Patenting and Early Industrialization in Norway, 1860–1914. Was there a Linkage

The Norwegian patent system was formally established in 1839. For many years the interest in the patent institution and in patenting was moderate. The first real increase in patenting occurred in the 1870s and 80s. The paper will examine and analyse the development in patenting, and the patent institution (legislation, administration) from about this period until 1914. An explicit focus of the analysis is the relationship between patenting and industrialization. There has been an issue among Norwegian economic historians if or when there was an industrial breakthrough in Norway. So far, patents, patent policy and the role of the patent institution have not been related to this question. This paper will therefore investigate in which way the system was developed to stimulate modernization and industrialization. The first version of the paper was presented at the XIII Economic History Congress, Buenos Aires, July 2002 (Session 78: Intellectual property institutions and inventive activity in historical perspective). I am thankful to Kenneth Sokoloff who organized the session and gave valuable comments together with participants Christine MacLeod, Kristine Bruland, Naomi Lamoreaux, Zorina Kahn and Ted Betty. The paper was later presented at a seminar at the Department of Economics, Norwegian School of Economics, and circulated as Discussion Paper 19/2002 from the department. I am especially thankful to colleagues Stig Tenold and Ola H. Grytten for their comments. I am also thankful to the referees of this journal who initiated several changes in the original version. The first version of the paper was presented at the XIII Economic History Congress, Buenos Aires, July 2002 (Session 78: Intellectual property institutions and inventive activity in historical perspective). I am thankful to Kenneth Sokoloff who organized the session and gave valuable comments together with participants Christine MacLeod, Kristine Bruland, Naomi Lamoreaux, Zorina Kahn and Ted Betty. The paper was later presented at a seminar at the Department of Economics, Norwegian School of Economics, and circulated as Discussion Paper 19/2002 from the department. I am especially thankful to colleagues Stig Tenold and Ola H. Grytten for their comments. I am also thankful to the referees of this journal who initiated several changes in the original version. Notes The first version of the paper was presented at the XIII Economic History Congress, Buenos Aires, July 2002 (Session 78: Intellectual property institutions and inventive activity in historical perspective). I am thankful to Kenneth Sokoloff who organized the session and gave valuable comments together with participants Christine MacLeod, Kristine Bruland, Naomi Lamoreaux, Zorina Kahn and Ted Betty. The paper was later presented at a seminar at the Department of Economics, Norwegian School of Economics, and circulated as Discussion Paper 19/2002 from the department. I am especially thankful to colleagues Stig Tenold and Ola H. Grytten for their comments. I am also thankful to the referees of this journal who initiated several changes in the original version. 2Basberg, B.L., Creating a Patent System in the European Periphery: The Case of Norway, 1839–1860, Scandinavian Economic History Review, Vol. XLV, No. 2, 1997. 3Taylor, C.T. and Z.A. Silberston, The Economic Impact of the Patent System, Cambridge 1973, F.M. Scherer, Patents. Economics, Policy and Measurement, Cheltenham 2005. See also O. Granstrand, The Economic and Management of Intellectual Property. Towards Intellectual Capitalism, Cheltenham 1999 for a review of such issues. The functioning of the system is still up for debate, which is clearly shown in the recent contribution by A.B. Jaffe and J. Lerner, Innovation and Its Discontents: How Our Broken Patent System is Endangering Innovation and Progress, and What to Do About It, Princeton 2004. 4J. Schmookler, Invention and Economic Growth, Cambridge 1966, Griliches, Z. (ed.), R&D, Patents and Productivity, Chicago 1984 and A.B. Jaffe and M. Trajtenberg, Patents, Citations and Innovation: A Window on the Knowlege Economy, Cambridge 2002. 5J. Mokyr, The Lever of Riches. Technological Creativity and Economic Progress, Oxford 1990, p. 251. 6C. MacLeod, Inventing the Industrial Revolution. The English Patent System, 1660–1800, Cambridge 1988. 7Sullivan, R.J., England's "Age of Invention": The Acceleration of Patents and Patentable Invention during the Industrial Revolution, Explorations in Economic History, Vol. 26, 1989. 8Sokoloff, K.L. , Inventive Activity in Early Industrial America: Evidence From Patent Records, 1790–1846, The Journal of Economic History, Vol. XLVIII, No. 4, 1988. 9H.I. Dutton, The Patent System and Inventive Activity during the Industrial Revolution 1750–1852, Manchester 1984. 10Khan, B. Zorina and K. L. Sokoloff, Patent Institutions, Industrial Organization and Early Technological Change: Britain and the United States, 1790–1850, in Technological Revolutions in Europe. Historical Perspectives, Eds. M. Berg and K. Bruland, Cheltenham 1998. 11Lamoreaux, N.R. and K.L. Sokoloff, Inventors, Firms and the Market for Technology in the Late Nineteenth and Early Twentieth Centuries, in Learning by Doing in Markets, Firms, and Countries, Eds. N.R. Lamoreaux et.al., Chicago 1999. 12Hodne, F. and O.H. Grytten, Norsk økonomi i det 19.århundre, Bergen 2000, p. 90. 13Hodne, F., Industri på 1820–tallet. Sysselsetting og bruttoprodukt, Historisk Tidsskrift, Vol. 80, 2001. See also Hovland, E., H.W. Nordvik and S. Tveite, Proto-Industrialization in Norway 1750–1850. Fact or Fiction?, Scandinavian Economic History Review, Vol. XXX, No. 1, 1982. 14Bruland, K., British Technology and European Industrialization. The Norwegian Textile Industry in the Mid Nineteenth Century, Cambridge 1989. 15See several contributions in Lange, E. (ed.), Teknologi i virksomhet. Verkstedsindustri i Norge etter 1840, Oslo 1989 and K. Bruland (ed.), Technology Transfer and Scandinavian Industrialization, Oxford 1991. 16Such issues have been explicitely discussed by Norwegian economic historians from the early 1970s, pioneered by contributions like Hodne, F., Growth in a Dual Economy - The Norwegian Experience 1814–1914, Economy and History, Vol. XVI, 1973 and Sejersted, F., The Industrial Revolution in Norway, Scandinavian Economic History Review, Vol. XX, No. 2, 1972. At this time Sejersted also wrote an influential paper, published in a revised form much later as A Theory of Economic and Technological Development in Norway in the Nineteenth Century , Scandinavian Economic History Review, Vol. XL, No. 1, 1992. For a review of this literature, see Nordvik, H.W., Gjennom krise til vekst? - Norsk økonomisk historie 1970–1995, Historisk Tidsskrift, Vol. 75, No. 1–2, 1996 and Lange, E. and H. W. Nordvik, Economic History, in Making a Historical Culture. Historiography in Norway, Eds. W.B. Hubbard et.al., Oslo 1995. 17Lange, E., Foredlet virke. Historien om Borregaard, 1889–1989, Oslo 1989. See also Sogner, K., Plankeadel. Kiær- og Solberg-familien under den 2. industrielle revolusjon, Oslo 2001. 18Marking the centennials of these companies, recent important company histories have been published; Sogner, K., Skaperkraft: Elkem gjennom 100 år, 1904–2004, Oslo 2003 and Andersen, K. G., Flaggskip i fremmed eie. Hydro 1905–1945, Oslo 2005 (The first of a three volume series). 19Behrend, I.T. and G. Ránki, The European Periphery and Industrialization 1780–1914, Budapest 1982, p. 144, A. Maddison, The World Economy, OECD/Paris 2001, pp. 185–187. For new estimates on Norway and the other Nordic countries, see Grytten, O.H., Economic Growth and Purchasing Power Parities in the Nordic Countries 1830–1910, in Exploring Economic Growth. Essays in Measurement and Analysis, Eds. Heikkinen, S. and J.L. van Zanden, Amsterdam 2004, pp. 89–104. 20Hovland, E. and H.W. Nordvik, Det industrielle gjennombrudd i Norge 1840–1914 med samtidens og ettertidens øyne, in I det lange løp. Essays i økonomisk historie tilegnet Fritz Hodne, Eds. Basberg, B.L., H.W. Nordvik and G. Stang, Bergen 1997, pp. 61–85. See also Nordvik, H.W., op.cit. (1996). 21Grytten, O.H., Gross domestic product for Norway 1830–2003, in Historical Monetary Statistics for Norway 1819–2003, Eds. Ø.Eitrheim, J.T. Klovland and J.F. Qvigstad, Oslo (Norges Bank Occasional Papers No. 35) 2004. 22See Basberg (1997), op.cit. The standard account of the historical development of the Norwegian patent institution is Svinndal, Aa. et.al. (eds.), Styret for det industrielle rettsvern – 50 år, Oslo 1961. A summary in English, p. 313 ff. 23Johnsen, A.O. and Joh. N. Tønnessen, Den moderne hvalfangsts historie, vol. I, Oslo 1959, p. 218ff, or the English edition; s.a., The History of Modern Whaling, London and Canberra 1982, p.25ff. An explicit account and analysis of patents in this industry, see Johnsen, A.O., Norwegian Patents Relating to Whaling and the Whaling Industry. A Statistical and Historial Analysis, Oslo 1947, and Basberg, B.L., Technological change in the Norwegian whaling industry. A case study in the use of patent statistics as a technology indicator, Research Policy, Vol. 11, No. 1, 1981. 24"...når det hele system betraktes under ett, hvorved hver av disse i og for seg lite merkelige enkeltheter inntrer som ledd i en eneste stor oppfinnelse, der spesielt for vårt land tør antas å være av ikke liten betydning." Quoted from Johnsen and Tønnesen, op.cit., p. 221. 25 "...når det hele system betraktes under ett, hvorved hver av disse i og for seg lite merkelige enkeltheter inntrer som ledd i en eneste stor oppfinnelse, der spesielt for vårt land tør antas å være av ikke liten betydning." Quoted from Johnsen and Tønnesen, op.cit., p. 223. 26Kahn, B. Zorina and K. L. Sokoloff, The Innovation of Patent Systems in the Nineteenth Century: A Comparative Perspective, unpublished paper, Intenational Economic History Association Congress, Buenos Aires 2002. See also Lerner, J., 150 Years of Patent Protection, American Economic Review Papers and Proceedings, Vol. 92, May 2002. 27The main principles of this act have, in fact, never been changed, for example regarding procedures for investigation and examination of the applications. 28Basberg (1997), op.cit., Table 1. 29There is, of course, more to say here: As Dutton (op.cit.) showed for the British case, the very imperfect nature of the patent system before around 1830 may have facilitated diffusion and technological change as such, more than a "perfect" system would have done. 30Before 1910 the examination time was on average less than a year. Thus there are no significant lags between aggregate data on applications and patents in most of the years we are studying. Over time, the average examination time increased, and in the period 1911 to 1914 more than fifty percent of the applications had to wait for more than a year before a decision was made. See Basberg, B.L., Patenter og teknologisk endring i Norge 1840–1980, Bergen (NHH) 1984, p. 96ff. 31Such relationships between applications and patent policy changes have recently been discussed in several papers, see J. Lerner, op.cit. 32In analysing inventive and innovative capabilities in a country, national's patenting abroad has been considered a useful indicator. One has assumed that such patents on average has a higher quality than domestic patents. Only patents with a special commercial and technological potential will be taken abroad to a leading country, like Britain or the U.S. We do not have available data for Norwegian citizens patenting in Britain in our period. U.S. data, on the other hand, have been assembled from 1883. The aggregate data should be interpreted with great care, and obviously reflect both general international business cycles as well as institutional characteristics with the U.S. patent system. The numbers were also very low, making interpretations of the annual fluctuations dubious. Between 1883 and 1900 Norwegian patents granted in the U.S. to Norwegian citizens were annually around ten or lower. From 1900 there was an upward trend, culminating in 1914 with 38 patents. I will not here go further into a discussion about how these data should be interpreted. See instead Basberg, B.L., Foreign Patenting in the U.S. as a Technology Indicator. The Case of Norway, Research Policy, vol. 12, No. 4 1983. 33The almost complete absence of patents all the way from 1839 was discussed in Basberg (1997). A more detailed analysis of the early development of this industry, including references to patening is Bruland, K. (1989), op.cit. 34Different correlation-calculations of the ranking of patents in industry-sectors in 1890 for foreigners and Norwegian citizens give results between 0.8 and 0.9. 3580% of the patents in this class originated from Norwegian citizens. 36Norway was in this respect a full century behind Britain, the first industrial nation. The importance of commodities and product innovations in this early stage of Britain's industrialization has been analysed by Berg, M., From imitation to invention: Creating commodities in eighteenth-century Britain, Economic History Review, Vol. LV, No. 1 2002. 37For a more detailed analysis of the patentees, see Basberg, B.L. (1984), op.cit., p. 272ff. 38MacLeod, op.cit., p. 5

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