Trade Secrets Laws and Technology Spillovers

Abstract

This paper examines whether and to what extent the Uniform Trade Secrets Act (UTSA) affects technology spillovers between focal firms (i.e., receivers of spillovers) and peers (i.e., senders of spillovers). I find that technology spillovers from peers located in states adopting the UTSA are 27% to 75% lower than technology spillovers from peers located in states not adopting the UTSA. Focal firms whose peers come from the UTSA states have lower R&D investments and fewer migrant inventors than firms whose peers come from non-UTSA states. I also find that the Defend Trade Secrets Act has weak effect on technology spillovers.

Keywords: Technology spillovers, R&D spillovers, Trade secrets laws, UTSA, DTSA

JEL Classification: G31, O30, O38, K22