Intellectual Property Rights, Holdup, and the Incentives for Innovation Disclosure

Abstract

We study how the assignment of property rights between employees and their employers influences disclosures that reveal the productivity and ability of individual employees. To do so, we examine the effect of a court ruling that significantly shifted the assignment of intellectual property rights from inventors to their employers, but that was otherwise likely exogenous with respect to disclosure. Using a within-firm-year difference-in-differences design estimated across a sample of multiple firms, we find that firms accelerate their patent disclosures for innovations created by their inventors affected by the ruling, relative to their patent disclosures for innovations created by their unaffected inventors. Our results suggest that the assignment of intellectual property rights and the potential for hold up problems between employees and their employers can affect disclosure decisions.