Instead of seeking patents, many inventors and firms choose to keep the details of their innovations secret, out of the public view. But what are the implications of keeping important new ideas locked away in vaults as trade secrets? Does it slow down technological progress over time?
As the threat of intellectual property theft by foreign competitors grows and secrecy becomes a more attractive strategy for firms to protect and capitalize on their innovations, this question is becoming increasingly important to policymakers and inventors alike. However, getting a handle on the consequences of widespread secrecy is understandably difficult, since by their very nature, secret inventions are hard to find.
Recently, a researcher at Harvard Business School found a way to study this issue—by examining patent applications the US government ordered secret during World War II in the interest of national security, and later allowed to be granted and published. Daniel P. Gross, assistant professor of business administration, learned of the wartime policy while conducting research at the National Archives.
“I started reading about the history of patent policy during World War II, and I discovered that this compulsory secrecy program was in place during the war, and after the war it transitioned to a peacetime policy that persists to this day,” Gross says.
“Everybody in the system benefits from being able to access information about the cutting edge.”
Patents give inventors exclusive rights to commercialize their ideas in exchange for disclosing the details of their inventions in the patent document itself. The system is designed to make information about cutting-edge technology available to other inventors, in order to promote improvements and technological progress. However, if disclosure of those details poses a threat to national security, the government can order the inventors to keep it secret.
11,000 secrecy applications during WWII
The WWII patent secrecy policy, for example, was established in 1940. Over the next five years, the US Patent Office ordered 11,000 patent applications related to the war effort into secrecy—technological areas included radar and electronics, synthetic materials, and cryptography. These secrecy orders were abruptly rescinded in 1945, a fact that provided Gross with the opportunity to examine the implications of invention secrecy.
To study the effects, Gross compared inventions in patent applications from 1945, which were typically suppressed only about six months, with those from earlier applications, which had been kept under wraps for years. The latter, he found, were 15 percent less likely to be cited in future patent applications, indicating that the secrecy orders had hindered improvements on that technology over time. Gross also studied whether technical words from secret patents appeared in contemporary patent applications and broader literature and media. “You don’t see these words diffusing widely prior to the mass rescindment in 1945, but their use spikes immediately afterwards,” Gross explains. This suggests that secrecy orders were effective at keeping sensitive technology out of the public view.
Whether the 15 percent reduction in follow-on invention for patents kept secret the longest represents a substantial blow to society’s technological advancement, or a manageable cost to protect national interests, remains an open question. “One reading is that it had a chilling effect, as you had inventions that were temporarily lost to secrecy and then permanently forgotten,” Gross says. “But it’s possible that it was not a major impediment to overall technological progress, given the pace of innovation at the time.”
“There should be further research to determine whether that’s a serious cost or not,” he continues. “What it does show is that there’s a tradeoff to consider.” Gross compiled his results in the May 2019 working paper, The Consequences of Invention Secrecy: Evidence from the USPTO Patent Secrecy Program in World War II.
Although less common in the modern era, the US government still issues patent secrecy orders under the Invention Secrecy Act of 1951. In light of ongoing concerns over intellectual property theft and forced technology transfer, there has also been discussion in Congress about expanding secrecy orders. That proposal was strongly opposed by powerful lobbies including the American Bar Association and ultimately failed. But the research Gross conducted highlights what the consequences of such an expansion might be.
Ripple effects
“Whether or not it really stands in the way of technological progress is likely a function of how expansively secrecy orders are issued as well as whether they are temporary or permanent,” Gross says.
Gross acknowledges that his research is unlikely to influence managers’ day-to-day decisions about whether to apply for patents. Indeed, many companies already attempt to have it both ways, as patent attorneys can use obfuscating language in patent applications in an effort to conceal ideas, he says.
But when the state of the art is kept hidden on a broad scale, it has a ripple effect about which firms and IP experts should be concerned, Gross says. “Everybody in the system benefits from being able to access information about the cutting edge.”
About the author
Kristen Senz is a writer and social media creator for Harvard Business School Working Knowledge.
[Image: Matejmo]
Related Reading
- Some Facts of High-Tech Patenting
- At Booking.com, Innovation Means Constant Failure
- Migrant Inventors and the Technological Advantage of Nations