Patents, Secrets, and the First-Inventor Defense

Posted: 10 Aug 2004

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We analyze optimal patent design when innovators can rely on secrecy to protect their innovations. Secrecy has no fixed term but does not preclude accidental disclosure nor independent creation by other inventors. We derive the optimal scope of the rights conferred to such second inventors, showing that if the patent life is set optimally, second inventors should be allowed to patent and to exclude first inventors who have relied on secrecy. We then identify conditions under which it is socially desirable to increase patent life as much as is necessary to induce first inventors to patent. The circumstances in which it is preferable that they rely on secrecy seem rather limited.

Keywords: Trade secrets, patents, first-inventor defense

JEL Classification: K11, O34, L00

Suggested Citation

Denicolo, Vincenzo and Franzoni, Luigi Alberto, Patents, Secrets, and the First-Inventor Defense. Available at SSRN:

Vincenzo Denicolo

University of Bologna ( email )

Strada Maggiore 45
Bologna, 40125

Luigi Alberto Franzoni (Contact Author)

University of Bologna ( email )

P.zza Scaravilli 2
Bologna, 40124
0512098488 (Phone)
+39-051-221968 (Fax)


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