Disclosure as a Strategy in the Patent Race

Research firms disclose a surprisingly large amount of information to the patent office through "targeted" disclosures, that is, disclosures intended to make the patent office aware of potentially patentable information. Conventional wisdom holds that these disclosures are made for defensive purposes; the disclosing firm does not itself plan to pursue patents related to the disclosed information, so the firm discloses to create prior art that might stop rivals from patenting. But firms have an incentive to disclose even if they intend to pursue patent protection. The reason is that, by making it more difficult to patent, disclosure extends the patent race. If an invention of a certain quality would have been sufficient to qualify for patent protection before the disclosure, after the disclosure any invention must be that much better before it will represent a sufficient advance over the now-expanded prior art. This paper models disclosure strategies of this sort.