Patent Exposure and the Diffusion of “Trapped Knowledge”

Published:

Valuable knowledge developed in one part of the world may remain trapped even when formally available because frictions prevent it from entering the consideration set of downstream users. This paper examines whether granting US patents to already-established foreign inventions can “untrap” this knowledge by increasing its effective exposure, making it more likely to be noticed, recognized as relevant, and seriously evaluated. Using difference-in-differences with an examiner leniency instrument, I find that US grants of foreign patents significantly increase both the intensity and reach of forward citations. Using a new measure of “trappedness,” I show that knowledge from historically more trapped countries and sectors experiences larger diffusion benefits after US grants. These findings highlight the historical role of the US as an influential platform of global knowledge diffusion.