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² For a discussion, see Bresnahan, Timothy and Gambardella, Alfonso, “The Division of Inventive Labor and the Extent of the Market,” in General Purpose Technologies and Economic Growth, ed. Helpman, Elhanan (Cambridge, MA, 1998), ch. 10Google Scholar; as well as Lamoreaux, Naomi R. and Sokoloff, Kenneth L., “Inventors, Firms, and the Market for Technology: US Manufacturing in the Late Nineteenth and Early Twentieth Centuries,” in Learning by Doing in Firms, Organizations, and Nations, ed. Lamoreaux, Naomi R., Raff, Daniel M. G., and Temin, Peter (Chicago, 1999), 19–60Google Scholar.

³ Spulber, Daniel, “The Quality of Innovation and the Extent of the Market,” Journal of International Economics 80 (Mar. 2010): 260–70CrossRefGoogle Scholar; and Spulber, Daniel, “Innovation and International Trade in Technology,” Journal of Economic Theory 138 (Jan. 2008): 1–20CrossRefGoogle Scholar. International trade in technology allows access to a greater portfolio of inventions that are of higher quality; it also lowers prices and increases output and variety in the marketplace. The gains from trade are reduced if trade occurs in similar products. However, they persist regardless of whether exchange occurs because of imitation or piracy.

⁴ Grossman, Gene M. and Lai, Edwin L.-C., “International Protection of Intellectual Property,” American Economic Review 94 (Dec. 2004): 1635–53CrossRefGoogle Scholar; and Helpman, Elhanan, “Innovation, Imitation, and Intellectual Property Rights,” Econometrica 61 (Nov. 1993): 1247–80CrossRefGoogle Scholar; Chin, Judith C. and Grossman, Gene M., “Intellectual Property Rights and North-South Trade,” in The Political Economy of International Trade, ed. Jones, Ronald W. and Kreuger, Anne O. (Cambridge, MA, 1990), 90–107Google Scholar.

⁵ For instance, some studies find little evidence of technological spillovers from international trade. Keller, Wolfgang, “Are International R&D Spillovers Trade-Related? Analyzing Spillovers among Randomly Matched Trade Partners,” European Economic Review 42 (Sept. 1998): 1469–81CrossRefGoogle Scholar.

⁶ See, for instance, Cipolla, Carlo, “The Diffusion of Innovations in Early Modern Europe,” Comparative Studies in Society and History 14 (Jan. 1972): 46–52CrossRefGoogle Scholar; Ciriacono, Salvatore, “Migration, Minorities, and Technology Transfer in Early Modern Europe,” Journal of European Economic History 34 (Jan. 2005): 43–64Google Scholar; and Scoville, Warren C., “Spread of Techniques: Minority Migrations and the Diffusion of Technology,” Journal of Economic History 11 (Dec. 1951): 347–60CrossRefGoogle Scholar.

⁷ For a study of contemporary markets in inventions, see Arora, Ashish, Fosfuri, Andrea, and Gambardella, Alfonso, Markets for Technology: The Economics of Innovation and Corporate Strategy (Cambridge, MA, 2001)Google Scholar.

⁸ Branstetter, Lee, Fisman, Raymond, and Foley, C. Fritz, “Do Stronger Intellectual Property Rights Increase International Technology Transfer? Empirical Evidence from US Firm-Level Panel Data,” Quarterly Journal of Economics 121 (Feb. 2006): 321–49CrossRefGoogle Scholar.

⁹ Khan, B. Zorina, “Looking Backward: Founding Choices in Innovation and Intellectual Property Protection,” in Founding Choices: American Economic Policy in the 1790s, ed. Irwin, Douglas and Sylla, Richard (Chicago, 2010), 315–42CrossRefGoogle Scholar; and Khan, B. Zorina and Sokoloff, Kenneth L., “The Early Development of Intellectual Property Institutions in the United States,” Journal of Economic Perspectives 15 (Summer 2001): 233–46CrossRefGoogle Scholar.

¹⁰ Sokoloff, Kenneth L., “Inventive Activity in Early Industrial America: Evidence from Patent Records, 1790–1846,” Journal of Economic History 48 (Dec. 1988): 813–50CrossRefGoogle Scholar; and Sokoloff, Kenneth L. and Khan, B. Zorina, “The Democratization of Invention during Early Industrialization: Evidence from the United States,” Journal of Economic History 50 (June 1990): 363–78CrossRefGoogle Scholar.

¹¹ Khan, B. Zorina and Sokoloff, Kenneth L., “‘Schemes of Practical Utility’: Entrepreneurship and Innovation among ‘Great Inventors’ during Early American Industrialization, 1790–1865,” Journal of Economic History 53 (June 1993): 289–307CrossRefGoogle Scholar; Khan, B. Zorina and Sokoloff, Kenneth L., “Lives of Invention: Patenting and Productivity among Great Inventors in the United States, 1790–1930,” in Les archives de l'invention, ed. Corcy, Marie-Sophieet al. (Paris, 2004), 181–99Google Scholar; and Sokoloff, , “Inventive Activity in Early Industrial America,” 813–50Google Scholar.

¹² Khan, B. Zorina and Sokoloff, Kenneth L., “Institutions and Technological Innovation during Early Economic Growth: Evidence from the Great Inventors of the United States, 1790–1930,” in Institutions and Economic Growth, ed. Eicher, Theo and Garcia-Penalosa, Cecilia (Cambridge, MA, 2006), 123–58Google Scholar.

¹³ Lamoreaux, Naomi R. and Sokoloff, Kenneth L., “Long-Term Change in the Organization of Inventive Activity,” Proceedings of the National Academy of Sciences 93 (Nov. 1996): 12686–92CrossRefGoogle ScholarPubMed; Lamoreaux, and Sokoloff, , “Inventors, Firms, and the Market for Technology,” 1960Google Scholar; and Lamoreaux, Naomi R. and Sokoloff, Kenneth L., “Market Trade in Patents and the Rise of a Class of Specialized Inventors in the Nineteenth-Century United States,” American Economic Review 91 (May 2001): 39–44CrossRefGoogle Scholar. See also Lamoreaux, Naomi R. and Sokoloff, Kenneth L., eds., Financing Innovation in the United States, 1870 to Present (Cambridge, MA, 2007)CrossRefGoogle Scholar.

¹⁴ Khan, B. Zorina, The Democratization of Invention: Patents and Copyrights in American Economic Development, 1790–1920 (Cambridge, UK, 2005)Google Scholar; Penrose, Edith, “International Patenting and the Less-Developed Countries,” Economic Journal 83 (Sept. 1973): 768–86CrossRefGoogle Scholar; Penrose, Edith, The Economics of the International Patent System (Baltimore, 1951)Google Scholar.

¹⁵ Wilkins, Mira, “European and North American Multinationals, 1870–1914: Comparison and Contrast,” Business History 30 (Jan. 1988): 8–45CrossRefGoogle Scholar; Wilkins, Mira, “The Role of Private Business in the International Diffusion of Technology,” Journal of Economic History 34 (Mar. 1974): 166–88CrossRefGoogle Scholar.

¹⁶ Patents have notable defects as a gauge of inventive activity and innovation, but they provide the most readily available measure of technological change and have provided valuable insights into the sources of economic growth. However, international patent statistics should be treated with especial caution because of the great variation in institutions and their enforcement across countries.

¹⁷ Historical details of the British patent system are provided in MacLeod, Christine, Inventing the Industrial Revolution: The English Patent System, 1660–1800 (Cambridge, UK, 1988)CrossRefGoogle Scholar; and Dutton, Harold I., The Patent System and Inventive Activity during the Industrial Revolution, 1750–1852 (Manchester, 1984)Google Scholar. See also Taylor, C. T. and Silberston, Z. A., The Economic Impact of the Patent System: A Study of the British Experience (Cambridge, UK, 1973)Google Scholar; and Khan, Patents and Copyrights in American Economic Development.

¹⁸ Lerner, Josh, “150 Years of Patent Protection,” American Economic Review 92 (May 2002): 221–25CrossRefGoogle Scholar; Lerner, Josh, “150 Years of Patent Office Practice,” American Law and Economics Review 7 (Spring 2005): 112–43CrossRefGoogle Scholar.

¹⁹ Khan, Patents and Copyrights in American Economic Development.

²⁰ As late as 1920, Sir Robert Hadfield observed that “invention is discouraged by excessive fees, by inadequate preliminary search of the patent records, and by the complexity of the rules. He advocates a radical revision of the whole system after the American model, and he gives point to his suggestion by comparing the number of patents taken out in Great Britain and the United States. This suggestion, coming from a man who has taken out several hundred patents in England and abroad, is worthy of attention, but there are no indications that it is likely to be adopted,” US Bureau of Foreign and Domestic Commerce, Special Agents Series, 188–195 (1920), 50Google Scholar.

The patent agency of Munn & Company smugly noted that: “From January 1, 1865 to the 1st of December, the whole number of applications for patents to the British Patent Office will not have exceeded three thousand. Within the same period the applications made by Munn & Co. to the United States Patent Office number at least three thousand five hundred; thus showing that our professional business considerably exceeds the entire business of the British Patent Office,” Scientific American 13 (Dec. 1865): 415Google Scholar.

²¹ Engerman, Stanley and Sokoloff, Kenneth, Economic Development in the Americas since 1500: Endowments and Institutions (New York, 2011)Google Scholar.

²² According to Johnson, James and Johnson, J. Henry, The Patentee's Manual: A Treatise on the Law and Practice of Patents for Inventions (London, 1890), 422Google Scholar: “Probably in no country in the world are the rights of inventors more cherished than in the United States, and the number of patents issued there annually far exceeds that granted in any other country.”

²³ Khan, B. Zorina, “Property Rights and Patent Litigation in Early Nineteenth-Century America,” Journal of Economic History 55 (Mar. 1995): 58–97CrossRefGoogle Scholar.

²⁴ The earliest statutes of 1793, 1800, and 1832 restricted patent property to citizens or to residents who declared that they intended to become citizens. In 1836, the stipulations on citizenship or residency were removed, but were replaced with discriminatory patent fees: foreigners could obtain a patent in the US for a fee of three hundred dollars or five hundred if they were British. However, it should be noted that these provisions were not strictly enforced, and numerous foreign inventors were able to obtain patent rights by petitioning the legislature.

²⁵ See Sáiz's, J. Patricio extensive study, Invención, Patentes e Innovación en la España Contemporánea (Madrid, 1999)Google Scholar.

²⁶ Britain introduced compulsory licenses in 1883 (and strengthened them in 1919 as “licences of right”) for fear that foreign inventors might injure British industry by refusing to grant other manufacturers the right to use their patents. In 1907 patentees who manufactured abroad were required to also make the patented product in Britain.

²⁷ For Australia, see Magee, Gary B., “Technological Development and Foreign Patenting: Evidence from Nineteenth-Century Australia,” Explorations in Economic History 36 (Oct. 1999): 344–59CrossRefGoogle Scholar.

²⁸ For studies of Japanese technological and economic development, see Nicholas, Tom, “The Origins of Japanese Technological Modernization,” Explorations in Economic History 48 (Apr. 2011): 272–91CrossRefGoogle Scholar; and Saxonhouse, Gary, “Mechanisms for Technology Transfer in Japanese Economic History,” Managerial and Decision Economics 12 (Apr. 1991): 83–92Google Scholar. Comparative perspectives are provided in Nishimura, Shigehiro, “International Patent Control and Transfer of Knowledge: The United States and Japan before World War II,” Business and Economic History Online 9 (2011): 1–22Google Scholar; and Nicholas, Tom, “Independent Invention during the Rise of the Corporate Economy in Britain and Japan,” Economic History Review 64 (Aug. 2011): 995–1023CrossRefGoogle Scholar.

²⁹ The Act of 1921 also permitted the state to revoke a patent grant on payment of appropriate compensation if it was deemed in the public interest. Medicines, food, and chemical products could not be patented, but protection could be obtained for processes relating to their manufacture.

³⁰ See, for instance, Deardorff, Alan, “Welfare Effects of Global Patent Protection,” Economica 59 (Feb. 1992): 35–51CrossRefGoogle Scholar. Deardorff attempted to assess the welfare implications of extending patent regimes from a country of innovation producers to a country of innovation consumers. He found that the welfare of the producer increased unambiguously, but the welfare of the consumer country fell, and it was possible for the net effects on global welfare to be negative overall.

³¹ The United States was the most prolific patenting nation in the world. Many of the major American enterprises owed their success to patents and were expanding into international markets, and the US patent system was recognized as the most successful. It is therefore not surprising that patent harmonization implied convergence towards the American model despite resistance from other nations. In 1884 the International Union for the Protection of Industrial Property was signed by Belgium, Portugal, France, Guatemala, Italy, the Netherlands, San Salvador, Serbia, Spain, and Switzerland. The United States became a member in 1887, and a significant number of developing countries followed suit. Other conferences were held in 1878, 1880, and 1883, Rome (1886), Madrid (1890–91), Brussels (1897–1900), Washington (1911), The Hague (1925), and London (1934). Ironically, because its patent laws were the most liberal towards patentees, the United States found itself with weaker bargaining abilities than nations that could make concessions by changing their provisions. This likely influenced the US tendency to use bilateral trade sanctions rather than multilateral conventions to obtain reforms in international patent policies. See Khan, Patents and Copyrights in American Economic Development; and Penrose, Economics of the International Patent System.

³² For a study of the welfare effects of harmonization in the twentieth century, showing that harmonization redistributes income toward the strongest patenting nations, see McCalman, Phillip, “Reaping What You Sow: An Empirical Analysis of International Patent Harmonization,” Journal of International Economics 55 (Oct. 2001): 161–85CrossRefGoogle Scholar.

³³ For early US patents granted to foreign inventors, See Bill S. 38, 16th Congress, 1st Session, 17 Feb. 1820: “A Bill Authorizing the Secretary of State to issue letters patent to Richard Willcox”; H.R. 57, 20th Congress, 1st Session, 11 Jan. 1828, “An Act for the Relief of Simeon Broadmeadow”; “An Act for Christopher Bechtler,” “praying that letters patent may be granted him for invention of two new and useful machines for the purpose of washing gold ores, without requiring the two years' residence as is by law now required.” Approved by the President of the United States on 3 Mar. 1831, Journal of the Senate of the United States of America, 1789–1873; Anthony Hermange, an alien, residing in the city of Washington, and Paul Steenstrup, of Kongsberg, in the Kingdom of Norway, praying that letters patent for an invention may be granted, approved by President 1 May 1828. However, not all petitions were granted; see for instance, Peter Hirgoyen's petition to be able to apply for a patent for a distilling apparatus (Journal of the House of Representatives of the United States, 1817–1818, 21 Jan. 1818.Google Scholar)

³⁴ The degree of foreign patenting in registration systems is inaccurately gauged, since patents were often taken out in the name of the foreign patent agent or representative. For instance, Daniel Treadwell noted that he obtained a patent in 1845, under the name of the US Consul in London, Thomas Aspinwall (English patent No. 10728 of 23 Dec. 1845, “For improvements in ordnance carriages; comprising apparatus for governing the recoil, and likewise for moving the piece of ordnance backwards and forwards.”)

³⁵ E. L. Richards & Co., The Inventors' Handbook (Washington, DC, 1882), 18Google Scholar.

³⁶ Sokoloff, , “Inventive Activity in Early Industrial America: Evidence from Patent Records, 1790–1846,” 813–50Google Scholar; Sokoloff, and Khan, , “The Democratization of Invention during Early Industrialization,” 363–78Google Scholar.

³⁷ Davies, Robert B., “‘Peacefully Working to Conquer the World’: The Singer Manufacturing Company in Foreign Markets, 1854–1889,” Business History Review 43 (Autumn 1969): 299–325CrossRefGoogle Scholar.

³⁸ For a study of sewing machine inventions, see Thomson, Ross, “Learning by Selling and Invention: The Case of the Sewing Machine,” Journal of Economic History 47 (June 1987): 433–45CrossRefGoogle Scholar.

³⁹ Randolph, David Meade was also the author of a Treatise on Wheel Carriages; Or, Considerations, Comments & Certain Conclusions Respecting Their Principles & Construction (Washington, DC, 1810)Google Scholar.

⁴⁰ “We [E. L. Richards & Co.] have agents in all the principal foreign countries, and have every facility for giving thorough work and securing the patents in the shortest possible time. The most desirable foreign patents for American inventors to secure are those of Canada, England, France, Germany, Spain, and Belgium. These six patents secure the exclusive monopoly among about One Hundred and Fifty Millions of the most intelligent people in the world.” E. L. Richards & Co., The Inventors' Handbook.

⁴¹ See the Transactions of the Chartered Institute of Patent Agents (London, various years).

⁴² According to Rosenberg, Nathan, “Economic Development and the Transfer of Technology: Some Historical Perspectives,” Technology and Culture 11 (Oct. 1970): 550–75CrossRefGoogle Scholar: “physical proximity between the producer and user of machinery seems to have been indispensable in the past for reasons which we do not really understand but which seem to be rooted basically in the problem of communications.” For a contrary conclusion in the modern context, which likely owes to the marked fall in transactions costs over the past century, see Cornish, Susan L., “Product Innovation and the Spatial Dynamics of Market Intelligence: Does Proximity to Markets Matter?” Economic Geography 73 (Apr. 1997): 143–65CrossRefGoogle Scholar.

⁴³ The French dominance fell rapidly during the Second Industrial Revolution, and the foreign roster for corporate patenting during the 1820–1939 period consisted of Germany (29.7 percent), France (19.7 percent), the US (14.5 percent), and the UK (13.7 percent). See Sáiz, J. Patricio, “Why Did Corporations Patent in Spain? Some Historical Inquiries,” Universidad Autónoma de Madrid Working Papers in Economic History (Madrid, 2010)Google Scholar.

⁴⁴ It might be expected that the newly established Japanese patent office would lack the materials to conduct thorough searches, especially where leading technologies were described in a foreign language. According to Thompson, W. P., Handbook of Patent Law of All Countries (London, 1920), 108Google Scholar, the Japanese patent procedures were somewhat arbitrary, and “the office are very apt to reject inventions which they consider closely resemble in appearance others known, and they frequently reject an invention as ‘publicly known’ without citing any specific proof.” In 1903, Americans accounted for 52.6 percent of foreign patent applications in Japan, followed by Britain (21.0 percent) and Germany (14.2 percent).

⁴⁵ The US firm “transferred to the Japanese companies the right to apply in Japan for patented technology owned by GE in their own names; the Japanese companies could apply for and acquire a patent with themselves as the rightful claimants within Japan. In accordance with this contract, Tokyo Electric and Shibaura Engineering Works applied for, registered, and subsequently controlled GE patents in their own names” (Nishimura, Shigehiro, “International Patent Control and Transfer of Knowledge: The United States and Japan before World War II,” Business and Economic History Online 9 [2011]: 13)Google Scholar.

⁴⁶ Inkster, Ian, “Intellectual Dependency and the Sources of Invention: Britain and the Australian Technological System in the Nineteenth Century,” History of Technology 12 (1990): 40–64Google Scholar.

⁴⁷ Nicholas, , “The Origins of Japanese Technological Modernization,” 272–91Google Scholar.

⁴⁸ Khan, B. Zorina and Sokoloff, Kenneth L., “Institutions and Democratic Invention in Nineteenth-Century America,” American Economic Review 94 (May 2004): 395–401CrossRefGoogle Scholar.

⁴⁹ Spulber, Daniel, “The Quality of Innovation and the Extent of the Market,” Journal of International Economics 80 (Mar. 2010): 260–70CrossRefGoogle Scholar.

⁵⁰ Moreover, foreign patenting was positively correlated with assignments and licensing.

⁵¹ Sáiz, J. Patricio, “Patentes, Cambio Técnico e Industrialización en la España del Siglo XIX,” Revista de Historia Económica 17 (Mar. 1999): 265–302Google Scholar; Sáiz, Invención, Patentes e Innovación en la España Contemporánea.

⁵² Lamoreaux, Naomi R., Sokoloff, Kenneth L., and Sutthiphisal, Dhanoos, “The Reorganization of Inventive Activity in the Early Twentieth Century US,” in Understanding Long-Run Economic Growth: Geography, Institutions, and the Knowledge Economy, ed. Costa, Dora L. and Lamoreaux, Naomi R. (Chicago, 2011), 235–74CrossRefGoogle Scholar.

⁵³ The Lamoreaux and Sokoloff dataset includes patent assignments that occurred at the time the patent was granted, as well as a sample of assignments that were completed after the patent was issued. They find that over a third of US patents were assigned after issue, and approximately one quarter were never transferred. During the 1870s, inventors tended to be personally involved in the commercialization of their patented innovations, granting licenses to manufacturers in outlying regions. However, over time a division of labor occurred as invention and commercialization became separate pursuits, and specialized inventors sold off or licensed their rights to others.

⁵⁴ The rights of employees to their patented inventions were gradually eroded, according to Fisk, Catherine L., “Removing the ‘Fuel of Interest’ from the ‘Fire of Genius’: Law and the Employee-Inventor, 1830–1930,” University of Chicago Law Review 65 (Autumn 1998): 1127–98CrossRefGoogle Scholar. See also Merges, Robert P., “The Law and Economics of Employee Inventions,” Harvard Journal of Law and Technology 13 (Jan. 1999): 2–54Google Scholar.

⁵⁵ Scientific American 3 (1842): 62Google Scholar, which was associated with the patent agency of Munn & Co., noted, “we advise every inventor who is able, to make application for himself, and thereby save some expense. There are forms and rules that will require study, but you can soon master them.”

⁵⁶ Meyer-Thurow, Georg, “The Industrialization of Invention: A Case Study from the German Chemical Industry,” Isis 73 (Sept. 1982): 363–81CrossRefGoogle ScholarPubMed. Murmann, Johann Peter, Knowledge and Competitive Advantage: The Coevolution of Firms, Technology, and National Institutions (Cambridge, UK, 2003)CrossRefGoogle Scholar, provides an extensive study of the German chemical industry that compares the German innovation system to the experience of other countries. See also Hagen, Antje, “Patents Legislation and German FDI in the British Chemical Industry before 1914,” Business History Review 71 (Autumn 1997): 351–80CrossRefGoogle Scholar.

⁵⁷ Marsh, Ulrich, “Strategies for Success: Research Organization in the German Chemical Companies until 1936,” History and Technology 12 (Jan. 1994): 23–77Google Scholar. The prominent role of intellectual property in Bayer's American business strategy can be discerned from its appointment of a patent attorney, Anthony Gref, as the President of its US subsidiary.

⁵⁸ For instance, 16.3 percent of French chemical patents issued in the US were assigned, as were 21.2 percent of British patents, and 33.8 percent of American patents; whereas the assignment rates for German and Swiss patents were 75.5 percent and 87.4 percent, respectively.

⁵⁹ These propensities to assign property rights for patented inventions can be compared to an average rate in Germany itself of 8 percent (see Table 3). According to Burhop, Carsten, “The Transfer of Patents in Imperial Germany,” Journal of Economic History 70 (Dec. 2010): 921–39CrossRefGoogle Scholar, two-thirds of assignments in Germany were transferred to firms. See also Burhop, Carsten and Luebbers, Thorsten, “The Historical Market for Technology Licenses: Chemicals, Pharmaceuticals, and Electrical Engineering in Imperial Germany,” MPI Collective Goods Preprint, No. 2009/25 (Aug. 2009)Google Scholar.

⁶⁰ These were Aktiengesellschaft fur Farben, Badische Anilin Fabrik, Bayer/Farbenfabrik Elberfeld, and Meister Lucius & Bruening (Hoechst). United States Congressional Report, H.R. No. 326, 62d Congress 2d Session, Report on Schedule A: Chemicals, Oils, and Paints (Washington, DC, 1912), 361Google Scholar.

⁶¹ Burhop, , “The Transfer of Patents in Imperial Germany,” 921–39Google Scholar, estimated that 85 percent of assignments in Germany comprised economic transactions rather than procedural transfers.

⁶² Steen, Kathryn, “Patents, Patriotism, and ‘Skilled in the Art’: USA v. The Chemical Foundation, Inc., 1923–1926,” Isis 92 (Mar. 2001): 91–122CrossRefGoogle Scholar. See also Moser, Petra and Voena, Alessandra, “Compulsory Licensing: Evidence from the Trading-with-the Enemy Act,” American Economic Review 102 (Feb. 2012): 396–427CrossRefGoogle Scholar, who contend that compulsory licensing of foreign chemical inventions increased domestic US inventions by at least 20 percent.

⁶³ The price in the US was $1, whereas Canadians paid 15 cents.

⁶⁴ Dickerson v. Tinling, 84 F. 192, 195 (1897).

⁶⁵ Report on Schedule A: Chemicals, Oils, and Paints, 362.

⁶⁶ Hearings before the Committee on Patents, H.R. 13679, 58th Congress (Washington, DC, 1904), 3. A noted economist of the patent system, Floyd Vaughan, also advocated altering US intellectual property laws to enable compulsory working of patented inventions (Vaughan, Floyd W., “Suppression and Non-Working of Patents, with Special Reference to the Dye and Chemical Industries,” American Economic Review 9 [Dec. 1919]: 693–700Google Scholar).

⁶⁷ One of the referees points out that the success of these German chemical companies in negotiating and using the US patent system to their own advantage is intriguing, since it provides a stark contrast with the example of American machine tool manufacturers. The Germans exploited the features of their own system, which allowed them to copy and ultimately compete with the superior American technology. The Americans were foiled when they tried to use the German patent system to prevent Germans from infringing on American machine tool inventions. Richter and Streb contend that the German patent office administered the rules in a discriminatory fashion that was biased against foreign inventors. See Richter, Ralf and Streb, Jochen, “Catching-Up and Falling Behind: Knowledge Spillover from American to German Machine Toolmakers,” Journal of Economic History 71 (Dec. 2011): 1006–31CrossRefGoogle Scholar.

⁶⁸ Friedman, Walter A. and Jones, Geoffrey, “Business History: Time for Debate,” Business History Review 85 (Spring 2011): 1–8CrossRefGoogle Scholar.

⁶⁹ For discussions of the role of intellectual property rights in today's developing societies, see Finger, J. Michael and Schuler, Philip, Poor People's Knowledge: Promoting Intellectual Property in Developing Countries (Washington, DC, 2004)Google Scholar; and Netanel, Neil Weinstock, ed., The Development Agenda: Global Intellectual Property and Developing Countries (Oxford, 2008)CrossRefGoogle Scholar.

⁷⁰ Khan, Patents and Copyrights in American Economic Development. The evidence suggests that the “infant industry” argument might apply to intellectual property rights as well as to trade. Especially relevant is the experience of the US publishing industry prior to the recognition of international copyrights in 1891. A number of arguments can be made against outright “piracy” such as the deleterious effect on local industries, the misallocation of resources to counterfeiting, and the consequent fall in quality. However, far from being deterred by the reprinting of foreign literary and artistic works, their ready availability promoted domestic publishing output to the extent that, by the turn of the century, the balance of trade was moving in favor of the United States. At this point, self interest dictated reforms in the copyright laws although the provisions still included protection of US manufacturers and printers. See also Khan, B. Zorina and Sokoloff, Kenneth L., “Historical Perspectives on Patent Systems in Economic Development,” in The Development Agenda: Global Intellectual Property and Developing Countries, ed. Netanel, Neil Weinstock (Oxford, 2008), ch. 10Google Scholar.