Sunday, November 1, 2015

Intellectual Property: "Piracy and Fraud Propelled the U.S. Industrial Revolution"

A repost from 2013:
In late December I found myself talking to a gentleman from Pakistan whose mission in life was to get a couple of his nephews into American manufacturing companies so they could memorize some mid-tech manufacturing machines and return to Pakistan to re-build the machines from memory.
He said his hero was Samuel Slater.

From Bloomberg's Echoes blog:

Intellectual Property
Francis Cabot Lowell's industrial empire was built, in part, on stolen intellectual property. 
Source: Library of Congress Prints and Photographs Division 
Although typically glossed over in high-school textbooks, as a young and newly industrializing nation the U.S. aggressively engaged in the kind of intellectual-property theft it now insists other countries prohibit.
In other words, the U.S. government’s message to China and other nations today is “Do as I say, not as I did.”

In its adolescent years, the U.S. was a hotbed of intellectual piracy and technology smuggling, particularly in the textile industry, acquiring both machines and skilled machinists in violation of British export and emigration laws. Only after it had become a mature industrial power did the country vigorously campaign for intellectual-property protection.

The U.S. emerged from the Revolutionary War acutely aware of Europe’s technological superiority. It aspired to catch up and rapidly close the technology gap. The prevailing hope was that the acquisition of new industrial technologies from abroad would help solve the country’s chronic labor shortage and enhance its self-sufficiency and competitiveness.

As the Pennsylvania Gazette put it in 1788: “Machines appear to be objects of immense consequence to this country.” It was therefore appropriate to “borrow of Europe their inventions.” “Borrow,” of course, really meant “steal,” since there was certainly no intention of giving the inventions back.
Hamilton’s Manifesto The most candid mission statement in this regard was Alexander Hamilton’s “Report on Manufactures,” submitted to Congress in December 1791. “To procure all such machines as are known in any part of Europe can only require a proper provision and due pains,” Hamilton wrote. “The knowledge of several of the most important of them is already possessed. The preparation of them here is, in most cases, practicable on nearly equal terms.”

Notice that Hamilton wasn’t urging the development of indigenous inventions to compete with Europe but rather the direct procurement of European technologies through “proper provision and due pains” -- meaning, breaking the laws of other countries. As the report acknowledged, most manufacturing nations “prohibit, under severe penalties, the exportation of implements and machines, which they have either invented or improved.” At least part of the “Report on Manufactures” can therefore be read as a manifesto calling for state-sponsored theft and smuggling.

The first U.S. Patent Act encouraged this policy. Although the law safeguarded domestic inventors, it didn’t extend the same courtesy to foreign ones -- they couldn’t obtain a U.S. patent on an invention they had previously patented in Europe. In practice, this meant one could steal a foreign invention, smuggle it to the U.S., and develop it for domestic commercial applications without fear of legal reprisal.
The most important limitation to smuggling machines was that they were useless unless one knew how to use them. After all, they didn’t come with instructions. Thus, almost as important as the machines themselves were machinists from the British Isles who knew how to operate them. British emigration laws prohibited the departure of skilled machinists, but thousands still made the clandestine crossing to the U.S.
Remarkable Espionage
The most celebrated was Samuel Slater. Slater had worked his way up from a teenage apprentice to middle management at the Jedediah Strutt mills in Milford, England. Enticed by stories of opportunity and success in America, he pretended to be a non- skilled laborer and boarded a U.S.-bound ship in 1789. Leaving tools, machines, models and drawings behind, all he brought with him was his memory....MORE