Do Patents Enable Disclosure? Evidence from the Invention Secrecy Act

Abstract

This paper provides novel empirical evidence that patents enable knowledge disclosure. The analysis exploits the Invention Secrecy Act, which grants the U.S. Commissioner for Patents the right to prevent disclosure of new inventions that represent a threat to national security. Using a two-level matching approach, we document a negative and large relationship between the enforcement of a secrecy order and follow-on inventions, as captured with patent citations and text-based measures of invention similarity. The effect of secrecy orders is particularly salient for geographically-distant parties and for inventions in the same technological field as the secreted patent.

Keywords: disclosure, follow-on invention, knowledge diffusion, patent

JEL Classification: O31, O33, O34