US Patent #5523741.

Abstract : A children's Christmas Stocking device useful for visually signaling the arrival of Santa Claus by illuminating an externally visible light source having a power source located within said device. (Quoted directly from the patent; don't get on to me for the spelling, please.)

From looking at the pictures, it seems to work like this...

Two stockings are to be hung on the chimney with care. Those two stockings are connected by a festive red bow, which hangs directly in front of the fireplace. As Santa enters, he will be forced to remove the festive red bow, thus setting off switches in each stocking and causing the external lights mounted on each stocking to flash excitedly for the rest of the night.

And my coworkers are amazed at the stuff we are able to patent... they should see what other people are getting away with.