Did the Defend Trade Secrets Act Spur the Reliance on Trade Secrets?

This paper explores whether the U.S. Defend Trade Secrets Act (DTSA) increased the declaration of trade secrets. Leveraging cross-sectoral variation in the importance of trade secrets prior to the DTSA, empirical results show that the DTSA was followed by an increase in the intensive margin of trade secrets declaration in service industries, not in manufacturing industries though. The extensive margin of trade secret declaration increased in both services and manufacturing, where the surge was strongest in manufacturing. The extensive margin increased most strongly for manufacturing with a high sectoral R&D intensity. The results are of interest to policy makers as trade secrets can hinder knowledge flows with potential implications for innovation.