When Ideas Go Public: Patent Disclosure and the Dynamics of Cumulative Innovation

The patent system grants exclusive rights in exchange for the disclosure of the invention, on the premise that disclosure feeds follow-on innovation. This paper provides the first direct test of this premise. Japan’s 1971 pre-grant publication reform replaced secrecy averaging nearly five years with a uniform 18-month deadline. It accelerated disclosure most where lags had been longest. Across the reform, the flow of follow-on applications per patent roughly doubled. Where disclosure accelerated by one standard deviation more across technology- firm segments, about one additional year of earlier publication, patents attracted roughly 15 percent more follow-on applications over twenty years. The additional inventions appeared soon after publication and came mostly from the field’s periphery, firms returning after years of absence, small entities, and inventors in other fields. The firms actively filing in the field showed no detectable response. The follow-on inventions attracted follow-on applications of their own, virtually none citing the original patent. The expansion compounded across citation generations at an unchanged rate per invention, still building a decade after the original patents’ rights expired. Under intense R&D competition the gains were smaller, because disclosure there also enforces the discloser’s priority and terminates duplicative rival projects. The disclosed patents’ value did not decline, and the follow-on inventions were of average quality. Disclosure thus expands cumulative innovation without weakening appropriability, by multiplying the documents that place an invention before readers its firm’s networks do not reach.