Abstract: Patent Law, Research, and Competitiveness: The German Dye Industry during the German Empire, 1871-1914

Tobias Cramer

Abstract

Recent studies on the rise of Germany's synthetic dye and pharmaceutical industry usually highlight the impact of beneficial institutional conditions. Most important among them are the enactment of patent laws and a higher education system capable of supplying a huge amount of qualified personnel. According to mainstream business history, market leaders (such as Bayer, BASF, and AGFA) managed especially well to integrate these chemists into their industrial research labs to develop innovative products and processes. Once patented, these processes guaranteed lower production costs, better quality, and even new products (for example, synthetic indigo). With a given consumption function, sales should increase. Applying explorative-descriptive statistics on recently discovered sources from various corporate archives and patent statistics, this study challenges that broadly accepted but empirically unproven thesis. This paper will address two questions. First, to what extent did the different patent acts affect the industrial innovativeness, considering that patents are regarded as a difficult but valid measure to determine innovative outputs? Second, did the establishment of centralized research laboratories cause an increase in innovations, and if yes, when?