Perhaps the best feature of the U.S. patent system is mandatory disclosure, where patent filers must disclose the innovation. While innovators tend to prefer secrecy to keep a competitive edge, the desire to block copying by patenting an innovation leads to the positive effects of disclosure for follow-on innovation.
A new NBER study by Daniel Gross examines how a mandatory patent secrecy program implemented in WWII slowed the development of follow-on innovations in fields where patents were kept secret:
This paper studies the effects of the USPTO’s patent secrecy program in World War II, under which approximately 11,200 U.S. patent applications were issued secrecy orders which halted examination and prohibited inventors from disclosing their inventions or filing in foreign countries. Secrecy orders were issued most heavily in areas important to the war effort — such as radar, electronics, and synthetic materials — and nearly all rescinded en masse at the end of the war. I find that compulsory invention secrecy was effective at keeping affected technology out of the public domain, but it appears to have reduced and delayed follow-on invention, reduced entry into patenting, and restricted commercialization. The results shed light on the consequences of invention secrecy, which is widely used by inventors to protect and appropriate the returns to innovation, and yield lessons for ongoing policy debates over potential measures to protect U.S. invention against the growing incidence of foreign IP theft today.
The effect of the secrecy orders (which are still used today, albeit much less frequently), was a 10% decline in patent filings immediately following the war, and patenting frequency didn’t return to its pre-war levels until the 1950s.
Not only did the patent secrecy program prevent the filing of new patents, but it also reduced access to commercial products more broadly. Using DuPont as an example, Gross found that technical terms used in patent filings with secrecy orders were less likely to appear in chemical company catalogs.
The authors ultimately conclude that such secrecy orders were effective at preventing information disclosure (stiff penalties were imposed on those that did disclose), but had a large negative effect on postwar innovation.
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