patents papers and secrecy

8/14/2019 Patents Papers and Secrecy

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The Social Accumulation of Knowledge The mere production of knowledge does not guarantee that others

will be able to exploit that knowledge (Polanyi; Mokyr)

Tacit Knowledge Trade Secrecy

Intriguingly, the ability to provide private incentives to produceknowledge that can be exploited by others is a the heart of

modern theories of endogenous growth (Romer)

Open Science and Patenting are two institutional arrangementsthat require the disclosure of knowledge (Dasgupta and David)

By and large, the spheres of knowledge governed by Open Scienceand Patenting are assumed to be relatively independent


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The Duality of Knowledge

Immediate usefulness

Low High

Scientific

Merit

Low

High

Adapted from Stokes (1996)


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Human Genome Project The Human Genome draft was published in early 2001,

providing almost-comprehensive location and sequence

information for more than 20,000 individual genes

Without a doubt, this is the most important, most wondrous mapever produced by humankind. (Bill Clinton, 2000) Two principal routes for documenting further explorations of

individual genes

Scientific publications -- kudos & naming rights

Patent disclosures protection of discoveries and licensing rights What do we know today about the Human Genome? How has

that information been disclosed?


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Chromosome 10:

Multiple disclosure outcomes

over similar types of knowledge

Both public and private researchers observed in each of the three disclosure regimes, though

private researchers more likely to be associated with patents or PP Pairs overall, ~25% of

the Human Genome is protected by formal IP rights (Murray and Jensen)

GenePatent

Yes 126 40

No 424 669

No Yes

GenePublication


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Chromosome 10:

Multiple disclosure outcomes

over similar types of knowledge

Both public and private researchers observed in each of the three disclosure regimes, though

private researchers more likely to be associated with patents or PP Pairs overall, ~25% of

the Human Genome is protected by formal IP rights (Murray and Jensen)

GenePatent

Yes 10% 4%

No 34% 52%

No Yes

GenePublication


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The BLNK gene We describe here the identification of a novel B cell linker protein,

termed BLNK, that interfaces the B cell receptor-associated Syk tyrosine

kinase with PLCgamma, the Vav guanine nucleotide exchange factor, and

the Grb2 and Nck adapter proteins (Fu et al,Immunity, 1999).

the discovery of molecules which interact with either Grb2 or PLC- play a role in the regulation of signaling pathways are desired.

Accordingly, it is an object of the present invention to provide such

molecules, termed BLNK proteins, and to provide methods of using such

molecules in screening assays. (USPTO patent 5994522)

While the patent and paper disclose essentially the same information inthis congruentpatent-paper pair, other publications go beyond the patent

disclosure to offer a landscape for future research orenable imitation

above and beyond the patent disclosure


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Research Questions What are the key factors shaping the disclosure of

knowledge in the form of scientific research publications,

patents, or both?

A Theory of Patent-Paper Pairs How does disclosure strategy depend on the disclosure

environment?

Patentability Requirements? Public versus Private Funding? The Potential for Licensing in the Market for Ideas? The Impact of Scientific and Market Competition?


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Scientific Researchers and

Private Research Investors Regardless of potential commercial returns, scientific researchers realize

benefits from knowledge disclosure through scientific publications Intrinsic preferences for kudos Signaling to both private and public employers

Regardless of potential impact on the scientific community, privateresearch investors realize benefits through the protection of ideas

Formal intellectual property rights (patents) Trade secrecy and inimitability

Researcher preferences for scientific disclosure may conflict with thecommercial objectives of research funders May be willing to trade of wages for ability to publish in the scientific

literature

Disclosure strategy results from the contract between researchers andresearch funders when bargaining over compensation


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The Model Single researcher is hired by a single firm in order to produce

knowledge that potentially has significant scientific value and/or

commercial returns

The firms expected return from the innovation depends on theirability to limit potential competition Relative to secrecy, a patent grant increases the fixed cost of entry () but

only a imperfect chance of blocking entry () However, disclosures through patenting (dPAT) or publication (d) reduce the

fixed cost of entry

The researcher cares about their monetary compensation (w) andtheir ability to earn kudos through publication (bs)


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Under what conditions does the firm and researcher

choose each of the following disclosure regimes?

Publication disclosure (d)

0 1

Patent

(i)

1Commercial

Science

Patent-Paper

Pairs

0 Secrecy Open Science


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Preferences Scientist

Firm/Private Funder Monopoly profit: w Competitive profit: w Expected profit of the private funder:

While researchers care about scientific disclosure, investorscare about the impact of disclosures on potential competition

kcapital cost

w Pr(entry(d, idPAT,i,i)( )


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Disclosures Jointly Impact on Entry Consider a potential entrant who faces the following profit

function

andare the strength of patent protection is the degree of fidelity between disclosure paths bEis the reduced marginal cost of entry due to

disclosures dand dPAT

is distributed uniformly on [0,1] + bE< 1 (entry always uncertain)

The potential for entry is increasing in both patenting and publicationdisclosure, while the cost of entry is increasing in the receipt of a patent

(1 i) (1 i) i+ bE(d+ id

PATid

PATd)( )


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Complete Overlap Suppose that the knowledge disclosed in a patent and

publication were exactly the same.

Then if decide to patent, there is no additional cost inpublishing and vice versa.

Would only observe secrecy and patent-paper pairs.


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Negotiations Scientist and firm negotiations over disclosure regime:

maxw,i,d

w + bSd( ) k w (1 i) (1 i) i+ b

E(d+ id

PATid

PATd)( )( )( )

Unconstrained wage: w > 0

Relative commercial return highChoose (i, d) to maximise jointsurplus

So long asd

* d=

k (1 i)((1 i) i+ bEid

PAT)( )

bS+ b

E(1 i)(1id

PAT)( )

w*

= max 0,1

2 k (1 i) (1 i) i+ bE(d+ idPAT idPATd)( )( ) bSd( )

Constrained wage: w = 0

Relative commercial return lowUse dto transfer utility betweenfirm and scientist (d> d)

Choose (i, d) to maximise NTUNash objective

di

*=

k (1 i)((1 i) i+ bEid

PAT)( )

2bE(1 i)(1id

PAT)( )


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Two key expressions shape the decision of whether to allow

scientific disclosure, patenting, or produce patent-paper pairs

Consider the choices that maximise surplus Scientific disclosure? consider the ratio of the marginal

benefit versus marginal cost of scientific disclosures.Choose no disclosure if

Patent? consider the ratio of the marginal benefit to themarginal cost of publicationchoose to patent if

d

bS

bE

() (1 i)(1 id

PAT)

i

k(1)((1)+bEdPAT

)()

k() 1 + b

EdPAT

(2)

1

bSd+ k (1 i) (1 i) i+ b

E(d+ id

PATid

PATd)( )( )


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Complementarity: when patents and publications are partially

overlapping in terms of disclosure, the patent-paper regime expands

when the strength of intellectual property protection increases

1

1

Secrecy

Commercial

Science

Patent-Paper

Pairs

Open

Science

d


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Sources of Complementarity Fidelity (): as a grows, this increases patent-paper pairs

relative to other regimes.

Intuition: the marginal cost of disclosure is lower if there is apatent as less entry-facilitating knowledge is likely to begenerated.

Patent effectiveness (): as the effectiveness of a patent inblocking entry rises, this increases patent-paper pairs

relative to other regimes.

Intuition: if a patent can actually block entry (= 1), thedisclosures are not commercially harmful.


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Possibility of Zero Wages If publishing maximises joint surplus, w = 0

Increase duntil wage is constrained Beyond this point, dused as compensation.

Increasing More likely to take out a patent If there is publication, negotiate more disclosure

Increasing dPAT Less likely to take out a patent If there is a publication, reduces disclosure

Stronger IP protection (higherand lower dPAT) stimulatesopenness in science

di

*=

k (1 i)((1 i) i+ bEid

PAT)( )

2bE(1 i)(1idPAT)( )


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Independent Knowledge Suppose dand dPAT revealed

information about distinctknowledge (= 0)

Suppose patent protectionineffective (= 0)

When d> 1, surplusmaximisation would involve1 > d

Wages always zero (theoutside option) when thereis publication

Decisions do not interact.

i

d

1

1

Secrecy

Commercial

Science

Patent-Paper

Pairs

Open

Science


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Dynamics Suppose that scientists and firms live two periods

Overlap with other generations Future kudos generated by citation

Past knowledge reduces future capital costs, k Full transfer (under contracting): zero future costs Partial transfer (through publication): (1-dt-1)k

Firm owns patent and can license it to next generation Disclosure, fee & wages now a 3-way negotiation Use Nash bargaining solution Past publication gives future pair an easier work-around if there is

no license work-around possible (on same research path) with

probability.


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License Negotiations Outcomes

If no patent, = 0 If patent but no publication, = k/3 If patent but publication, = k(1-(1-)dt-1)/3

Patent-Paper Pairs Forsufficiently high, patent-paper pairs can be an

equilibrium

Presence of patent reduces incentives for publication and viceversa when< 1 Increasingcauses more disclosure under patent-paper pairs


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Substitutability

1

1

Secrecy

Commercial

Science

Patent-Paper

Pairs

Open

Science

d


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Other implications Look only at symmetric dynamic equilibria Inter-temporal complementarity

Only worthwhile publishing if expect future scientific work tobe published (so can earn a citation)

Therefore, always exists a commercial science or secrecyequilibrium.

Domain of open science is expanded as a result ofsubstitutability

Key issue: who should own IP rights?


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Key ExtensionsPublic funding: impact and restrictionsScientific and Commercial Research RacingEmpirical: Human Genome Project


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Conclusions The disclosure strategy of privately funded research is grounded in the

disclosure environment and is shaped by the bargaining over disclosure

between scientific researchers and their funders

Rather than an anomaly, patent-paper pairs emerge as an equilibriumoutcome in which scientific researchers trade off wages in order to gainscientific credit, while investors (private or public) seek to retain the

ability to capture value from these dual-purpose discoveries

Interestingly, in most circumstances, increases in the strength of formalintellectual property protection enhances the scope for patent-paper

pairs.

More generally, the model suggests that the key requirements forcumulative disclosure in the aggregate requires a careful evaluation of

the strategic foundations of disclosure strategy.

patents papers and secrecy

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