Canada’s Founders Debated Justification for Patents

Interesting post on Mises blog by Skip Oliva. Note that Canadian Sen. Jean-Charles Chapais, the agriculture minister, in introducing legislation for a Canadian patent law in 1869, readily admitted the monopoly nature of patents:

It must be remembered that a patent is a kind of monopoly, though he did not mean to say that the word monopoly should be taken in its fullest sense, but nevertheless it is a monopoly, because it gives to a man the right of manufacturing or vending alone, an article useful to the public; certainly there was great reason for granting this monopoly.

 

Today I was perusing the historical debates of the Parliament of Canada and I found a spirited argument took place during the 1869 session over the creation of a uniform patent system. (Prior to the confederation of Canada two years earlier, the separate colonies had their own patent laws, which varied as to terms and eligibility.) Conservative Prime Minister John A. MacDonald’s government proposed a broad patent law allowing any Canadian resident to obtain a patent for a term of up to 15 years — three five-year terms, renewable at the patent-holder’s option.

There was no confusion among Canadian leaders that patents were a state-granted monopoly privilege. Sen. Jean-Charles Chapais, MacDonald’s agriculture minister, introduced the 1869 legislation on the government’s behalf:

It must be remembered that a patent is a kind of monopoly, though he did not mean to say that the word monopoly should be taken in its fullest sense, but nevertheless it is a monopoly, because it gives to a man the right of manufacturing or vending alone, an article useful to the public; certainly there was great reason for granting this monopoly. It was to encourage men of genius to work for the benefit of the public by rewarding them for their labour. But when once such discoveries are made, he did not see what right a person who has made the discoveries has to come and ask to have that exclusive right extended. When he got his patent for a particular place or province he was circumscribed, and considered himself sufficiently rewarded.

Sen. Jonathan McCully, an opposition Liberal who was one of the drafters of Canada’s constitution, challenged Chapais’s claim that patents were ever in the “public interest”:

He believed the true interest of the country would be best subserved by no Patent Law at all. (Hear, hear.) He believed that patents were always in the interest of inventors and not in the interest of the public. If [Chapais’s] position was sound that a Patent Law is for the interest of the public, then why limit the period for granting a patent to fifteen years? Why not give the inventor the right for life? It is said the man who invents a thing has the same right to that invention, as the man who has created a thing. To carry out this theory, they might limit the time a man is to use his property.

To limit the time of holding a patent is suicidal to the argument that patents of invention are in the interest of the public. He would ask what position we would be in if Patent Laws had existed, and inventions on patents were in full force in all parts of the world. Why, all inventions in connection with steamboats and railroads could not be used at all, because every man would have a patent for a different application of steam for industrial pursuits. That was one of the reasons why he doubted the soundness of the principle, that Patent Laws were in the interest of the public. It was well known that the people of this Dominion were in the enjoyment of the inventions of other countries free from all restrictions.

There was considerable opposition to allowing foreigners to claim patents. The final bill only required “residency” within Canada but not citizenship. In 1866 the United States had abandoned a longstanding reciprocity treaty with Canada, and even the MacDonald government acknowledged unrestricted patent rights would serve as a weapon of international trade. As one member of the House of Commons noted during debate: “If the privilege of getting patents were granted to American citizens we would in many cases have to pay a higher price for articles than we now did; he knew of one machine which could be got here for $450 which, if covered by a patent, would cost $1,000.”

(My thanks to Kady O’Malley of the CBC for sharing the link to the Parliament of Canada’s Reconstituted Debates web archive.)

Update: See also Fritz Machlup & Edith Penrose, “The Patent Controversy in the Nineteenth Century,” J. Econ. History 10, no. 1 (May 1950): 1–29 and Fritz Machlup, U.S. Senate Subcommittee On Patents, Trademarks & Copyrights, An Economic Review of the Patent System (85th Cong., 2nd Session, 1958, Study No. 15; https://mises.org/library/economic-review-patent-system), Part IID, “The victory of the patent advocates (1873–1910).