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Losing the lead: the patenting decision in the light of the disclosure requirement

Alexandra Zaby ()

Economics of Innovation and New Technology, 2010, vol. 19, issue 2, 147-164

Abstract: Empirical findings state that the disclosure requirement might be a reason for firms to rely on secrecy rather than patents to protect their inventions. We choose a dynamic framework in which we can explicitly analyze the patenting decision reflecting the tradeoff between a positive protective effect and a negative effect due to the required disclosure of the protected invention. In spite of a patent, the inventor's rival may still enter the market with a non-infringing product. Measuring the technological lead of the inventor by a time advantage he has compared with his rival, we show that if his headstart exceeds a critical threshold, he will not patent and rather rely on secrecy.

Keywords: patenting decision; secrecy; disclosure requirement; patent height; vertical product differentiation (search for similar items in EconPapers)
Date: 2010
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