Patent applications are evaluated in light of the prior art. What this mean
s is that patent examiners evaluate a claimed invention by comparing it wit
h what in a rough sense corresponds to the set of ideas and inventions alre
ady known to the public. This is done for three reasons. First, the compari
son hl lps to ensure that patents issue only in cases where an inventor has
made a non-trivial contribution to the public's store of knowledge. Second
, it protects ct possible reliance interest on the part of the public since
, once an invention is widely known, members of the public might reasonably
assume that the invention is free for all to use. And third, it pressures
inventors to file their patent applications promptly lest some other invent
or disclose a related invention or the applicant himself inadvertently let
slip some fraction of his own research result.
The prior art inquiry has a fourth policy implication, however, and while t
his one might not have been one of the motivating factors for establishing
the inquiry in the first place, it is just as important when it comes to de
signing and interpreting sensible prior art rules. That additional wrinkle
is simply this: the fact that patent applications are evaluated in light of
the prior art gives firms a strategic incentive to create prior art. A fir
m can publish a journal article or engage in a public demonstration and in
that way affect both a rival's ability to patent a related invention and th
e rival's incentive to do so. Perhaps surprisingly, this can make the discl
osing firm better off even though, by revealing information, the firm is li
kely helping its rival and, worse, narrowing or even fully preempting the v
ery patent it seeks.
In this Article, then, we explain the incentive for strategic disclosure. W
e show that a firm trailing in a given patent race has an incentive to disc
lose information in the hopes of preempting a rival's patent, but only if t
he laggard itself has little chance of leapfrogging the leader and winning
the race. We show that a firm leading a patent race similarly has an incent
ive to disclose, this time in an effort to reduce its rival's expected payo
ff and in that way encourage the rival to quit the race. We consider the po
ssibility that private negotiations will displace public disclosures, for e
xample with the laggard agreeing not to disclose and in exchange receiving
from the ultimate patentee some form of favorable licensing agreement. Last
ly, toe consider the implications all this might have for the patent system
overall.