The Hidden Costs of Securing Innovation: The Manifold Impacts of Compulsory Invention Secrecy

Abstract

for sharing code from Iaria et al. (2018), and to Jeff Kuhn for discussing the mechanics of semantic analysis. I also thank Hayley Pallan, Greg Saldutte, and Senan Hogan-Hennessy for outstanding research assistance, and the Harvard Business School Division of Research and Faculty Development and NBER Innovation Policy grant (2016) for financial support. All errors are my own. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Lockdowns and Innovation: Evidence from the 1918 Flu Pandemic

“…12 There may also have been some suppression of defense-related patent applications, though such efforts were much more systematic in World War II (Gross, 2019).…”

Do Patents Enable Disclosure? Evidence from the Invention Secrecy Act

“…This Act remained in force only for a few months after WWI, but it was renewed without major changes in July 1940. It authorized the imposition of secrecy orders only during war time, such that most secrecy orders were rescinded in November 1945 (for a detailed discussion, see Lee, 1997;Gross, 2019).…”

“…Using citation data as a measure of follow-on inventions, they conclude that the technical information contained in patent documents is not used in the production of inventions. Gross (2019) offers a rich analysis of a mass patent secrecy program under which about 11,000 patent applications invented during World War II (WWII) were secreted until the end of the war. The author offers an analysis at the intensive margin.…”

“…Our evidence points to a 'lost generation' of follow-on inventions. Another notable difference with Gross (2019), besides observing follow-on inventions during the time of secrecy, is that we offer an analysis at the extensive margin. We measure the effect of secrecy against the baseline of disclosure-as opposed to measuring the effect of longer periods of secrecy (against the baseline of shorter periods of secrecy).…”

Early Disclosure of Invention and Reduced Duplication: An Empirical Test

“…Early disclosure increases (more citations by future patents), accelerates (faster appearance of future citations), and improves (higher difference relative to prior art) follow-on invention (e.g., Hegde et al 2019, Baruffaldi and Simeth 2018, and Graham and Hegde 2015. In contrast, mandated secrecy delays citations, at least temporarily (Gross 2019). Patents disclosed for standards settings are more likely to be litigated, although causality remains unclear (Simcoe 2005).…”