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Trade Secret vs. Broad Patent: The Role of Licensing

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Author Info
Franco Cugno (University of Turin)
Elisabetta Ottoz (University of Turin, Italy)

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Abstract

We present a simple model wherein a patents regime is inferior to a trade secrets system, meaning that when private returns from innovation under the two regimes are the same, society will be better off if the innovator chooses not to patent. In our model, trade secret licensing is envisaged and the inferiority of patents depends on the lack of an independent invention defense in patent law, while such a defense currently exists in secrecy and copyright law. Thus, although secrecy is superior to patents, it is not superior to other types of formal intellectual property rights where independent invention is allowed (such as copyrighted software).

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Review of Law & Economics.

Volume (Year): 2 (2007)
Issue (Month): 2 ()
Pages: 3
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Handle: RePEc:bep:rlecon:2:2007:2:3

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Related research
Keywords: Patents Secrets Licensing Independent Invention

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Boldrin, Michele & Levine, David K., 2004. "Rent-seeking and innovation," Journal of Monetary Economics, Elsevier, vol. 51(1), pages 127-160, January. [Downloadable!] (restricted)
    Other versions:
  2. Arundel, Anthony, 2001. "The relative effectiveness of patents and secrecy for appropriation," Research Policy, Elsevier, vol. 30(4), pages 611-624, April. [Downloadable!] (restricted)
  3. Novshek, William, 1980. "Cournot Equilibrium with Free Entry," Review of Economic Studies, Blackwell Publishing, vol. 47(3), pages 473-86, April. [Downloadable!] (restricted)
  4. Bessen, James, 2005. "Patents and the diffusion of technical information," Economics Letters, Elsevier, vol. 86(1), pages 121-128, January. [Downloadable!] (restricted)
  5. Kitch, Edmund W, 1977. "The Nature and Function of the Patent System," Journal of Law & Economics, University of Chicago Press, vol. 20(2), pages 265-90, October.
  6. Anton, James J & Yao, Dennis A, 1994. "Expropriation and Inventions: Appropriable Rents in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 84(1), pages 190-209, March. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Cugno Franco & Ottoz Elisabetta, 2006. "Static inefficiency of compulsory licensing: quantity vs. price competition," Department of Economics Working Papers 200606, University of Turin. [Downloadable!]
    Other versions:
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This page was last updated on 2008-7-28.


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