Up until the seventeenth century, when it was one of world’s technological leaders, the Netherlands took an extremely open attitude towards foreigners’ access to its technologies. However, with its technological edge constantly being eroded, its attitude, both at the firm and government levels, changed, and in 1751 the government finally introduced a law prohibiting the export of machinery and the emigration of skilled workers. Unfortunately, the law was much less successful than Britain’s, and the outflow of skilled workers and machinery continued.[226]
In the face of these measures to prevent technology outflows by the advanced countries, the less developed ones deployed all sorts of ‘illegitimate’ means to gain access to advanced technologies. The entrepreneurs and the technicians of these countries, often with explicit state consent or even active encouragement by their governments (including offers of bounty for securing specific technologies), were routinely engaged in industrial espionage.[227] Landes, Harris and Bruland, among others, document an extensive range of industrial espionage directed at Britain by countries such as France, Russia, Sweden, Norway, Denmark, the Netherlands, and Belgium.[228] Many states also organized and/or backed the recruitment of workers from Britain and other more advanced countries. France’s attempt under John Law (see section 2.2.4) and Prussia’s attempt under Frederick the Great (see section 2.2.3) are just some of the better known examples.
Despite all these efforts, legitimate and illegitimate, technological catching-up was not easy. As the recent literature on technology transfer shows, technology contains a lot of tacit knowledge that cannot easily be transferred. This problem could not even be solved by the importation of skilled workers, even in the days when they embodied most of the key technologies. These people faced language and cultural barriers, and more importantly did not have access to the same technological infrastructure as they had at home. Landes documents how it took decades for the Continental European countries to assimilate British technologies, even working as they did by importing some skilled workers and perhaps a key machine.[229]
Therefore, as is the case with modern-day developing countries, these technology transfers were most effective when backed by the policies intended to enhance what the modern economics of technology calls ‘technological capabilities’ .[230] As I have mentioned in various places in the preceding section, many governments set up institutions of teaching (e.g., technical schools) and of research (e.g., various non-teaching academies of sciences). I have also pointed out that they took measures to raise awareness of advanced technologies by setting up museums, organizing international expositions, bestowing new machinery on private firms and establishing ‘model factories’ that used advanced technologies. Government financial incentives for firms to use more advanced technology, especially through rebates and exemptions of duties on imports of industrial equipment, were also widely used.[231] It is interesting to note that tariff rebate or exemption on certain imported capital goods (which, interestingly, coexisted with restrictions on the importation of certain other capital goods) was until recently one of the key tools of the East Asian industrial policy.
By the middle of the nineteenth century, the key technologies had become so complex that the importing of skilled workers and machinery was not enough to achieve command over a technology. Reflecting this, the British bans on skilled worker emigration and machinery exports had by that point been abolished. From then on, an active transfer by the owner of technological knowledge through the licensing of patents emerged as a key channel of technology transfer in a number of industries. This made the policies and institutions regarding the protection of intellectual property rights (henceforth IPR) a lot more important than they had previously been. This eventually culminated in the emergence of the international IPR regime, following the 1883 Paris Convention on patents and the Berne Convention of 1886 on copyrights, under pressure from the technologically more advanced countries, especially the USA and France.
Between 1790 and 1850, most NDCs established their patent laws (see section 3.2.3.B of chapter 3 for details). However, all these earlier patent laws were highly deficient, judged by the modern standards demanded even from the developing countries after the TRIPS (trade-related intellectual property rights) agreement in the WTO.[232]
Particularly with regard to our main interest in this chapter, it must be pointed out that these laws accorded only very inadequate protection to the IPR of foreign citizens.[233] In most countries, including Britain (before the 1852 reform), the Netherlands, Austria and France, the patenting of imported inventions by their nationals was often explicitly allowed. In the USA, before the 1836 overhaul of patent law, patents were granted without any proof of originality, thus enabling the patenting of imported technologies. As we have already mentioned, Switzerland did not have a patent system until 1907, and although the Netherlands introduced a patent law in 1817, it was abolished in 1869 and was not reintroduced until 1912.
What is notable is that, despite the emergence of an international IPR regime in the last years of the nineteenth century, even the most advanced countries were still routinely violating the IPR of other countries’ citizens well into the twentieth century. As mentioned above, Switzerland and the Netherlands did not have a patent law until 1907 and 1912 respectively. Even the USA, already a strong advocate of patentee rights, did not acknowledge foreigners’ copyrights until 1891.[234] As late as the last decades of the nineteenth century, when Germany was about to overtake Britain technologically, there was great concern in Britain over the widespread German violation of its trademarks.[235] At the same time, the Germans were complaining about the absence of a patent law in Switzerland and the consequent theft of German intellectual property by Swiss firms, notably in the chemical industry.
Although Britain did not have a trademark law until 1862, Kindleberger notes that ‘as early as the 1830s a number of British manufacturers were continuously engaged in litigation to protect trademarks’.[236] In 1862, it introduced a trademark law (the Merchandise Mark Act), which banned ‘commercial thievery’, such as the forging of trademarks and the labelling of false quantities. In the 1887 revision of the act, mindful of foreign, particularly German, infringement of the British trademark law, the British Parliament specifically added the place or the country of manufacture as part of the necessary ‘trade description’. This revised act banned not only patently false descriptions but also misleading descriptions – such as the then widespread German practice of selling counterfeit Sheffield cutlery with fake logos. According to this act, ‘it [was] a penal offence to sell an article made abroad which has upon it any word or mark leading the purchaser to believe that it is made in England, in the absence of other words denoting the real place of origin’.[237] According to Kindleberger, the law also made specific provision requiring that ‘foreign goods marked with the name of an English dealer carry indication or place name of their foreign origin as well’.[238]
227
For example, in the 1750s, John Holker, a former Manchester textile finisher and Jacobite officer, was appointed as Inspector-General of Foreign Manufactures in the French government. While also advising French producers on technological problems, his main activity under this euphemistic job title consisted of industrial espionage and the suborning of British skilled workers (Harris 1998, p. 21).
230
On the issue of technological capabilities in developing countries, see Fransman and King 1984; Lall1992; Lall and Teubal 1998.
232
On the controversy surrounding TRIPS, see Chang 2001a. Obviously, exactly what aspect of these laws is considered ‘deficient’ will depend on one’s view. For example, there are good arguments for and against the product patent in the chemical and pharmaceutical industries.
233
For further details, see Williams 1896; Penrose 1951; Schiff 1971; McLeod 1988; Crafts 2000; and Sokoloff and Khan 2000.
234
The USA did not fully conform to the Berne Convention on international copyright (1886) until 1988, when the country finally abolished the requirement that copyrighted books had to be printed in the USA or typeset with US plates (Sokoloff and Khan 2000, p. 9).
235
See Landes 1969, p. 328. It is interesting to note that at the time the British were criticising Germany not only for using industrial espionage and the violation of trademark law but also for exporting goods made with convict labour (recall the recent US dispute with China on this account).