Public Rewards and Innovation Policy: Lessons from the Eighteenth and Early Nineteenth Centuries
| Author | Catherine Kelly,Robert Burrell |
| Published date | 01 November 2014 |
| DOI | http://doi.org/10.1111/1468-2230.12095 |
| Date | 01 November 2014 |
Public Rewards and Innovation Policy: Lessons from the
Eighteenth and Early Nineteenth Centuries
Robert Burrell*and Catherine Kelly**
There has been renewed interest in recent years in using prizes and rewards to promote
innovation. History has played a central role in public debates in the UK about the merits of such
interventions, with the Longitude Prize 2014 being self-consciously modelled on its eighteenth
century precursor. Similarly, historical case studies have been used extensively in the scholarly
literature in this area. However, it is striking that there has been little engagement with parli-
ament’s role generally in rewarding inventors in the eighteenth and early nineteenth centuries and
how this formed part of a broader system of rewards. The article explores how this system
operated and demonstrates that it formed an established part of the legal landscape for many
decades. It considers the extent to which a more complete understanding of the historical use of
prizes and rewards during the key period of Britain’s industrialisation might inform current
debates.
INTRODUCTION
Over recent years there has been growing concern about the effectiveness of the
patent system in promoting innovation. Patent ‘trolls’ and ‘patent thickets’ are
said to be delaying the introduction of new pharmaceuticals and other important
inventions.1Controversial and widely publicised patent litigation involving
things like tablet computers, and discussion in the general media of the claim that
the rate of technological progress is slowing have heightened the sense that
something is amiss.2Against this background it is hardly surprising that econo-
mists and legal scholars have begun to look to alternative ways of incentivising
innovation. This has led to a flurry of articles on the use of prizes and rewards as
an alternative to patents. Policy-makers are also showing real interest in this
possibility. In the United States the America COMPETES Reauthorization Act
2010 authorises Federal agencies to award innovation prizes in their fields of
responsibility.3In the UK the NHS has been running Innovation Challenge
Prizes for several years.4More recently David Cameron announced that the
government was going to provide money for a prize relating to a ‘grand
*Professor of Law, University of Sheffield and Winthrop Professor of Law, University of Western
Australia.
**Associate Professor, University of Western Australia.
Our thanks go to Lionel Bently, Michael Burstein, Erica Charters, Emily Hudson, Andrew Johnston,
Fiona Murray and to the anonymous referees for their helpful comments. Our thanks go also to the
participants at the Oxford Intellectual Property Research Centre seminar held on 13 February 2014 at
which an early version of this research was presented.
1 See eg, M. Heller, The Gridlock Economy: How Too Much Ownership Wrecks Markets, Stops
Innovation, and Costs Lives (New York: Basic Books 2010) in particular ch 3.
2 ‘Has the ideas machine broken down?’ The Economist 13 January 2013.
3 15 U.S.C. § 3719(b).
4 www.nhschallengeprizes.org (all URLs last accessed 15 July 2015).
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© 2014 The Authors. The Modern Law Review © 2014 The Modern Law Review Limited. (2014) 77(6) MLR 858–887
Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
innovation challenge’.5This announcement led to the establishment of the
Longitude Prize 2014, a £10 million fund administered by NESTA, with the
assistance of the Technology Strategy Board, which will be aimed at tackling
antibiotic resistance.6
History has played a significant role in public debate in the UK, with the 2014
Longitude Prize being self-consciously modelled on its eighteenth century pre-
cursor. History has played an equally important role in the scholarly literature.
Much of the work on prizes and rewards has been done by economic historians,7
but even more theoretical papers have drawn on historical case studies.8Despite
the importance that history has taken on in debates about alternatives to patents,
it is striking that the existing literature has not engaged with parliament’s role in
rewarding inventors in the eighteenth and early nineteenth centuries. This
system of support for inventors was present for most of the key period of Britain’s
industrialisation and for this reason provides an ideal historical case study through
which to analyse alternatives to the patent system.
The article proceeds as follows. The first section describes the complex system
used by the state to reward inventors during the eighteenth and early nineteenth
centuries. It begins with an account of rewards to inventors authorised by
parliament between 1732 and 1840. It will be seen that although there was some
fluctuation both in the mechanisms used to pay inventors and in the frequency
with which payments were made, parliamentary rewards formed an established
part of the legal landscape for many decades. This section then considers patent
term extensions granted by parliament over this same period. Patent extensions
share much in common with monetary rewards. Specifically, although formally
they confer a benefit on inventors through the patent system, such extensions
depend on an ex post assessment of the value to society of an invention. Patent
extensions and rewards were also understood by parliament to perform a very
similar role. Indeed, our study is more or less bookended by cases where
inventors petitioned parliament for a patent term extension but were granted a
direct financial reward instead. It notes that even as the system of parliamentary
rewards petered out there was a dramatic increase in the number of patent
extensions, thanks to a new procedure established in 1835 under the control of
the Privy Council. Consequently there was a significant reward-like component
5 www.bbc.co.uk/news/uk-politics-22892443.
6 www.longitudeprize.org. The public was asked to choose between six possible areas of focus for
the prize. The announcement that the public had voted in favour of antibiotic resistance was made
on 25 June 2014.
7 See eg, L. Brunt, J. Lerner and T. Nicholas, ‘Inducement Prizes and Innovation’ (2012) 60 Journal
of Industrial Economics 657 (examining the impact of prizes offered by the Royal Agricultural
Society between 1839 and 1939); P. Moser and T. Nicholas, ‘Prizes, Publicity, and Patents:
Non-Monetary Awards as a Mechanism to Encourage Innovation’ (2013) 61 Journal of Industrial
Economics 763 (looking at prizes given to exhibitors at the Great Exhibition in 1851); L. Davis and
J. Davis, ‘How Effective are Prizes as Incentives to Innovation? Evidence from Three 20th Century
Contests’ at www.druid.dk/conferences/summer2004/papers/ds2004-114 (examining the
impact of twentieth century prizes in the fields of aviation and refrigeration technology).
8 See eg, S. Shavell and T. van Ypersele, ‘Rewards versus Intellectual Property Rights’ (2001) 44
Journal of Law and Economics 425; W. Masters and B. Delbecq, Accelerating Innovation with Prize
Rewards (Washington, DC: IFPRI, 2008).
Robert Burrell and Catherine Kelly
© 2014 The Authors. The Modern Law Review © 2014 The Modern Law Review Limited. 859(2014) 77(6) MLR 858–887
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