Policymakers often assume that patents are necessary for inventions to be produced or, if the politician is sophisticated, for a market in knowledge to develop. Economists are skeptical of such claims, for theoretical and empirical reasons. For example, Petra Moser has shown how few important inventions are ever patented, and Bessen and Maskin have a paper showing how the existence of patents can slow down innovation in certain technical industries. The literature more generally often mentions how heterogeneous appropriation strategies are across industries: some rely entirely on trade secrets, other on open source sharing, and yet others on patent protection.
Nuvolari and Sumner look at the English brewing industry from the 17th to the 19th century. This industry was actually quite innovative, most famously through the (perhaps collective) invention of that delightful winter friend named English Porter. The two look in great detail through lists of patents prior to 1850, and note that, despite the importance of brewing and its technical complexity, beer-related patents make up less than one percent of all patents granted during that period. Further, they note that there are enormous differences in patenting behavior within the brewing industry. Nonetheless, even in the absence of patents, there still existed a market for ideas.
Delving deeper, the authors show that many patentees were seen more as charlatans than as serious inventors. The most important inventors tended to either keep their inventions secret within their firm or guild, keep the inventions partially secret, publicize completely in order to enhance the status of their brewery as “scientific”, or publicize completely in order to garner consulting or engineering contracts. The partial secrecy and status-enhancing publicity reasons are particularly interesting. Humphrey Jackson, an aspiring chemist, sold a book with many technical details left as blank spots; by paying to attend his lecture, the details of his processes could be filled in, though the existence of the lecture was predicated on sufficiently large numbers buying the book! James Bavestock, a brewer in Hampshire, brought his hydrometer to the attention of a prominent London brewer Henry Thrale; in exchange, Thrale could organize entry into the London market, or a job in Thrale’s brewery should the small Hampshire concern go under.
2012 Working Paper (IDEAS version). This article appeared in the new issue of Business History Review, which was particularly good; it also featured, among others, a review on markets for knowledge in 19th century America which will probably be the final publication of the late Kenneth Sokoloff, and a paper by the always interesting Zorina Khan on international technology markets in the 19th century. Many current issues, such as open source, patent trolls, etc. are completely rehashing similar questions during that period, so the articles are well worth a look even for the non-historian.
A Fine Theorem 