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Choosing an intellectual property protection strategy: patents’ unexpected benefits

Firms’ ability to innovate and protect the fruits of their R&D investments is of ever increasing importance in a world of fast paced competition and imitation. With regard to protection, R&D managers are normally faced with the choice between keeping innovations secret and filing for patents. Compared to secrecy, patents have the distinct advantage of granting their holders a temporary monopoly on the use of an innovation (which normally last 20 years). However their use also presents serious drawbacks. Patents are costly, they imply the disclosure of the innovation, the timespan of protection is limited, and depending on the technology it might be easy to innovate around them. In practice these limitations entail that firms often choose to file for patents only when they have serious concerns about their ability to keep an innovation secret. 

However, despite all the flaws, a new study by Eduardo Melero and Neus Palomeras from UC3M Business, and David Wehrheim from IESE Business School, shows that patent benefits might extend beyond the legal protection of innovations and result in increased employee retention. In their forthcoming article in Management Science, the authors provide evidence that obtaining patent protection decreases the chance that the inventors associated with the innovation leave the firm by as much as 23%. Increase retention improves the firms ability to capture the value generated by investments in strategic human capital. Furthermore it also reduces the chances that firms will suffer from negative knowledge spillover to competitors.

The full article is available at the link below: