The Value of Giving Away Secrets
New York University School of Law
University of Pennsylvania Law School; Bar Ilan University - Faculty of Law
Harvard Law and Econ Disc Paper No. 417
Harvard Public Law Working Paper No. 64
U of Penn Law School, Public Law Working Paper No. 24
U of Penn, Inst for Law & Econ Research Paper No. 03-07
This Essay demonstrates the strategic advantage of narrow patents and unprotected publication of R&D output. Broad patents might stifle follow-on improvements by deterring potential cumulative innovators, who fear being held up by the initial inventor at the ex post licensing stage. By opting for a narrower patent and unprotected publication, the initial patent holder commits not to hold up follow-on inventors, thus promoting sequential innovation and generating lucrative licensing fees. Counterintuitively, in cumulative innovation settings, less protection benefits the patentee. This finding may serve as a counter-force to the much-lamented "anti-commons" problem. More generally, our theory demonstrates that the divergence between private interests and social objectives - on both the static and dynamic dimensions of intellectual property - is not as great as conventionally believed. Our theory bridges yet another gap; that between the two main theoretic strands in patent law scholarship - the property rights perspective and the information revelation perspective. It also explains the recent trend toward unprotected publication of information. Finally, we propose an important reform of the novelty requirement in patent law that would further encourage narrow patents and unprotected publication by bolstering the credibility of a patentees commitment not to patent previously published research findings.
Number of Pages in PDF File: 37
Keywords: Patents, Intellectual Property, Cumulative Innovation, Publication, Licensing, Hold-up
JEL Classification: D23, D45, K11, L43working papers series
Date posted: May 6, 2003
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo8 in 0.313 seconds