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Creating a working system of patents and copyrights was a top priority for George Washington. In his first State of the Union message (January 8, 1790), he recommended that Congress enact legislation to encourage the introduction of new inventions from abroad and foster their creation domestically.
Congress acted quickly, and the president signed the first Patent Act into law on April 10, 1790, and the first Copyright Act less than two months later, on May 31, 1790.
The Patent Act made the issuance of a patent a matter of the highest importance—a function administered by the president and three senior cabinet officers. There was no patent office. Rather, a patent petition was submitted directly to Secretary of State Thomas Jefferson. Then Secretary of War Henry Knox and Attorney General Edmund Randolph reviewed it. These three constituted a patent board. They established strict rules for obtaining a patent, and on the last Saturday of every month, they met to review applications. If two of the three approved, a patent letter was prepared for the personal signature of President Washington, who then sent it back to Jefferson who, as secretary of state, also signed the letter and then had the Great Seal of the United States affixed. The patentee then had a fourteen-year period during which to exclude others from using the creation. The total cost was roughly $5, which went not to the Treasury but to the clerks who copied and processed the paperwork. Those early patent grants are greatly valued today for their historic signatures.
Jefferson was surprised by the number of innovations inspired by the prospect of a patent. Soon after passage of the 1790 act, more applications and models of inventions were appearing at his office than he and his two colleagues could handle.
As often happens with something new in government, the first patent act was a false start, and Jefferson knew it. He urged Congress to alter the “whole train of business and put it on a more easy footing.” To that end, he drafted legislation and sent it to his congressional allies in February 1791. Jefferson’s escape from the patent board, however, was delayed for more than a year as Congress repeatedly postponed any vote on his or any other patent reform proposal. Meanwhile, the board was obligated to carry out its duties.
In 1792 Jefferson wrote his old friend Congressman Hugh Williamson of North Carolina that of all the duties ever imposed on him, reviewing patent applications consumed his time the most and gave him the most “poignant mortification.”
By early 1793, only 57 patents had been issued and 114 applications were pending, while dozens of others had been denied. Inventors hated the system; it delayed consideration of their applications and imposed such scrutiny that for every one approved, another was denied. The board abhorred the process because it had neither the time nor the resources to meet its obligations.
Eventually, Congress enacted the Patent Act of 1793, without most of Jefferson’s recommendations. What emerged was legislation that sharply changed the patent system from one with strict rules to one with virtually no rules. Congress allowed inventors to register their inventions with the State Department without an examination. The courts were assigned the responsibility of sorting out which patents were legitimate and which were not.
Not surprisingly, with such lax rules the number of applications and issuances rose. Between 1793 and 1836, when the patent laws were next altered, more than 9,500 patents were issued. In such a lenient environment, piracy flourished.
Many applicants went to the State Department, where models of inventions were found, bought a copy of a patent, duplicated it, and then filed an application for the same invention. Often, the same idea was patented multiple times. The owners of the later grants would enter business, telling others they had the exclusive use of an innovation, or take the official documents to unsuspecting licensees and investors for money. In other situations, an inventor would create an innovation, unaware of the advances of others, secure a patent, and sincerely believe that the conception was his alone. The result was a patent holder’s nightmare and a lawyer’s dream. The courts were soon clogged with lawsuits.
In the end, the most important feature of the Patent Act of 1793 was what it did not provide: protections for foreign inventors. Only American citizens were eligible for a U.S. patent. Thus, any American could bring a foreign innovation to the United States and commercialize the idea, all with total legal immunity.
In 1800, the law was amended to allow foreigners who had resided in the United States for two years to obtain patents, subject to an oath that the ideas they were attempting to patent had not previously been known or used in the United States or abroad. The oath, of course, was meaningless. In 1832, the law was changed to permit the issuance of a patent to those resident aliens who gave an oath declaring their intention to become U.S. citizens. They also had to work the patent inside the United States within twelve months, or it would be voided.
Because of these discriminatory laws, between 1793 and 1836 the U.S. government issued patents only to foreign citizens who worked in America, had alien status, or swore an oath to take citizenship. In 1836, Congress finally gave foreigners the right to obtain a U.S. patent without such restrictions. But even then, the system remained discriminatory. By law, a U.S. citizen, or an alien declaring his or her intention to become a citizen, paid a patent application fee of $30. Citizens of all other nations, except those of the British Empire, were charged $300. Subjects of the king of Great Britain paid $500. Apparently, some old wounds had not yet healed.
Hamilton and Congress wanted to rapidly industrialize the United States and do so by whatever means necessary—a practice we now call “nation building.” America thus became, by national policy and legislative act, the world’s premier legal sanctuary for industrial pirates.
The benefits of sanctuary, moreover, were not limited to foreign tech- nicians and craftspeople willing to bring technology to America. It also worked well for those Americans bold and capable enough to steal foreign industrial secrets and bring them back to the United States. Among the foremost of these spies, and certainly one of the most influential in early American history, according to industrial espionage expert John Fialka, author of War by Other Means: Economic Espionage in America, was Francis Cabot Lowell, a cultured Boston entrepreneur.
In 1810, the thirty-five-year-old Lowell set out to steal one of the foremost industrial secrets of that age: the plans of the British textile industry’s Cartwright loom. In such locales as Edinburgh, Lancashire, and Derbyshire, textile makers were spinning cotton and wool into thread and then weaving the thread into cloth with water-powered, mechanical looms—an economic alchemy that transformed cotton and wool into gold for England. The secrets of this technology were so precious that British law forbade the export of the machinery, the making or selling of drawings of that equipment, and the emigration of the skilled workers.
Thanks to Samuel Slater, who brought the secret of England’s automated spinning machines across the ocean, America knew how to turn cotton fibers into thread mechanically. But the nation did not know how the power loom worked or how to machine-weave thread into cloth in the vast quantities that it made possible.
No Mission: Impossible adventure was better planned or executed than Lowell’s caper. First, he developed a cover story for his trip to England: his health was bad, and his doctor prescribed a foreign tour for relaxation and recuperation. While the idea of touring cold, dank nineteenth-century British mills where the air was filled with lint might seem an improbable cure for any affliction, Lowell was a major American merchant shipper, and his Boston pedigree was impeccable. To allay the suspicions of his intended victims, he took his wife and young children with him to England, stayed in the best hotels, and toured the countryside in an elegant rented carriage.
British textile producers welcomed the touring American importer, proudly showing him whatever he wanted to see in their factories— something they never did for their local competitors. The idea of a proper Bostonian, a Harvard graduate, a rich shipping merchant being an industrial spy out to steal their manufacturing processes was simply ridiculous.
What his British hosts did not realize was that Lowell possessed an almost photographic memory and that he shared their avaricious economic attitudes. Nor did they know that after each day’s tour, he would return to his room and carefully draw out what he had just been shown and record the details of his conversations. Eventually, Lowell accumulated from his British hosts all the technical information he needed to build a fully integrated textile mill—one that could take cotton bales in one end and ship finished cloth out the other. How he got the plans out of England remains unknown. His bags were searched twice, but nothing was ever found.
On returning to Boston, Lowell and his brother-in-law, Patrick Tracy Jackson, raised $100,000 in capital and created the Boston Manufacturing Company. They then bought an existing building just outside Boston near Waltham, a facility with a ten-foot waterfall, to power their first mill. Working with a hired mechanic, Lowell constructed a prototype mill and a power loom that were superior to the British versions he copied. His company was an immediate success. Lowell then built a group of mills at a village that eventually was named after him. Soon the Boston Manufacturing Company was weaving more than one-third of a mile of cloth per day, a feat that was as extraordinary then as going to Mars would be today.
By the time Lowell began to build his first factory, America was again at war with the British. Instantly, he became a hero for bringing America England’s most valuable industrial secret. After the war, the British moved to destroy their new U.S. competitors, using the old technique of selling their goods in the U.S. market for far less than Lowell’s production costs—a predatory practice called “dumping.” The British used cotton produced in India with cheap labor, brought it to England, mechanically spun it into thread and wove the thread into cloth, and then shipped it to America. The English product was not only less expensive; it was of better quality, reflecting greater experience.
Lowell and his U.S. colleagues responded as Hamilton had foreseen. In 1815, they enlisted the political help of Massachusetts Senator Daniel Webster, who was not a strong supporter of protective tariffs. But he did believe that the United States required self-sufficiency in manufactured goods if it was to prosper. That could not be if English and European producers were allowed to dump their goods on the U.S. market and kill America’s infant industries. In 1816, Webster, working with Senator John Calhoun of South Carolina, who represented a major cotton-producing state, pushed through Congress a protective tariff on cotton and woolen imports of 30 percent for two years, 25 percent for another two years, and 20 percent thereafter. This gave the infant U.S. textile industry a market all its own and the time to grow. American cotton producers were also given a market: American textile makers. And those who truly wanted foreign goods could continue buying them, but at a higher cost and with the import duties going to the U.S. Treasury. It was Webster and Calhoun’s legislation, but it was Hamilton’s plan in action.
From the Hardcover edition.
|Introduction : my fake Rolex||3|
|Ch. 1||The golden covenant||23|
|Ch. 2||The American system||46|
|Ch. 3||A world of pirates||77|
|Ch. 4||The German method||103|
|Ch. 5||Japan's way||138|
|Ch. 6||China rising||169|
|Ch. 7||Evolving enforcement||196|
|Ch. 8||A global solution||221|
|Ch. 9||The patent battle||238|
|Ch. 10||The copyright wars||261|
Posted March 8, 2006
This book is in large part a polemic against intellectual piracy and in favor of intellectual property protection. Author Pat Choate was third-party candidate Ross Perot's running mate in the 1996 U.S. presidential election. It is no surprise, then, that the book features charged rhetoric and less than scrupulously dispassionate analysis. Nevertheless, it provides an amusing, easy-to-read introduction to the history of intellectual property protection and its role in U.S. industrial development. That history takes some surprising turns. Eli Whitney, famed as the inventor of the cotton gin, went broke trying unsuccessfully to defend his patents. Alexander Graham Bell and Thomas Edison also experienced patent and piracy headaches. Choate recounts these stories with verve and style. He also attempts to be even-handed as when, for example, he draws a parallel between intellectual property violations and the use of traditional knowledge (such as folk medicine) without compensation to the peoples who preserved the traditions. Ultimately, though, Choate focuses more on identifying problems than at proposing solutions. We recommend this book to managers in businesses such as pharmaceuticals and media, which are struggling to preserve their intellectual property rights internationally, as well as to policy-makers and others who are interested in legal and business history.Was this review helpful? Yes NoThank you for your feedback. Report this reviewThank you, this review has been flagged.