Our main empirical analysis documents two patterns consistent with the theory. First, after IP protection became available to American airframe producers, the rate of improvement for key performance measures accelerated. This is apparent either when focusing only on changes within the United States over time or comparing the United States to other countries. Prior to 1926, innovation in airframes was typically slower in the United States than in comparison countries; after 1926, the rate of innovation was faster. This suggests that providing IP protection had a positive effect on technological progress in airframes, as predicted by the theory. Second, we find that the rate of innovation in aero-engines slowed after 1926. Again, this pattern appears when looking at the United States over time, as well as relative to available comparisons countries. Since there was no change in the availability of IP protection for engine technology, we attribute this slowdown in the United States to the spillover effects of granting IP protection to airframe producers.