Abstract

The International Market for Inventions: the UK and the USA in the Interwar Period

In many industries knowledge can be generated by upstream firms, be these independent specialists or small research-intensive firms, and embodied into new products by dominant firms and lead users. This division of labour in innovation is especially developed in knowledge-intensive industries. The value of transactions in this market for technology, is estimated to be around $100 billion per year, and it is increasing (Arora and Gambardella, 2010; Palermo, Higgins and Ceccagnoli, 2019). The division of labour in innovation is hardly a new phenomenon; a vibrant community of independent inventors and corporate innovation co-existed until the Second World War. Historical work has investigated how transaction costs and information asymmetries were addressed in the USA (Lamoreaux and Sokoloff, 2003; Khan, 2013) and in the UK (Nicholas, 2011; Guagnini, 2012). This valuable body of research has studied markets as being confined to their national limits. For example, where the USA and the UK are concerned, their markets have been treated separately. However, a dataset of 8,000 patents granted by the United States Patent and Trademark Office to British inventions in the interwar years, shows that 57 per cent of those patents were issued to inventions produced by independent inventors. This is a strong indication that the market for inventions was operating internationally, which is particularly interesting considering that those years were characterized by trade barriers and protectionism. Using records held in British and American archives, this paper examines how the USA – UK market for inventions operated. It focuses on trade journals, patent agents and on the relative importance of the transfer of ideas, through transactions of property rights, versus the movement of inventors. This research is timely, and the historical period offers a vantage point for investigating how new technology travels and highlights strategies to navigate the increasingly disintegrated contemporary international economic environment.