Patent Visibility and the Diffusion of "Trapped Knowledge"

Valuable knowledge developed in one part of the world may remain trapped due to frictions in how knowledge is exposed globally. This paper examines how increasing the visibility of foreign innovations—by granting US patents—“untraps” knowledge. Using difference-in-differences with an examiner leniency instrument, I find that US grants of foreign patents significantly increase the intensity and reach of forward citations. Using a novel measure of “trappedness,” I show that knowledge from historically more trapped countries and sectors sees larger diffusion benefits after US grants. These findings highlight the central role of the US as a platform of global knowledge diffusion.