NCPA - National Center for Policy Analysis

Uncertain Effects of Early Patent Disclosure on Innovation

April 8, 2002

Until November 2000, the information submitted in an application for a U.S. patent remained private until the moment the patent was actually granted. Under new rules required by the American Inventors Protection Act, patent applications are made public 18 months after they are filed, regardless of whether the patent has been granted or not. This is the rule in most countries.

Will this new early disclosure rule promote, or hamper, innovation? In a study for the National Bureau of Economic Research, economists Daniel Johnson and David Popp say the effect of early disclosure of patents depends on two contrary trends:

  • Since information on innovations will be available sooner, early disclosure rules promote a faster diffusion of knowledge, and therefore a faster pace of subsequent innovations.
  • This effect is strong in the short term, but levels off after 30 years.
  • On the other hand, inventors will have less incentive to patent their innovations, given the risk that information will be made public before the patent is granted.
  • This negative effect of earlier disclosure on innovation will offset the aforementioned positive effect if just 4 percent or more of inventors decide to keep their innovation secret.

The disclosure of information on ungranted patents, which was never made available under the old law, might also have a positive effect by encouraging further research in that area and discouraging firms from unproductive research. This effect is hard to quantify without empirical experience. The authors therefore conclude that the total net effect of the new disclosure law is uncertain.

Source: "Pros and Cons of Early Patent Disclosure," Economic Intuition, Summer 2001; based on Daniel K. N. Johnson and David Popp, "Forced Out of the Closet: The Impact of the American Inventors Protection Act on the Timing of Patent Disclosure," NBER Working Paper No. w8374, July 2001, National Bureau of Economic Research.

For NBER abstract

http://papers.nber.org/papers/W8374

 

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