<p>Using the staggered state-level adoption of the Inevitable Disclosure Doctrine (<i>IDD</i>) as a measure of trade secret protection, we document that <i>IDD</i> boosts R&amp;D investment and patent output of firms with high existing innovative capacity, while hurting those of firms lacking thereof. In addition, broader industry-wide adoption of <i>IDD</i> leads to greater industrial concentration of innovation investment and patent production. However, there is no evidence that <i>IDD</i> yields consistent impact on innovation efficiency. In contrast to existing research on the protection measures of trade secret and intellectual property in general, in which the debate focuses on whether such mechanisms promote or hurt innovation, through the lens of trade secret protection, our findings present crucial evidence of the complexity and polarizing potential of such measures and bear important policy implications.</p>

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A renewed examination of how trade secret protection affects innovation: evidence from the inevitable disclosure doctrine

  • He Li,
  • Clas Wihlborg

摘要

Using the staggered state-level adoption of the Inevitable Disclosure Doctrine (IDD) as a measure of trade secret protection, we document that IDD boosts R&D investment and patent output of firms with high existing innovative capacity, while hurting those of firms lacking thereof. In addition, broader industry-wide adoption of IDD leads to greater industrial concentration of innovation investment and patent production. However, there is no evidence that IDD yields consistent impact on innovation efficiency. In contrast to existing research on the protection measures of trade secret and intellectual property in general, in which the debate focuses on whether such mechanisms promote or hurt innovation, through the lens of trade secret protection, our findings present crucial evidence of the complexity and polarizing potential of such measures and bear important policy implications.