More Secrecy...More Knowledge Disclosure? On Disclosure Outside of Patents

It is an important concern that innovators by waiving their patent rights might obstruct the disclosure of knowledge and therefore retard progress. This paper explores this concern by using a simple model of two innovators who must decide sequentially whether to protect an innovation with limited patent rights. Two features are crucial to the disclosure decision. First: the second inventor may use his valid patent right to exclude the …rst inventor from using a secret invention. Second: when waiving her patent right, the …rst inventor may disclose her knowledge outside of a patent. Disclosure informs the Patent O¢ ce and courts that related inventions from later inventors may lack novelty and hence should not be protected by valid patent rights. This paper shows that when the …rst inventor chooses not to patent the innovation, the amount of disclosure is related to the intellectual property choices in a paradoxical way: the amount of disclosure will be ‘large’ (‘small’) when the second inventor chooses secrecy (patenting) to protect the innovation too.