The Assignment of Intellectual Property Rights and Innovation

We study how the assignment of intellectual property rights for successful innovations between inventors and their employers affect inventor-employer matching, the generality of innovation, and innovation disclosure. To do so, we examine the effect of a major court ruling that significantly shifted the assignment of intellectual property rights from inventors to their employers. Our evidence from within-firm-year analyses show that inventors affected by the ruling are less likely to leave their current employer, more likely to create generalized innovations, and more promptly disclose their innovations, compared to unaffected inventors at the same firm. If affected inventors do leave their employer, they are relatively more likely to choose noncorporate employment. Firms affected by the ruling are more likely to locate their inventors in agglomeration economies, suggesting that strengthened property rights reduce the perceived risk of talent poaching and outgoing knowledge spillovers. We conclude that the assignment of intellectual property rights affects inventor-employer matching, the types of innovations inventors create, and the disclosure of innovation.