Working Paper | HBS Working Paper Series | 2015

Patent Publication and the Market for Ideas

by Deepak Hegde and Hong Luo


In this paper, we study the effect of invention disclosure—through patent publication—on the market for ideas. We do so by analyzing the effects of the American Inventor's Protection Act of 1999 (AIPA), which required U.S. patent applications be published 18 months after their filing date rather than at patent grant, on the timing of licensing deals in the biomedical industry. We find that post-AIPA, U.S. patent applications are significantly more likely to be licensed before patent grant and shortly after 18-month publication. Licensing delays are reduced by about ten months, on average, after AIPA's enactment. These findings suggest a hitherto unexplored benefit of the patent system: by requiring inventions to be published through a credible, standardized, and centralized repository, it mitigates information costs for buyers and sellers and thus facilitates transactions in the market for ideas.

Keywords: Market Transactions; Information; Patents; Investment; Innovation and Invention; Biotechnology Industry; United States;


Hegde, Deepak, and Hong Luo. "Patent Publication and the Market for Ideas." Harvard Business School Working Paper, No. 14-019, September 2013. (Revised August 2015.)