Strategic Scientific Disclosure – Evidence from the Leahy-Smith America Invents Act

Abstract

We examine the impact of technological competition on voluntary innovation disclosure using changes scientific publications around the enactment of Leahy-Smith America Invents Act of 2011 (AIA). The AIA changes the patent system from first-to-invent to first-inventor-to-file system and induces a patent “race” that increases technological competition. Firms with resource constraints tend to be slow in filing a patent and are disadvantaged in this race. Using a difference-in-differences design, we show that financially constrained firms strategically increase scientific publications in an attempt to block competitors from obtaining a patent and extend the patent race after the enactment of AIA. This effect is more pronounced among firms (1) that are less capital intensive, and whose competitors have a lower cost of entry; (2) that face more patent competition; and (3) whose patents have longer lifecycles. The findings suggest that technological competition is a key determinant of firms’ scientific publications. The positive effect of the AIA on corporate scientific publications is consistent with the policy makers’ goal to promote knowledge spillover in society.