startups were utilizing the patent system, as well as to learn their reasons
for choosing to avail themselves of the
patent system—or not.
The basic economic principle underlying the patent system is that
technology innovations are often expensive, time-consuming, and risky
to develop, although once developed,
these innovations are often inexpensive and easy to copy; in the absence of
intellectual property rights (IPRs), innovative high-tech firms may have insufficient incentives to invest in innovation insofar as they cannot recoup
their research and development (R&D)
expenses and justify further investments in innovation because of cheap
copies that undermine the firms’ recoupment strategy.
Although this economic principle applies to all companies, early-stage technology firms might, we conjectured,
be more sensitive to IPRs than more
mature firms. The former often lack
various kinds of complementary assets
(such as well-defined marketing channels and access to cheap credit) that the
latter are more likely to enjoy. We decided it would be worthwhile to test this
conjecture empirically. With generous
funding from the Ewing Marion Kauff-man Foundation, three colleagues and I
designed and carried out the survey and
have begun analyzing the results.
Why startups Patent
The most important reasons for seeking patents, as reported by software executives who responded to the Berkeley
Patent Survey, were these: to prevent
competitors from copying the innovation ( 2. 3 on a 4 point scale, where 2 was
moderately important), to enhance the
firms’ reputation ( 2. 2), and to secure investment and improve the likelihood of
an IPO ( 1. 96 and 1. 97 respectively).
The importance of patents to investors was also evident from survey data
showing striking differences in the rate
of patenting among the VX and the D&B
software companies.
Three-quarters of the D&B firms had
no patents and were not seeking them.
Because the D&B firms are, we believe,
fairly typical of the population of software startup firms in the U.S., their responses may well be representative of
patenting rates among software start-ups generally. It is, in fact, possible
it is an article of
faith among many
iP lawyers that
patents provide
significant incentives
for firms to engage
in R&D and develop
new products.
that the overall rate of software startup
patenting is lower than this given that
patent-holders may have been more
likely than non-patent-holders to take
time to fill out a Berkeley Patent Survey.
In striking contrast to the D&B respondents, over two-thirds of the VX
software startup respondents in the
sample, all venture-backed, had or were
seeking patents. We cannot say why
these venture-backed firms were more
likely to seek patents than other firms.
Perhaps venture capitalists (VCs) are
urging firms they fund to seek patents;
or VCs may be choosing to fund the
development of software technologies
that VCs think are more amenable to
patenting.
Interestingly, the rate of patenting
did not vary by the age of the firm (that
is, older firms did not patent more than
younger firms).
Why forego Patenting?
The survey asked two questions about
decisions to forego patenting: For the
last innovation for which the firm chose
not to seek a patent, what factors influenced this decision, and what was the
most important factor in the decision?
The costs of obtaining and of enforcing patents emerged as the first
and second most frequent explanation. Twenty-eight percent of the software startup executives reported that
the costs of obtaining patents had
been the most important factor in this
decision, and 12% said that the costs of
enforcing patents was the most important factor. (They reported that average
cost of getting a software patent was
just under $30,000.)
Calendar
of Events
November 17–19
asian Internet engineering
Conference,
Bangkok, Thailand,
Contact: Kanchanasut
Kanchana,
email: kk@cs.ait.ac.th
November 17–19
advances in Computer
entertainment Technology
Conference,
Taipei, Taiwan,
Contact: Duh henry B.L.,
email: eledbl@nus.edu.sg
November 22–23
Conference on Decision and
game Theory for Security,
Berlin, germany,
Contact: Tansu alpcan,
email: alpcan@sec.t-labs.tu-
berlin.de
November 22–24
The 17th aCM Symposium on
Virtual reality Software and
Technology,
hong Kong,
Contact: george Baciu,
email: csgeorge@comp.polyu.
edu.hk
December 1–3
9th International Conference
on Mobile and ubiquitous
Multimedia,
Limassol, Cyprus,
Contact: angelides Marios,
email: marios.angelides@
brunel.ac.uk
December 4–8
The 43rd annual Ieee/aCM
International Symposium on
Microarchitecture,
atlanta, ga,
Sponsored: SIgMICro,
Contact: Sudhakar
yalamanchili,
email: suhdha@ece.gatech.edu
December 5–8
Winter Simulation Conference,
Baltimore, Maryland,
Sponsored: SIgSIM ,
Contact: Joe hugan,
email: jhugan@gmail.com
December 12–13
Virtual reality Continuum and
its applications in Industry,
Seoul, republic of Korea,
Sponsored: SIggraPh ,
Contact: hyunseung yang,
email: hsyang@cs.kaist.ac.kr