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Review of Law & Economics

Editor-in-Chief: Parisi, Francesco

Ed. by Cooter, Robert D. / Gómez Pomar, Fernando / Jacobi, Tonja / Kornhauser, Lewis A. / Ulen, Thomas

3 Issues per year

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Trade Secret vs. Broad Patent: The Role of Licensing

Franco Cugno1 / Elisabetta Ottoz2

1Università di Torino, Italy

2Università di Torino, Italy

Citation Information: Review of Law & Economics. Volume 2, Issue 2, Pages 209–221, ISSN (Online) 1555-5879, DOI: 10.2202/1555-5879.1069, September 2006

Publication History:
Published Online:
2006-09-08

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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