Trade Secrets: Intellectual Piracy and the Origins of American Industrial Power
Trade Secrets: Intellectual Piracy and the Origins of American Industrial Power
eBook
Related collections and offers
Overview
During the first decades of America’s existence as a nation, private citizens, voluntary associations, and government officials encouraged the smuggling of European inventions and artisans to the New World. At the same time, the young republic was developing policies that set new standards for protecting industrial innovations. This book traces the evolution of America’s contradictory approach to intellectual property rights from the colonial period to the age of Jackson.
During the seventeenth and early eighteenth centuries Britain shared technological innovations selectively with its American colonies. It became less willing to do so once America’s fledgling industries grew more competitive. After the Revolution, the leaders of the republic supported the piracy of European technology in order to promote the economic strength and political independence of the new nation. By the middle of the nineteenth century, the United States became a leader among industrializing nations and a major exporter of technology. It erased from national memory its years of piracy and became the world’s foremost advocate of international laws regulating intellectual property.
Product Details
| ISBN-13: | 9780300127218 |
|---|---|
| Publisher: | Yale University Press |
| Publication date: | 10/01/2008 |
| Sold by: | Barnes & Noble |
| Format: | eBook |
| File size: | 2 MB |
Read an Excerpt
Trade Secrets
Intellectual Piracy and the Origins of American Industrial PowerBy Doron S. Ben-Atar
Yale University Press
Copyright © 2004 Yale UniversityAll right reserved.
ISBN: 978-0-300-10006-8
Chapter One
Knowledge as Property in the International State System
Intellectual property is a historical development of the last five hundred years. In the ancient world, once a machine was developed and gained acceptance, its fate was beyond the inventors' control. Inventions were distinct forms of nonmaterial commodities that did not have a specific value in the marketplace. Neither Greek nor Roman law protected intellectual property, though accusations of theft of knowledge and plagiarism were not uncommon. The value of technical knowledge was embodied in the product. Ancient artisans did not distinguish between the processes and technical skills they used and the goods they made.
Notions of knowledge as a distinct concept representing an economic value emerged in the late medieval period and the early Renaissance. Artisans' guilds played a crucial role in this development. In an attempt to protect their members' power in the emerging market economy, guilds regulated access to knowledge of processes and operation of machinery. By assigning a value to the skill itself, as distinct from the product, the guilds fostered the abstraction ofintellectual property. It was not in the interests of guilds, however, to encourage the use of new machinery. The main feature of technical development, after all, is the transfer of functions in the process of production from man to machinery. Guilds, then, opposed measures that could undermine job security and render some of their protected knowledge obsolete. Thus, when rulers wanted to adopt new technologies they often had to overcome the resistance of their local guilds.
The emergence of a protocapitalist commercial economy and the consolidation of some nations into distinct geographical and political units in parts of early modern Europe forced a reconfiguration of the boundaries between individuals and their communities. This period of continued economic expansion saw the consolidation of political power into dynastic-centered states. The ideal of a united Christendom gave way to competing dynasties unified by religious particularism (Catholic, Protestant, Anglican, etc.) and seeking to best rivals in all spheres. At the same time, Renaissance celebration of genius placed individuals at the center of the creative process and granted them ownership over the fruits of their minds. Marketplace notions associated innovations with the individuals who supposedly originated them and thus entitled them to enjoy their rewards. States increasingly adopted the practice of securing rights and royalties to authors and inventors in an effort to encourage innovation from within and attract innovators from abroad. Strategies to accomplish this goal varied. In prerevolutionary France, for example, an inventor or introducer who successfully persuaded a certain group of judges that his innovation was useful was awarded a payment in cash by the state. Other states, like England, at times followed the continental practice of giving cash rewards and at other times took a less direct route of encouraging mechanization. Men in possession of useful mechanical knowledge were granted a temporary monopoly on the use or sale of the device in return for a detailed description of it. The British Empire of the eighteenth century opted for awarding patent monopolies for a specified number of years as the strategy of choice for promoting innovation and industrialization.
Modern discussion of intellectual property often assumes that an invention has a something-out-of-nothing quality to it-an assumption that fades as soon as one takes a closer look at most so-called "inventions," for close scrutiny often reveals marginal originality and great dependency on previous knowledge. The gap between what is original and what is merely derivative is rather narrow. An innovation that is deemed an invention worth protecting is wholly a political and legal construct. An invention that is not followed by practical application funded by investors is of little value. James Watt's 1769 development of a separate condenser for steam engines, for example, was a technological breakthrough of the first order. Its market potential, however, was undermined by Watt's failure to perceive other possible applications besides pumping water out of mines. It took Matthew Boulton's investment of time and capital and Watt's application of "double action" of steam on both sides of the piston in 1781, thereby making rotary motion possible, to turn the engine into a source of power for mill machinery. Boulton and Watt formed a powerful partnership of ingenuity and business acumen and got along famously. They were, however, the exception, as tensions between investors and inventors over the ownership of ideas were frequently difficult to resolve. Finally, it is impossible to protect intellectual property in organizational and procedural changes that often account for leaps in production far more than improved machinery.
Natural rights and utilitarian arguments combined in the seventeenth and eighteenth centuries to justify a patent monopoly system as a just reward for socially useful inventiveness. Natural rights philosophers argued that man's right to property is inalienable and that he is entitled to the wealth created by his labor. In the words of the great prophet of liberalism and individualism, John Locke: "every Man has a Property in his own Person. This no Body has any Right to but himself. The Labour of his Body, and the Work of his Hands, we may say, are properly his. Whatsoever then he removes out of the State that Nature hath provided, and left it in, he hath mixed his Labour with, and joyned to it something that is his own, and thereby makes it his Property." From the natural rights perspective inventions are a form of property and all individuals are entitled to benefit from the fruits of their labors. An inventor has a right to his invention just as an artisan does to a tool he makes. Society has to recognize that it has to protect intellectual property in the same way that it is obligated to protect physical property. In other words, it should treat unlicensed imitation as if it were an actual theft of physical property. Granting authors and inventors an intellectual property right over their creations is a just extension of their natural rights, for it was their labor alone that gave their creations their value.
Natural rights arguments bridge the tension that is inherent in a patent system between capitalism's commitment to a free market and the countercompetitive nature of monopolies. Accordingly, society is obligated to reward inventors for their labor only in proportion to its value. The most appropriate rewards that take into account the social usefulness of inventions are limited monopolies. The National Assembly of revolutionary France declared in 1790 that benefiting from intellectual discoveries and innovations was the natural right of authors and inventors. The preamble to the French patent law of 1791 employed similar reasoning. Nineteenth-century international agreements on patents and copyrights sounded similar notes. Both the International Conference on Intellectual Property Rights held in Paris in 1878 and the International Convention for the Protection of Industrial Property ratified by the U.S. Senate in 1887 used natural rights reasoning to explain their commitment to the protection of intellectual property.
But natural rights association of intellectual and physical property is problematic. First, physical property is inherently a zero-sum game while knowledge is not. An owner of an ax loses his ability to use it when it is stolen. An inventor, however, can still use his invention even when others duplicate it. The impact of technology piracy on the inventor is the loss of exclusivity that undermines his potential profit margin. The public at large, on the other hand, benefits from the dissemination of superior technologies among producers because lower prices for consumers are generally the by-product of such competition. Second, physical property does not cease to exist in law through time while intellectual property, in the form of either a patent or copyright, is always confined to a specific number of years. Finally, the natural rights perspective runs counter to the interests of the state, for it locates the value of an innovation in the creative individual and concludes that intellectual property is not confined by international boundaries. On the one hand it stipulates that each country is obligated to respect intellectual properties of all others within its own borders and must consider imitation as theft. On the other hand, since the property is embodied in the individual himself, he may carry the patent monopoly with him as he moves between locations. In the context of the persistent rivalry among European states, it is not surprising that rulers in Renaissance and early modern Europe privileged their own economic interests over abstract commitment to the principles of natural rights philosophy.
Utilitarian considerations proved a more powerful impetus to the codification of ideas as a form of property. Granting special benefits to authors and inventors supposedly encouraged innovation that ultimately benefited society as a whole. By assuring inventors and/or their assignees and licensees a time-specific monopoly in their respective field and hence offering the possibility of great financial rewards, states hoped to generate growth that would trickle down to all sectors of the economy. Governments granted patents in exchange for disclosure of the secrets of trade. The act of registration amounted to depositing the desired knowledge in the public vault to be shared with all members of society after the term of the patent expired. Often, individual patentees and bureaucratic agencies fought over the degree of specificity that was needed in patent applications, with the patentees trying to disclose as little as possible. The dramatic rise in literacy following the invention of movable type printing by Gutenberg made the content of patents application more accessible, though seventeenth- and eighteenth-century verbal descriptions were often vague and general. Nonverbal communication, primarily drawings, also proved an extremely useful agent of technology diusion. In order to limit the monopolistic powers of patents to their specific fields, courts demanded exact specification of all the applications of an invention. Inventors, on the other hand, feared that listing such details in their patent applications would allow competitors to emulate inventions and destroy inventors' competitive advantage of exclusivity. It was none other than Matthew Bolton and James Watt who used their reputation and resources to combat the general hostility of late eighteenth-century judges to patents, and established the requirement of precise specifications as a quid pro quo for the privilege of monopoly.
States had to define who was entitled to such lucrative monopolies. Modern distinctions between invention, discovery, and the acquisition of knowledge by other than mental effort did not exist in the language of the sixteenth and seventeenth centuries. The terms "invention," "discovery," and "first finding out" were used indiscriminately in the patent registration rolls and in the legal literature of the period. Often it was not the inventor per se who benefited from a monopoly. Protecting one's patent was technically and financially burdensome. Success depended on the ability to litigate, not on inventive merit. Many inventors who did not have the budget for financing lengthy court battles did not register their patents, opting for nondisclosure over patent exposure. Secrecy was effective less in hiding mechanical innovation than in hiding the cost and profit margins involved in adopting new machinery. Without these economic data investors had a harder time deciding whether or not it was beneficial to alter the production process.
Success in obtaining state-sanctioned monopoly depended on the ability of would-be patentees to persuade governmental bodies with coercive powers that the innovations they championed were in their exclusive possession and of great value to society and its rulers. Such campaigning required resources that were not at the disposal of all inventors, and many turned to selling and leasing their rights over their patents to others. Keeping innovations secret by not patenting them was a viable alternative only for inventors of processes who could use their monopolized knowledge to increase production and decrease costs without divulging their methods to competitors. Inventors of machines, however, usually had to sell them in order to make a profit, and buyers could analyze the innovations and build their own copies. Even within small communities restrictions on the diffusion of technical knowledge depended on the ability of first users to persuade society to coerce others to respect their monopoly. As critics of capitalism were quick to point out, control of the mode of production was a development of utmost significance in the distribution of political and economic power in the early modern age. In the precapitalist system of production the master owed his dominant role in the production process to his knowledge of the secrets of the craft rather than his ownership of the means of production. Modern industry, however, wrote Karl Marx, "sweeps away by technical means the manufacturing division of labor, under which each man is bound hand and foot for life to a single detail operation. At the same time, the capitalistic form of that industry reproduces this same division of labour in a still more monstrous shape; in the factory proper, by converting the workman into a living appendage of the machine." Owners of patent monopolies sought to restrict the 8 knowledge as property in the state system spread of knowledge by defining it as property, thus controlling the pace of industrialization and keeping all the economic benefits of innovations to themselves.
Early modern patent law did not distinguish between inventors on the one hand, and introducers of skills, devices, or processes from abroad on the other. In fact, in the precapitalist world, introducers enjoyed greater privileges than inventors. Rewarding local inventors was at the complete discretion of rulers. Princely control of movement between localities meant that inventors had no other choice except to try and use their invention in their home countries and be exposed to technological piracy. Foreign know-how, however, was beyond the control of rulers, who had to find ways to attract it. Countries offered inducements to immigrants who would dare to violate restrictions on the dissemination of knowledge and transplant themselves and their skills. Rulers believed that imported technologies could convert their nations' natural resources into valuable international assets and swing the import-export ratio in their favor. The battle over the diusion of technology, then, became an integral component of European nations' economic and political competition.
England led the way in adopting the practice of awarding patent monopolies to foreigners to entice them to introduce skills or processes without checking whether they were the inventors in their countries of origin. English patents, in fact, were originally granted to introducers rather than inventors. During the reign of Edward III, in the fourteenth century, letters of protection from competition were given to foreign artisans, in order to entice them to settle in England and teach their English apprentices their trades. Two hundred years later, during the reign of Elizabeth I, the exclusive right to the use of a particular imported innovation for a period of years was added to the patent grant. Patents of importation preceded patents of inventions because of the widespread belief in the superiority of continental technology and the desire to replace imports and correct the balance of trade-the premier barometer of the strength of nations in the mind of mercantilists.
(Continues...)
Excerpted from Trade Secrets by Doron S. Ben-Atar Copyright © 2004 by Yale University. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.