The Value of Giving Away Secrets

Oren Bar-Gill and Gideon Parchomovsky
Additional contact information
Oren Bar-Gill: Harvard Law School, John M. Olin Center for Law, Economics and Business; and Harvard University, The Society of Fellows
Gideon Parchomovsky: University of Pennsylvania Law School

Scholarship at Penn Law from University of Pennsylvania Law School

Abstract: This Essay demonstrates the strategic advantage of narrow patents and unprotected publication of R&D output. Broad patents might stifle follow-on improvements by deterring potential cumulative innovators, who fear being held up by the initial inventor at the ex post licensing stage. By opting for a narrower patent and unprotected publication, the initial patent holder commits not to hold up follow-on inventors, thus promoting sequential innovation and generating lucrative licensing fees. Counterintuitively, in cumulative innovation settings, less protection benefits the patentee. This finding may serve as a counter-force to the much-lamented "anti-commons" problem. More generally, our theory demonstrates that the divergence between private interests and social objectives - on both the static and dynamic dimensions of intellectual property - is not as great as conventionally believed. Our theory bridges yet another gap; that between the two main theoretic strands in patent law scholarship - the property rights perspective and the information revelation perspective. It also explains the recent trend toward unprotected publication of information. Finally, we propose an important reform of the novelty requirement in patent law that would further encourage narrow patents and unprotected publication by bolstering the credibility of a patentees commitment not to patent previously published research findings.

Keywords: Patents; Intellectual Property; Cumulative Innovation; Publication; Licensing; Hold-up (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law
References: Add references at CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://lsr.nellco.org/cgi/viewcontent.cgi?article=1030&context=upenn/wps (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bep:upennl:upenn_wps-1030

Access Statistics for this paper

More papers in Scholarship at Penn Law from University of Pennsylvania Law School
Bibliographic data for series maintained by Christopher F. Baum ().