monopoly on Monopoly (although "The Original Monopoly Game" is an alternative (3)). Monopoly is available in 26 languages in 80 countries and is the best selling copyrighted board game ever. More than 200 million sets have been sold, generating more than $3 billion of revenue for Parker Brothers. Maxine Brady, "The Monopoly Book: An Authorized History," Internet; "Hasbro/Parker Brothers, "Monopoly History," Internet; "History of Toys and Games," History Channel, Internet site. Ralph Anspach, the developer of the game Anti-Monopoly—and later, the Original Monopoly Game—uncovered this history of Monopoly (the game) in defending Anti-Monopoly in a court case relating to Parker Brother’s trademark. See his The Billion Dollar Monopolyâ Swindle (San Francisco: Anspach Publication, 1998). Ibid.

Photograph courtesy of: (c)Nance Trueworthy;

26.2 Trade secrets button

Trade secrets have long played an important role in maintaining returns from research and development (R&D). Long before Coca-Cola’s secret formula or Colonel Sanders’ secret herbs and spices, the Roman citizen Erasmo (c. 130 A.D.) had a secret ingredient for violin strings.(1) As the demand for his new product grew, he falsely identified his strings as catgut, when they were actually made of sheep intestines. Why the deception? At the time, it was considered to be extremely bad luck to kill a cat. By identifying his strings as catgut, he hoped that nobody would imitate his product and reduce his monopoly profit. Moreover, his trade secret would be preserved. We discovered this anecdote in Dennis W. Carleton and Jeffrey Perloff, Modern Industrial Organization, 2d ed. (New York: HarperCollins, 1994), p. 139. Their source, in turn, was L. Boyd, San Francisco Chronicle, October 27, 1984, p. 35.

Photograph courtesy of: (c)Corbis #11514490;