“Secrecy and Patents: Evidence from the Uniform Trade Secrets Act” by Professor Ivan P. L. PNG
Professor Ivan P. L. PNG
Department of Strategy & Policy
NUS Business School
National University of Singapore
Stronger trade secrets law affects patenting in conflicting ways. Stronger trade secrets law raises the return to commercialization and increases the exploitation of inventions, and so, increases patenting. However, for each particular invention, stronger trade secrets law possibly induces businesses to substitute secrecy for patents. Here, I exploit differences in the timing of the Uniform Trade Secrets Act (UTSA) in U.S. states and impact across industries to study the effect of stronger legal protection of trade secrets on patenting. The UTSA was associated with 45.5 percent more patents in discrete technology industries and 30.2 percent fewer patents in complex technology industries. Further, the UTSA was associated with relatively more patenting of smaller inventions and among larger businesses in all industries, and among technology laggards in complex technology industries.