Why Do Software Startups
Patent (or Not)?
TWo-ThIrDS oF The approxi- mately 700 software entre- preneurs who participated in the 2008 Berkeley Patent Survey report that they neither have nor are seeking patents for
innovations embodied in their products and services. These entrepreneurs rate patents as the least important mechanism among seven options
for attaining competitive advantage.
Even software startups that hold patents regard them as providing only a
slight incentive to innovate.
These are three of the most striking
findings from a recently published article, “High Technology Entrepreneurs
and the Patent System: Results of the
2008 Berkeley Patent Survey.” 1 After
providing some background about the
survey, I will discuss some key findings
about how software startup firms use
and are affected by the patent system.
While the three findings highlighted
above might seem to support a software
patent abolitionist position, it is significant that one-third of the software
entrepreneur respondents reported
having or seeking patents, and that they
perceive patents to be important to persons or firms from whom they hope to
no more than 10 years old before the
survey was conducted. We drew our
sample from a general population of
high-tech firms registered with Dun
& Bradstreet (D&B) and from the Ven-tureXpert (VX) database that has a rich
data set on venture-backed startups.
(Just over 500 of the survey software respondents were D&B firms; just under
200 respondents were VX firms.)
Eighty percent of the software re-
spondents were either the CEOs or
CTOs of their firms, and most had
experience in previous startups. The
average software firm had 58 employ-
ees, half of whom were engineers. Be-
tween 10%–15% of the software startup
respondents among the D&B respon-
dents were venture-backed firms.
Among the software respondents, only
2% had experienced an initial public
offering (IPO), while 9% had been ac-
quired by another firm.
measures of capturing “competitive advantage” from inventions.
how important or unimportant is each of the following in your company’s
ability to capture competitive advantage from its technology inventions?
some Background on the survey
More than 1,300 high-technology entrepreneurs in the software, biotechnology, medical devices, and computer
hardware fields completed the Berkeley
Patent Survey. All of these firms were