The Hidden Costs of Securing Innovation: The Manifold Impacts of Compulsory Invention Secrecy

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2022-04-12

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Abstract

<jats:p> One of the most commanding powers of the U.S. Patent and Trademark Office (USPTO) is to compel inventions into secrecy, withholding patent rights and prohibiting disclosure, to prevent technology from leaking to foreign competitors. This paper studies the impacts of compulsory secrecy on firm invention and the wider innovation system. In World War II, USPTO issued secrecy orders to more than 11,000 patent applications, which it rescinded en masse at the end of the war. Compulsory secrecy caused implicated firms to shift their patenting away from treated classes, with effects persisting through at least 1960. It also restricted commercialization and impeded follow-on innovation. Yet it appears it was effective at keeping sensitive technology out of public view. The results provide insight into the effectiveness of compulsory secrecy as a regulatory strategy and into the roles, and impacts, of formal intellectual property in the innovation system. </jats:p><jats:p> This paper was accepted by Toby Stuart, entrepreneurship and innovation. </jats:p>

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10.1287/mnsc.2022.4457

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Gross, DP (2022). The Hidden Costs of Securing Innovation: The Manifold Impacts of Compulsory Invention Secrecy. Management Science(19). 10.1287/mnsc.2022.4457 Retrieved from https://hdl.handle.net/10161/26746.

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Gross

Daniel Gross

Assistant Professor of Business Administration

Daniel P. Gross is an Assistant Professor of Business Administration at Duke University’s Fuqua School of Business and a Faculty Research Fellow at the National Bureau of Economic Research. He researches the causes and consequences of technological change. Recurring themes in his work include crisis innovation and its impacts on the innovation system; automation and its effects on firms, workers, and labor markets; and incentives and other tools for managing creative workers within organizations. His work frequently uses historical examples of industries undergoing significant technological change as contexts to investigate recurrent or modern economic questions.


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