Why are they hiding? Patent secrecy and patenting strategies

Abstract

ABSTRACT Patents provide a mechanism to protect inventors from having their inventions imitated by competitors in exchange for a detailed disclosure of the patented invention. However, the disclosure requirement might enable any interested and skilled audiences to understand and replicate the knowledge conveyed by the patent document. The enactment of the American Inventors Protection Act (AIPA) on 29 November 2000 required US patent applicants to have their patent application published 18 months after the filing date. The AIPA allows patentees to choose the option of keeping their application secret, relinquishing foreign patent protection. This paper investigates what variables are associated with the decisions made by large companies to keep a patent secret until its granting, using a sample of granted patents applied for by publicly traded companies between 2000 and 2009. In particular, we study the effect of technological crowdedness, strategic use of in-house knowledge stock and invention radicalness on the option for the publication of pre-grant patent applications. The variables relate the reason to opt-out of patent application publication to industry characteristics (competition), firm’s characteristics (internal knowledge) and innovation characteristics (radicalness). Results show a negative association between technological crowdedness and pre-grant secrecy, as well as between secrecy and the use of in-house knowledge stock. Conversely, radicalness is positively associated with the likelihood of a patent application being secret until its granting.