The Innovation Consequences of Mandatory Patent Disclosures

60 Pages Posted: 24 Oct 2019 Last revised: 22 Nov 2019

See all articles by Jinhwan Kim

Jinhwan Kim

Stanford Graduate School of Business

Kristen Valentine

University of Georgia

Date Written: October 28, 2019

Abstract

We investigate the effect of patent disclosures on corporate innovation. Using the American Inventor’s Protection Act (AIPA) as a shock that increased patent disclosures, we find an increase in innovation for firms whose rivals reveal more information after the AIPA and a decrease in innovation for firms whose own disclosures are divulged to competitors as a result of the law. These findings suggest patent disclosures generate both spillover benefits and proprietary costs. Further, we find that firms use strategic disclosure choices allowed by patent law in an attempt to mitigate proprietary costs. Our findings provide justification for patent disclosure requirements by demonstrating positive externalities: rivals’ disclosures facilitate a firm’s innovation. However, we also highlight that mandatory patent disclosure can impose proprietary costs on firms that are not fully mitigated by strategic disclosure responses.

Keywords: Patent disclosure, innovation, spillovers, proprietary costs, corporate disclosure

JEL Classification: D23, G38, O30, O31, O32, O34, O38

Suggested Citation

Kim, Jinhwan and Valentine, Kristen, The Innovation Consequences of Mandatory Patent Disclosures (October 28, 2019). Available at SSRN: https://ssrn.com/abstract=3469400 or http://dx.doi.org/10.2139/ssrn.3469400

Jinhwan Kim (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Kristen Valentine

University of Georgia ( email )

Athens, GA 30602
United States

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