Patent Disclosure and Innovation
67 Pages Posted: 25 Apr 2018 Last revised: 23 Jan 2019
Date Written: April 6, 2018
How does the disclosure of technical knowledge through patents affect knowledge diffusion, follow-on invention, and patenting? We study this by analyzing the American Inventor's Protection Act (AIPA), which required U.S. patent applications filed after November 28, 2000 to be published 18 months after filing, rather than at grant, and advanced the disclosure of most U.S. patents by about two years. We estimate AIPA’s causal effect by using a counterfactual sample of identical European “twins” (of U.S.patents) which were not affected by the U.S. policy change and find that AIPA (i) increased the rate and magnitude of knowledge diffusion associated with U.S. patents (ii) increased overlap between technologically distant patents and decreased overlap between similar patents. Patent abandonments and scope decreased, while patent clarity improved, after AIPA. The findings are consistent with the predictions of our theoretical framework which models AIPA as provisioning current information about related technologies to inventors. The information, in turn, reduces follow-on inventors’ R&D and patenting costs. Patent disclosure promotes knowledge diffusion and clearer property rights while reducing R&D duplication.
Keywords: Patents, Knowledge Diffusion, Innovation
JEL Classification: D23, G24, L26, O34
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