The Hidden Costs of Securing Innovation: The Manifold Impacts of Compulsory Invention Secrecy

Journal Article (Working Paper)

Compulsory invention secrecy has been long considered as a policy to prevent the leakage of technology in the interest of national security---and with the rise of global technological competition, it is increasingly so today. This paper uses a historical natural experiment to study the impacts of compulsory secrecy on firm invention and the broader innovation system. In World War II, the U.S. patent office issued secrecy orders to over 11,000 patent applications, which halted examination and prohibited disclosure until these orders were rescinded en masse at the end of the war. I show that compulsory secrecy caused incumbent firms to shift the direction of their innovation away from treated classes, with effects persisting through at least 1960. It interfered more broadly with the ordinary functioning of the innovation system by restricting commercialization and impeding follow-on innovation. Yet as part of the security policies in place during the war, it appears to have been effective at keeping sensitive technology out of the public view. These results offer evidence for recent debate over potential measures to protect U.S. invention against misappropriation by foreign competitors in both crises and regular times.

Full Text

Duke Authors

Cited Authors

  • Gross, DP

Published Date

  • June 6, 2021

Digital Object Identifier (DOI)

  • 10.3386/w25545

Language

  • en