We present a model where an incumbent firm has a proprietary product whose technology consists of at least two components, one of which is patented while the other is kept secret. At the patent expiration date, an entrant firm will enter the market on the same technological footing as the incumbent if it is successful in duplicating, at certain costs, the secret component of the incumbent's technology. Otherwise, it will enter the market with a production cost disadvantage. We show that under some conditions a broad scope of trade secret law is socially beneficial.

Choosing the scope of trade secret law when secrets complement patents

OTTOZ, Elisabetta;CUGNO, Franco
2011-01-01

Abstract

We present a model where an incumbent firm has a proprietary product whose technology consists of at least two components, one of which is patented while the other is kept secret. At the patent expiration date, an entrant firm will enter the market on the same technological footing as the incumbent if it is successful in duplicating, at certain costs, the secret component of the incumbent's technology. Otherwise, it will enter the market with a production cost disadvantage. We show that under some conditions a broad scope of trade secret law is socially beneficial.
2011
31
219
227
http://www.sciencedirect.com/science/article/pii/S0144818811000433
Knowledge spillovers, Duplication costs, Non-competition covenants, Inevitable disclosure
E. OTTOZ; F. CUGNO
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/2318/89975
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