I would be wary of taking that book at its word. The authors have an agenda and they are not afraid to twist historical facts to suit their narrative. I mean, their very first chapter begins with a lie which perpetuates the myth that Watt's patent retarded steam development [1].
When the authors of [1] called out Boldrin and Levine on this, the latter responded by fabricating new myths rather than admit that the truth undermined their narrative [2].
The very chapter you cite itself has such inaccuracies. I did not track down all the stuff they cite, but I did find an instance of mischaracterizing references to suit their view points. For instance, when they discuss the German dyestuff industry, they cite a study by Murmann to support their narrative that Germany dominated in that industry due to the lack of patents. But if you look at the actual study itself, Murmann paints (heh) a much more nuanced picture. German dominance in that industry was fueled by close ties with academic research, and later by R&D labs encouraged by, of all things, the newly introduced patent laws:
>When in 1877 German patent law protected dye innovations, a few German firms such as Hoechst, BASF, and AGFA saw the advantage of hiring organic chemists whose sole task was to synthesize new dyes. After these research chemists turned out economically successful dyes, firms hired more and more chemists and pioneered an entirely new corporate function, formally organized research. The birth of corporate research and development (R&D), which today is a standard activity in high-tech industries ... can be traced to the German synthetic dye firms in 1880s. By the 1890s the vast majority of dyes were being discovered in the R&D laboratories of Bayer, Hoechst, and BASF.
> Whereas in the early days of the industry a firm could exist by copying dyes invented somewhere else, patent laws made the systematic application of science within the boundaries of the firm a critical dimension of remaining a leader in the industry.
And elsewhere:
> The most important institution in the early success of the German dye industry was the university system, but patent laws were a second key factor that allowed the German firms to capture a dominant position.
With that many assertions in the study that refute their view, they cherry-pick a few comments and actually cite the study as one that supports their view.
With so many mischaracterizations in there, I find it hard to take anything else they say in that book at their word.
1. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1589712
2. http://econpapers.repec.org/article/bpjrlecon/v_3a5_3ay_3a20...
3. Murmann JP, 2003, "Knowledge and Competitive Advantage – The Coevolution of Firms, Technologies and National Institutions." - http://catdir.loc.gov/catdir/samples/cam041/2003043048.pdf