The Corporate Preference for Trade Secret
Andrew A. Schwartz
University of Colorado Law School
December 23, 2013
Ohio State Law Journal, Vol. 74, No. 4, 2013
U of Colorado Law Legal Studies Research Paper No. 13-19
Many inventions can be legally protected either by patent or by trade secrecy, and a conventional wisdom exists on how to select between them. This Article adds to that literature by showing that corporations should have an inherent preference for trade secret over patent for reasons relating to their legal form. Among them is the idea that corporations are perpetual entities and therefore perfectly suited to reap the perpetual returns that only a trade secret can offer. The Article also addresses the potential for a conflict between the inherent corporate preference for trade secret and the preferences of corporate managers, who may prefer patent for reasons of their own.
Number of Pages in PDF File: 47
Keywords: Patent, trade secret, corporations, perpetual, signal, secrecy, lock-in, liquidity
JEL Classification: K00, K11, K2, K20, K22, O3, O32, O34
Date posted: December 25, 2013
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