Against Intellectual Monopoly

courtiers?
Those are the questions we seek to answer.
    In the specific case of Watt, the granting of the 1769 and especially of
the 1775 patents likely delayed the mass adoption of the steam engine:
innovation was stifled until his patents expired, and few steam engines were
built during the period of Watt's legal monopoly. From the number of
innovations that occurred immediately after the expiration of the patent, it
appears that Watt's competitors simply waited until then before releasing
their own innovations. This should not surprise us: new steam engines,
no matter how much better than Watt's, had to use the idea of a separate
condenser. Because the 1775 patent provided Boulton and Watt with a
monopoly over that idea, plentiful other improvements of great social and
economic value could not be implemented. By the same token, until 1794,
Boulton and Watt's engines were less efficient than they could have been
because Pickard's patent prevented anyone else from using, and improving
on, the idea of combining a crank with a flywheel.
    Also, we see that Watt's inventive skills were badly allocated: we find him
spending more time engaged in legal action to establish and preserve his
monopoly than in the actual improvement and production of his engine.
From a strictly economic point of view, Watt did not need such a longlasting patent; it is estimated that by 1783 - seventeen years before his
patent expired - his enterprise had already broken even. Indeed, even after
their patent expired, Boulton and Watt were able to maintain a substantial
premium over the market by virtue of having been first, despite the fact that
their competitors had had thirty years to learn how to make steam engines.
    The wasteful effort to suppress competition and obtain special privileges
is referred to by economists as rent-seeking behavior. History and common
sense show it to be a poisoned fruit of legal monopoly. Watt's attempt to extend the duration of his 1769 patent is an especially egregious example
of rent seeking: the patent extension was clearly unnecessary to provide
incentive for the original invention, which had already taken place. On top
of this, we see Watt using patents as a tool to suppress innovation by his
competitors, such as Hornblower, Wasborough, and others.

    Hornblower's engine is a perfect case in point: it was a substantial
improvement over Watt's, as it introduced the new concept of the compound engine with more than one cylinder. This, and not the Boulton and
Watt design, was the basis for further steam engine development after their
patents expired. However, because Hornblower built on the earlier work of
Watt, making use of his separate condenser, Boulton and Watt were able to
block him in court and effectively put an end to steam engine development.
The monopoly over the separate condenser, a useful innovation, blocked the
development of another equally useful innovation, the compound engine,
thereby retarding economic growth. This retardation of innovation is a classic case of what we shall refer to as intellectual property inefficiency (or IP
inefficiency).
    Finally, there is the slow rate at which the steam engine was adopted
before the expiration of Watt's patent. By keeping prices high and preventing
others from producing cheaper or better steam engines, Boulton and Watt
hampered capital accumulation and slowed economic growth.
    The story of James Watt is a damaging case for the benefits of a patent
system, but we shall see that it is not an unusual story. New ideas accrue
almost by chance to innovators while they are carrying out a routine activity
aimed at a completely different end. The patent comes many years after
that, and it results more from a mixture of legal acumen and abundant resources available to "oil the gears of fortune" than anything else. Finally,
after the patent protection is obtained, it is primarily used as a tool to
prevent economic progress and to hurt competitors.
    Although this view of Watt's role in the Industrial Revolution may appear
iconoclastic, it is neither new nor particularly original. Frederic Scherer, a
prestigious academic supporter of the patent system, after going through
the details of the Boulton and Watt story, concluded his 1965 examination
of their story with the following illuminating words:
    Had there been no patent protection at all,... Boulton and Watt certainly would
have been forced to follow a business