Disclosure and Subsequent Innovation: Evidence from the Patent Depository Library Program

66 Pages Posted: 4 Jun 2018 Last revised: 20 May 2021

See all articles by Jeffrey L. Furman

Jeffrey L. Furman

Boston University - Department of Strategy & Policy; National Bureau of Economic Research (NBER)

Markus Nagler

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg

Martin Watzinger

Ludwig Maximilian University of Munich (LMU)

Date Written: May 2018

Abstract

How important is information disclosure through patents for subsequent innovation? Although disclosure is regarded as essential to the functioning of the patent system, legal scholars have expressed considerable skepticism about its value in practice. To adjudicate this issue, we examine the expansion of the USPTO Patent and Trademark Depository Library system between 1975 to 1997. Whereas the exclusion rights associated with patents are national in scope, the opening of these patent libraries during the pre-Internet era yielded regional variation in the costs to access the technical information (prior art) disclosed in patent documents. We find that after a patent library opens, local patenting increases by 17% relative to control regions that have Federal Depository Libraries. A number of additional analyses suggest that the disclosure of technical information in the patent documents is the mechanism underlying this boost in patenting: the response to patent libraries is significant and of important magnitude among young companies, library opening induces local inventors to cite more geographically distant and more technologically diverse prior art, and the library boost ceases to be present after the introduction of the Internet. We find that library opening is also associated with an increase in local business formation and job creation, which suggests that the impact of libraries is not limited to patenting outcomes. Taken together, our analyses provide evidence that the information disclosed in patent prior art plays an important role in supporting cumulative innovation.

Suggested Citation

Furman, Jeffrey L. and Nagler, Markus and Watzinger, Martin, Disclosure and Subsequent Innovation: Evidence from the Patent Depository Library Program (May 2018). NBER Working Paper No. w24660, Available at SSRN: https://ssrn.com/abstract=3189955

Jeffrey L. Furman (Contact Author)

Boston University - Department of Strategy & Policy ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Markus Nagler

University of Erlangen-Nuremberg-Friedrich Alexander Universität Erlangen Nürnberg ( email )

Schloßplatz 4
Erlangen, DE Bavaria 91054
Germany

Martin Watzinger

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

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