Authors: Stephen D. Billington (Ulster University) and Joe Lane (University of Reading)
Our paper investigates a little-known instance of State intervention into the administration of the English patent system: the insertion of a legal proviso into select English patents, which we dub the “Navy Proviso”, serving to compel the patentee to supply their invention or its output to His Majesty’s Service for “reasonable prices”. What is particularly interesting about the Navy Proviso is that it was applied unilaterally by the British State; the only way to avoid it was to abandon your patent application.
The Navy Proviso was introduced in 1794, a direct consequence of the outbreak of the French Revolutionary Wars, and continued in use until 1824, after which it was inserted universally into all English patents. Our paper asks:
- 1) How was the Navy proviso used in practice?
- 2) How were the reasonable prices settled?
- 3) And, most importantly, what technologies were targeted with it?
The Navy Proviso in Practice
Responsibility for inserting the Navy Proviso into a patent fell to the Law Officers of the Crown – the Attorney-General and Solicitor-General. This responsibility was given to them by the Secretary of State for the Home Office, with the Navy Proviso originally conceived by Henry Dundas. Before taking on the newly established office of the Secretary of State for War, Dundas had written to both the Law Officers and to the Board of Ordnance to pitch the idea of the proviso, indicating that the Board of Ordnance would act to settle reasonable prices, though this matter would also be appointed to the likes of the Navy Board, as well as other bodies to settle.
Obtaining an English patent before 1852 required navigating an application through ten stages, the first of which was submitting the application to the Secretary of State who then directed it to the Law Officers. It was at the point that the proviso would be inserted unilaterally. Patent applicants had little say in the matter, and could only influence the likelihood that their application would receive it by emphasising the utility of their invention to the military (which some applicants did do).
Settling Reasonable Prices
The Navy Proviso outlined that, in compensation for supplying their invention, the patentee was to be paid “reasonable prices”. The vague terms of compensation created an opportunity for the State to undercut the market price because the Navy Proviso legally compelled the patentee to supply their invention; the consequence of not doing so was the immediate revocation of the patent right.
However, this is not the strategy the State or its adjudicators appeared to adopt. In one instance the State offered a patentee an above-market price for a fixed quantity of output, after which the patentee would be paid the market rate for further provisions. In another case, the State instead opted to specify the terms in a recognizance, with the security set at £1,000. In this recognizance, the State offered the patentee their market rate, but reserved the right to license the working of the patent to a third-party if the patentee was unable to meet the State’s demands, with the patentee receiving a licensing fee.
Targeted Technologies
Of the 3,083 patents granted between 1794 and 1824, we identify 421 which received the Navy proviso. The only information available to the Secretary of State and the Law Officers as to the nature of the patented invention was the proposed patent title, which we examine to determine which patents were selected to receive the proviso.
We first examine whether a patent’s economic value was an important factor in dictating whether the application would receive the proviso. However, we do not find evidence that economic value mattered. We then examined whether contemporary interest in a patent correlated with insertion of the Navy Proviso. Here, contemporary interest refers to how many times the patent was published in scientific or technical literature at the time. We find that patents that were less frequently cited tended to receive the proviso. This, we argue, indicates that the State was targeting technologies that were being less frequently disseminated.
We are able to identify which technologies were being heavily selected for receiving the proviso and which were not. It might be fair to assume that the State would target military technologies like munitions and ordnance. This they did, but such technologies were not their main focus. Instead, the State was targeting more experimental technologies, or technologies which were liable to be under-supplied on the private market. The State then used the Navy Proviso as a means of gaining access to inventions that may otherwise have gone undeveloped.
Final thoughts
Our paper indicates that the British State intervened into the administration of patent rights as a means of ensuring they could access militarily-relevant technologies that were of a more experimental or speculative nature, or less liable for being widely disseminated.
It is entirely plausible to consider that this intervention may have helped to direct technical change by incentivising the invention of military-relevant technologies, in hopes of obtaining valuable State contracts, or because the usage and licensing of procured technologies would lead to cumulative innovation and subsequent development. Consequently, we cannot rule out that the State influenced the rate and trajectory of technical change during the Industrial Revolution.