Choosing the scope of trade secret law when secrets complement patents

Elisabetta Ottoz and Franco Cugno

MPRA Paper from University Library of Munich, Germany

Abstract: We present a model where an incumbent firm has a proprietary product whose technology consists of at least two components, one of which is patented while the other is kept secret. At the patent expiration date, an entrant firm will enter the market on the same technological footing as the incumbent if it is successful in duplicating, at certain costs, the secret component of the incumbent’s technology. Otherwise, it will enter the market with a production cost disadvantage. We show that under some conditions a broad scope of trade secret law is socially beneficial despite the innovator is over-rewarded.

Keywords: knowledge spillovers; duplication costs; covenants not to compete; inevitable disclosure (search for similar items in EconPapers)
JEL-codes: O31 O34 (search for similar items in EconPapers)
Date: 2010-02-14
New Economics Papers: this item is included in nep-bec, nep-com, nep-ino, nep-ipr, nep-pr~ and nep-tid
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https://mpra.ub.uni-muenchen.de/20672/1/MPRA_paper_20672.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/27195/1/MPRA_paper_27195.pdf revised version (application/pdf)

Related works:
Journal Article: Choosing the scope of trade secret law when secrets complement patents (2011)
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