Prior to the rise of the pharmaceutical industry, the most important form of chemical production was the paint and coloring industry. At its inception, the dye industry was a French-British business, and in both countries patent protection applied. In 1862 British firms controlled about 50% of the world market, and French firms another 40%, Swiss and German companies being marginal players. By 1873 German companies had 50% of the market, while French, Swiss and British firms controlled between 13% and 17% each. In 1913 German firms had a market share of more than 80%, the Swiss had about 8%, the rest of the world had disappeared. During this entire period there was no patent protection at all in Switzerland, while in Germany processes become patentable in 1877. In France, the U.K. and the U.S. both products and processes had been patentable all along...
...German chemical companies competed heavily at home and across most European markets, where chemical products could not be patented. This situation forced them to innovate frequently and to develop production processes able to guarantee a very high productivity. Such intense competition already gave them a "competitive edge" relative to the Anglo-Saxon companies living in a world of generalized patenting.
Boldrin and Levine’s new telling of Watt’s story is hardly more persuasive than their original (2004) version. Although they have corrected some of their earlier errors, their account remains inaccurate and one-sided. Although, told in this fashion, Watt’s story makes for an exciting introduction to the rest of Boldrin and Levine’s book, the story’s value as a source of reliable inferences concerning the general merits and shortcomings of the patent system is open to doubt.
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