Prof. Ivan Png (National University of Singapore)

Program

• Date: 02.12.2010
  Time: 14:00 - 15:30
  Location: Kaulbachstraße 45, second floor, library

Law and Innovation: Evidence from Trade Secrets Acts

Most research and policy discussion into intellectual property focuses on patents.  Yet, European and U.S. technology managers report secrecy to be as or even more important than patents as a way to protect technicalinnovation.  Moreover, secrecy protects business innovations as well as technical innovations that cannot be patented. In principle, stronger secrecy laws could increase or reduce innovation.  By increasing exclusivity, they would increase the incentive for innovation.  However, by reducing spillovers, they might reduce the incentive for innovation. Here, I exploit changes in trade secrets law among the U.S. states over time and find that trade secrets law had significant effects on company-level R&D, patenting, and advertising expenditure.  These effects increased with the corresponding R&D intensity and advertising intensity of the industry. At the mean company-level profit contribution, adoption of trade secrets law was associated with an increase in R&D of between 34.2% (±6.8%) and 59.8% (±7.2%) and, controlling for R&D expenditure, an increase in patenting of between 1.7% (±0.6%) and 3.5% (±0.2%) among pharmaceutical manufacturers and an increase in advertising of between 6.1% (±3.6%) and 13.8% (±2.6%) among retailers.