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Patenting in nineteenth century New Zealand: An economic and historical analysis A thesis submitted in partial fulfilment of the requirements for the degree of Master of Management Studies at The University of Waikato by Matthew Gibbons 2016 Abstract This thesis has studied the relationship between patenting and economic development in nineteenth century New Zealand, and the extent to which different population groups patented. These topics are studied using all patents applied for in New Zealand between 1860 and 1899, with the data being weighted by fees and other required expenditure on each patent. Patent application costs were substantially reduced in the 1880s when the government sought to broaden access to patenting. This thesis has confirmed that the lower cost of patent applications was associated with increased patent applications by New Zealanders. In addition, the proportion of patenting by some skilled trades workers increased after application fees were reduced. However, despite reduced application costs, patenting by low income earners, such as labourers, remained low. New Zealand farmers made a higher proportion of patent applications than farmers in comparable patenting systems, but the rate at which they patented was below average for male workers. Engineers, who had trained through apprenticeships, were the occupational group that applied for the most patents. Patenting by women increased from the mid-1880s, but even in 1899 women applied for only 2.5% of total patent applications. Maori made little use of the patenting system. No New Zealand region had the highest patenting rates for very long. The highest spending New Zealand patentees were typically engineers who patented products, such as agricultural or mining equipment, they had invented. Furthermore, they usually owned a business that produced goods and services they had patented. Some of the highest spending patentees became prosperous, although those who developed mining technology were relatively economically unsuccessful. For individual output series there were more cointegrating relationships with Granger causality between patent expenditure and economic output than between patent applications and economic output. Output series usually led patenting, particularly using patent expenditure data, which indicates patentees were concentrating on economic needs. In some of the results, however, such as the important area of agricultural output, output followed expenditure on patents. Similarly, output sometimes followed patent applications. These results suggest that patent applications and expenditure sometimes directly helped increase living standards in New Zealand over the period studied. ii Acknowledgements This 90 point thesis has been greatly improved by the advice and comments I have received from Professor Les Oxley, who suggested the topic and has been my supervisor. Furthermore, Professor Oxley arranged for the economics department to pay for some of the printing costs for the primary documents used. I am grateful for the financial assistance I received from a University of Waikato Masters scholarship. The Excel dataset and Stata programs created will be archived so that they are available to other researchers. A regional population dataset developed by Rebecca Craigie for a Canterbury University economics dissertation has been used and extended. In addition, Rachel Cotter’s descriptions of patenting topics, which was also developed for a Canterbury university economics dissertation, was used. Research by both these economists has considerably enhanced this thesis. Library staff arranged for the efficient interlibrary loan of key items, including rare documents. In addition, Kathryn Parsons provided valuable advice on New Zealand biographical sources. The School of Management’s computer staff provided help and advice, and tolerated me storing documents in the computer lab overnight when I was making corrections to the dataset. Staff at Archives New Zealand in Wellington provided valuable guidance and timely supply of the original patent ledgers books. Contributors on the rootschat.com forum provided useful advice and links to primary sources containing information about patentees. Thanks also to the other economics graduate students for their help and encouragement since I returned to university. Finally, my parents, Joan and Peter Gibbons, have provided help and support while I have worked on this thesis. iii Table of contents Abstract ii Acknowledgements iii Table of Contents iv List of Tables viii List of Figures x Chapter One: Introduction 1 1.1 Introduction 1 1.2 What patents are and why they are important 2 1.3 Research questions 3 1.3.1 The relationship between patent applications, patent expenditure 3 and economic output 1.3.2 The extent of patenting by different economics, social and 4 demographic groups 1.4 Chapter outline 5 Chapter Two: Review of the literature on patents 7 2.1 Introduction 7 2.2 Origins of patents and their justification 8 2.3 The debate over the importance of patents for economic 8 development 2.3.1 The relationship between patenting and economic growth in New 12 Zealand 2.4 The inclusiveness of patenting systems and the geographic 13 location of patenting 2.4.1 Invention and famous inventors in New Zealand 15 2.5 The number of patents, patent renewal and patent quality 17 2.6 Conclusion 18 iv Chapter Three: Nineteenth century New Zealand patents legislation, debates 20 about patents, and the advice patentees received 3.1 Introduction 20 3.2 The 1860 Patents Act 20 3.2.1 The 1870 Patents Act 21 3.2.2 The 1879 Patents Amendment Act 23 3.2.3 The 1883 Patents Act 24 3.2.4 The 1889 Patents Act 25 3.2.5 International Convention for the Protection of Industrial Property 28 3.3 Pride in the level of patenting and patent guides 28 3.4 The inflation adjusted cost of patenting fees 29 3.5 Attribution of these expenses 33 3.6 Conclusion 35 Chapter Four: The patents dataset and other datasets 4.1 Introduction 36 4.2 The 1860-1879 data 36 4.3 The 1880-1899 data 37 4.4 Status of patents and the accuracy of the data 38 4.5 Patents coded by industry of use 39 4.6 Data on geographic location 42 4.7 Data on occupation 46 4.8 Researching prolific and high spending patentees 47 4.9 Conclusion 48 Chapter Five: Changes in the level and source of patents 49 5.1 Introduction 49 5.2 Total number of patent applications 49 5.2.1 Patent applications by New Zealand inventors 54 5.2.2 Patent applications by overseas inventors 56 v 5.3 Expenditure on patents 57 5.4 Regional patenting activity 62 5.4.1 Patenting in the four main metropolitan centres 67 5.5 Distribution of patenting by industry 68 5.6 Revealed technological advantage 80 5.7 Conclusion 85 Chapter Six: The characteristics of inventors in New Zealand 6.1 Introduction 87 6.2 Occupation results 87 6.3 Assignments and patenting by companies 95 6.4 Number of authors and multiple patenting 95 6.5 The 20 New Zealand inventors who spent most on patents 99 6.6 Patenting by women 111 6.7 Patenting by Maori 116 6.8 Patenting by Chinese 117 6.9 Conclusion 117 Chapter Seven: Explaining patenting in New Zealand and the relationship 119 between patenting and output 7.1 Introduction 119 7.2 Theoretical and methodological background 120 7.3 Patenting levels and the effects of changes in patenting costs 122 7.4 Total per capital patent applications and expenditure and their 129 relationship with output 7.5 Explaining output in different parts of the economy 135 7.6 Conclusion 146 vi Chapter Eight: Conclusion 147 8.1 Introduction 147 8.2 The inclusiveness of New Zealand’s patent system 148 8.3 The relationship between patenting and economic output in New 149 Zealand 8.4 Areas for further research 150 8.5 Conclusions 151 Appendix A: Industry of use patent codes 152 Appendix B: Detailed pastoral sector results 157 Bibliography 160 vii List of Tables Table 3.1 Nominal cost of applying for and renewing a patent 25 Table 3.2 The duration of a patent 25 Table 3.3 Estimated total cost of taking out a patent in 1881 32 Table 4.1 Selected examples of industry categories for patents 41 Table 5.1 Patent applications in New Zealand for patents originating in 53 different countries; and equivalent data for Victoria, Australia Table 5.2 Expenditure on patent fees and on required expenditure on 61 patents originating in different countries Table 5.3 The regional distribution of patent applications by New 62 Zealand inventors Table 5.4 The regional distribution of patent fees and required 63 expenditure between 1860 and 1899 Table 5.5 Sector shares of patent applications in New Zealand between 69 1860 and 1899 and in Victoria between 1857 and 1901 Table 5.6 Sector shares of patent expenditure in New Zealand between 69 1860 and 1899 Table 5.7 Number and percent