The Consequences of Invention Secrecy: Evidence from the USPTO Patent Secrecy Program in World War II

NBER paper finds that secrecy during WWII reduced commercialization/diffusion of break thoughts, though the program was effective at keeping discoveries out of public domain

".....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heavily in areas important to the war effort — such as radar, electronics, and synthetic materials — and nearly all rescinded en masse at the end of the war.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.... Secrecy orders are still issued today, under the authority of the Invention Secrecy Act of 1951, but at lower frequency than during the war.More recently, motivated by recurrent theft of U.S. IP by foreign firms and governments, the USPTO solicited public comments in 2012 about the feasibility of expanding secrecy orders to “economically significant” patents. The request for comments elicited strong negative reactions from several legal trade groups, whose concerns included some of the questions studied in this paper. As of yet it has not evolved into legislation or agency action, but policymakers continue to debate solutions to foreign IP theft and illegal technology transfer, which could conceivably include promoting, or imposing, invention secrecy. The focus of this paper is on the repercussions of concealing new invention. An important question this paper leaves for future research is the incentive effects of this policy: by suspending patent examination and precluding commercialization, secrecy orders may discourage subsequent patenting or invention in sensitive subject matter by those who receive them. Concerns about the detrimental impact on domestic invention, namely stifling U.S. innovation and driving R&D abroad, were among those raised by the ABA and IPOA in their responses to the USPTO’s 2012 request for comments. An answer to this question would complement existing literatures on both the incentive effects of intellectual property rights and the decision to patent...."

Daniel Gross, "The Consequences of Invention Secrecy: Evidence from the USPTO Patent Secrecy Program in World War II," National Bureau of Economic Research, February 2019, https://www.hbs.edu/faculty/Publication%20Files/19-090_0c1138eb-2518-48df-a05b-881d5183df0d.pdf