Patenting by Entrepreneurs: The Berkeley Patent Survey (Part I of III)

Guest Post by Robert Merges and Pamela Samuelson, UC Berkeley School of Law; Ted Sichelman, University of San Diego School of Law

Why do entrepreneurs and startup companies file for patents? Why not? How often do startups acquire patents from others? How important are patents in fostering innovation at startups? In helping them raise financing? In providing leverage in cross-licensing negotiations? Are entrepreneurs and startups subject to patent thickets?

These and many related questions were the subject of the Berkeley Patent Survey—the most comprehensive survey to date in the United States, probably worldwide, on how patents are used by and affect entrepreneurs, startups, and early-stage high technology companies. Funded by the Ewing Marion Kauffman Foundation—and conducted by us, along with Robert Barr (Executive Director of the Berkeley Center for Law & Tech and former VP of IP at Cisco) and Stuart Graham (then a professor at Georgia Tech's College of Management, and currently Chief Economist of the USPTO)—the survey collected responses from over 1,300 companies less than ten years old (hereinafter, "startups") in the biotechnology, medical device, software, and hardware/IT sectors.

In this first post of three, we briefly review three major findings from our initial analysis of the survey about the frequency of patenting among high-tech startups, why startups seek patents, and how they rate patents and other strategies for attaining competitive advantage. In the next post, we'll discuss some reasons startups give for not seeking patents and why they sometimes license-in patents from other companies. In the last post, we'll specifically address startup perceptions about the incentives that patents provide for engaging in innovation as well as the perceived importance of patents in securing outside investments. The investment incentive role of patents has been not only a subject of enduring interest in the patent field generally, but also an important topic of interest of late at the Department of Commerce and PTO. (For those interested in more information, a detailed discussion of the survey results is available here; a focused analysis on the drivers of startup patenting, here; and some background on the genesis of the survey, here.)

First, startups hold many more patents and applications than previously believed. Instead of asking companies how many patents and applications they actually hold—like we did—earlier studies solely used the PTO databases to determine portfolio size. Unfortunately, these databases are unreliable, because the assignee records—particularly for patents acquired from founders and third parties—are incomplete. Our more complete data shows that about 40% of our respondents hold patents or applications, with the figure rising to about 80% for startups funded by venture capital firms.

As expected, this figure varies widely by industry—for example, 97% of venture-backed biotechnology companies hold patents or applications, while only 67% of venture-backed software startups do. And among the general population of software startups responding, the rate was only about 25%. In terms of raw numbers, among biotechnology companies, those with patents and applications have about 13 on hand, with the number rising to about 20 for medical device companies, and falling to about 7 for software companies. In sum, many startups are filing for patents and hold greater numbers than previously believed, though most software companies have never filed for patents.

Second, startups report that they primarily file for patents to prevent against copying of their innovative products and services (see Fig. 1 below). This holds true across all industries and by a variety of other company characteristics, such as age and revenues.

Respondents also note that filing for patents to improve their chances of securing investment and generating a liquidity event (such as an IPO or being acquired) are between moderately and very important reasons to file. In addition, the respondents state that a moderately important reason to file patents is for strategic reasons, such as defending against and preventing patent lawsuits as well as increasing negotiating leverage.

Figure 1: Reasons to File for Patents

Our third major finding concerns startup executives' perceptions of the effectiveness of patents and other methods of providing competitive advantage. Interestingly, responses vary widely (see Fig. 2 below). Biotechnology companies rate patents as the most effective means of capturing competitive advantage, more effective than first-mover advantage (though the differences are not statistically significant), trade secrecy, reverse engineering, copyright, and other means. Software companies, on the other hand, rank patenting dead last in providing competitive advantage.

Figure 2: Measures of Capturing "Competitive Advantage" from Inventions

In sum, the 2008 Berkeley Patent Survey has found that startups are patenting more than previous studies have suggested; that patents are being sought for a variety of reasons, the most prominent of which is to prevent copying of the innovation; and that there are considerable differences among startups in the perceived significance of patents for attaining competitive advantage, with biotech companies rating them as the most important strategy and software companies rating them least important.

Our next post will delve into reasons high tech entrepreneurs gave for not seeking patents for recent innovations and for licensing of patents from other companies.

65 thoughts on “Patenting by Entrepreneurs: The Berkeley Patent Survey (Part I of III)

  1. Yeah Dr John, just as long as you are not under that very common misapprehension, that the issue of a patent to Mr X gives X a positive right to practice that which is claimed in the said duly issued patent.

    Having a patent of your own is no defence against infringing the patents of others.

    When you write that you have secured from the Government “an exclusive right to practice” I can’t help wondering whether you think you have gained some sort of Government permission to practice the invention.

    Sorry if I am being patronising.

  2. Fellow bloggers, especially those with an interest in RFID, what do you think of the claim coverage in USP 6,229,443 and 7,649,461?

    Overly broad?

  3. Dr John, when you write “they represent a right to practice certain standard electronic methods” do you mean something like:

    “They provide their owners with a Government-awarded right to restrain members of the public from making any commercial use of certain electronic methods that were already standard even before the respective patent applications were filed”?

  4. The RF ID example was related to me by an entrepreneur from Santa Barbara. I don’t know exactly what patent he was referring to. Here are two US patents that have to do with circuit protection in RF ID devices: 6,229,443; 7,649,461. They do not teach anything. They are not abstract or scholarly. Nevertheless they do represent a right to practice certain standard electronic methods in the area of RF ID.

    Max, the system you describe certainly sounds like an improvement.

    INANE, the laws you refer to do not seem to function.

  5. DrJohn: I don’t agree that it is wise to have a system which allows people to purchase the right to stop others from applying what they learned in school.

    Well, it depends how they apply it. If it’s an application they learned in school, chances are no valid patent can stop them from doing that.

    If they apply it in a really clever way they didn’t learn in school, and it turns out that someone else invented that way first, they have a problem. We, as a society, have decided it’s worth giving that engineer that problem in exchange for rewarding the guy who came up with the idea in the first place. That’s a decision we made centuries ago.

    Patents are not supposed to be scholarly journal articles. They are supposed to be focused on new practical applications of technology. And usually they’re published before the author gets his grant, so take that into account when you’re reading it.

    Sure, I have a problem with the quality of disclosure of some patents these days, but the rules already exist to fix that, and the courts are headed in that direction by requiring more written description than simple enablement.

    DrJohn: But innovation can be stopped if, for example, the patent office allows someone to patent the use of a diode to protect a receiver connected to an RF ID antenna, despite the fact that this method of protecting receivers had been known for more than 50 years.

    Uh huh. That’s why there are laws about what can or cannot be the subject of a valid patent.

    Max: The bind is, of course, that within their limits patents do promote the progress but allowed to get out of control, they stifle the progress.

    The ones that stifle the progress are probably the ones that are written like journal articles. They come up with an equation or a flowchart, and they’re done. Or they notice a correlation between, say, a gene and a medical condition, and that’s it. They end with hopelessly abstract claims like Arrhythmia or Prometheus that are literally infringed by people looking at data and thinking. An interesting discovery may be the proper subject matter of a journal article, but a patent should focus much more on specific practical applications.

  6. That’s me, Mr. Helpful.

    Actually if I was really helpful, Ida tell ya that as soon as my eyes see the capped EPO-PSA, I don’t bother reading the full post. But Ima lazy so you shouldn’t take my non-reading as indicative of the general readership.

  7. You know, these days you hardly ever get any acknowledgement of receipt of emails. You send off valuable advice to a client and then…..nothing. You have no idea whether the client has read the email, and whether it ever was any help. It is a bit discouraging.

    So, thanks very much, ping for pinging back your acknowledgement of receipt. It is good to know that my stuff is being read somewhere.

    And better yet, that you have no constructive criticism to offer in return, except that I am too long-winded. I’m working on it.

  8. What are the words that I am looking for? I know that I have seen them somewhere and I was struck with how well they fit.

    Oh yeah -

    blah blah blah

  9. Dear Dr John, great tip, the Laughlin book. I will order a copy and read it. I see from the blurb in Amazon that Laughlin thinks in physics like that other laureate, Sulston, thinks in biotech, that patents are out of control. i gather that, like Sulston, he offers no solution.

    The bind is, of course, that within their limits patents do promote the progress but allowed to get out of control, they stifle the progress. There is a solution, the one they have in England: specialist patents judges with a background in science or engineering, plus 20 years of experience as patent litigators, sometimes appearing as advocate for the infringer, other times as advocate for the patent owner, before they step up to the bench. Once they take up judging, they have an unbounded thirst to adjudicate patent cases in a way that nurtures the integrity of the patent system, and does indeed promote the progress.

    Thus it is, that the English courts do the high value patent cases for the whole of Europe. The irony is that the City of London is clueless about investing in technical innovation, so the UK gets increasingly poorer despite its brilliant system of patent litigation.

  10. So there we have it folks. at the heart of the problem, dangerous for the future of the patent system, the delight of patent lawyers and the frustration of engineers, is the inability of the system to tell engineers when a claim is not patentable (or invalid) for obviousness.

    When a case comes up that is simple enough even for the SCOTUS justices, a gas pedal no less, what answer do we get? Anybody with an ounce of common sense could have told you all that this stuff is obvious. Thank you very much guys.

    There must be a better way. A way that makes engineers enthusiastic about arguing obviousness, and turns them into fans of the patent system. There is one. Mind though; whatever you do though, don’t call it EPO-PSA.

  11. “the patent office allows someone to patent the use of a diode to protect a receiver connected to an RF ID antenna”

    if this is an actual example, DrJohn, what is the # of the patent?

    let us all take a look at it

  12. INANE, your first point seems to be that buying and selling the right to practice technology is a way to make money. Yes, obviously, but this has nothing to do with my point, which was that patents do not typically teach anything. This may be fine with you, but to me it seems like a gross corruption of the original notion of the exchange involved in the granting of a patent. I don’t agree that it is wise to have a system which allows people to purchase the right to stop others from applying what they learned in school.

    And yes, things that are already patented are not innovation, and things that are obvious are also not innovation. But innovation can be stopped if, for example, the patent office allows someone to patent the use of a diode to protect a receiver connected to an RF ID antenna, despite the fact that this method of protecting receivers had been known for more than 50 years. What was taught by such a patent?

  13. To my mind, the patent world is a kind of intellectual “alternate universe” where people buy and sell rights to practice technology. It has almost nothing to do with invention or discovery.

    The stock market is a similar sort of alternate universe, where people buy and sell property rights in companies. It has almost nothing to do with operating those businesses, and the businesses don’t see any of the money. Much like in the patent universe, the business/invention that the system is designed to encourage has already happened, and was rewarded by the initial sale of the rights. Every other trade is just people buying and selling things in search of profit, but it’s also the aftermarket that gives the initial buyer some hope of eventual profit, so he’ll want to make that initial purchase that furthers the goal of the entire system.

    Then they discover, as I know many of you have, that what they have created is already patented, although it is obvious to any competent practitioner. This is no way to encourage innovation.

    In the alternate universe where I personally reside, things that are already patented and things that are obvious to any competent practitioner are two classes of things that, whether or not they overlap, don’t count as “innovation”.

  14. I’d like to suggest you all read Robert Laughlin’s book “The Crime of Reason.”

    I am an inventor, an entrepreneur and an educator. To my mind, the patent world is a kind of intellectual “alternate universe” where people buy and sell rights to practice technology. It has almost nothing to do with invention or discovery. Look at any serious published review of a scientific or engineering subject. How may references to patents do you see? The original social contract was supposed to be that you get an exclusive right to practice a technology in exchange for teaching something novel, unobvious and useful. But the world has grown, knowledge has advanced and the patent office no longer has the capacity to judge novelty or obviousness. How could it? They would have to be experts in everything.

    So now we have the crime of reason: I teach an undergraduate basic facts of physics or electrical engineering and they goes out into the world to apply what they have learned to develop a technology. Then they discover, as I know many of you have, that what they have created is already patented, although it is obvious to any competent practitioner. This is no way to encourage innovation.

  15. Posted by: IANAE | Jul 22, 2010 at 09:34 AM: Not too shabby being Vice President or a Nobel laureate either. I’m surprised you’re not prouder of that.”

    Even your sarcasm is stale. Can’t you do anything original?

    Oh .wait, if you could you would be an Actual Inventor, or at least a smart attorney. My mistake.

  16. Back in the late 80′s early 90′s I invented some of the most famous and widely used internet processes today, with out patents and made a boat load of cash for about 6 months.

    Hey, at least you had a pretty good run.

    Not too shabby being Vice President or a Nobel laureate either. I’m surprised you’re not prouder of that.

  17. Posted by: Adam | Jul 19, 2010 at 03:30 PM: “Wouldn’t it be great if we could ask the companies themselves how important patents are to their success? Someone should really do a survey and find out. Then we would have some information instead of random guesses from the Patently-O readership.”

    Good post Adam since many of the regularS of the anti patent crowd have no idea what its like to be an entrepreneur, let alone an inventor. Speaking from experience as both, I can tell you first hand that my businesses would have never made it and grown without patents, and especially strong patent laws.

    A start up just can’t compete against big corps without patent protection. Back in the late 80′s early 90′s I invented some of the most famous and widely used internet processes today, with out patents and made a boat load of cash for about 6 months. I thought I was on my way to being the next Bill Gates and that is what everyone said that saw my ideas and business. Until everyone copied my technology and made billions and I eventually just closed shop. Names like AOL, Compuserve, Prodigy, Delphi, simply copied me to detail and got super rich. This was before their was even a commercial web browser or folks even knew what the WWW was.

    I learned a good lesson early and every since then I have kept my processes, methods, and technology trade secret and filed patents on EVERYTHING.

    Every smart inventor will tell you that the best use of a patent is to build a business around it and use that business to beat the big boy and girls at their own game.

    I learned the hard way and as a result work the smart way now. I have done well thanks to the patent system, capitalism and the American way!

  18. It was a good analogy until someone changed the facts by setting the house on fire first. Because we all know that’s exactly when everyone lines up to insure your house.

    Relax. I failed to make myself clear; as a result you misunderstood me. Let’s move on.

  19. Dude, you’re the one who offered the analogy in the first place.

    It was a good analogy until someone changed the facts by setting the house on fire first. Because we all know that’s exactly when everyone lines up to insure your house.

    Me: Do you laugh at people who buy cars?
    You: Yes, if the car is crushed into a cube first.
    Me: (justifiable snark)
    You: (inexplicably declare victory)

  20. Another reason to like Cy – he knows how to take the high road and put down his antagonist at the same time. Bravo.

  21. Fire insurance policies don’t put out fires, but VC investment does stave off bankruptcy … In conclusion, they’re not the same.

    Dude, you’re the one who offered the analogy in the first place. All I said was that yes, I would laugh at an insurance company that underwrote policies on houses that were already on fire. I could say something really snarky like “I’m not sure you really understand how insurance works,” but instead I’ll just offer you hearty congratulations on your latest debating victory.

  22. Once again another great article. The fact that software companies do not often get patents is clearly a result of the fact that it is the only technology that can be covered by a copyright. Between copyrights and licenses that protect the source code as a trade secret, the software companies have no incentive to get a patent and to have the invention examined at the USPTO to obtain a patent. As a result the public gets nothing out of the protection to the software company accorded by the copyright and trade secret law.

  23. Goodness, what unpleasant language in the comments. There seem to be a lot of things going on here.

    I don’t think we have enough data to say whether software patents are good (perhaps because VC funded startups outperform non-funded and VC funded prefer patents) or to say software patents are bad (because they’re rated dead last in terms of usefulness).

    How about if the survey results are released so we can analyse it ourselves and draw our own conclusions instead of relying on the brief summary?

  24. GBS was talking about anti-patent geeks like software engineers.

    It’s true – his mother told me.

  25. “Face it, software patent practicioners are one tiny step above snake oil salesmen”

    “Tell that to Bill Gates…”

    He agrees. Look up his historic quotes on the matter!

    “No industry will go up in flames in the absence of patents (although pharmaceuticals would probably be hurt).

    That’s not an argument against software patents.”

    Actually, it is. Please look at the U.S. Constitution’s “Progress Clause” and note carefully that it authorizes Congress to “promote the progress of … the useful arts”. If an industry is actively hurt by patents (which software is), it’s arguably unconstitutional to have patents in that industry at all.

    But those of you whose incomes depend on not recognizing the truth are not going to recognize it. George Bernard Shaw said something about that.

  26. When you can tell me what a “software patent” is Philip, I’ll answer your question…

    You clearly didn’t get the memo.

  27. What I meant by How do you software patent lawyers spin that one? is that if software patents don’t confer competitive advantage – how can they be considered a net gain for the software industry, instead of a net loss? It sounds like the industry would be financially better off without them.

  28. How do you software patent lawyers spin that one?

    Say you have a software patent. You are also holding in your hand your competitor’s product. How will you determine whether that product infringes your patent?

    Now, suppose you reverse engineer your competitor’s product. How will your competitor determine whether your product infringes his patent?

  29. To Cowboy: Patent patrollers are very important to the justice system. We need to ask why the bankruptcy occurred, such as the theft of the patent usage by the company being sued by the patrollers. The lack of money on the part of inventors or startups to pursue lawsuits against infringers should never become the reason for the infringer to use the patent for free, like they all want to.

  30. 6,

    No industry will go up in flames in the absence of patents (although pharmaceuticals would probably be hurt).

    That’s not an argument against software patents.

  31. Software patents confer less competitive advantage than even reverse engineering? How do you software patent lawyers spin that one?

  32. “Face it, software patent practicioners are one tiny step above snake oil salesmen”

    Tell that to Bill Gates… now get back to work you m0r0n, those floors in the PTO cafeteria aren’t going to buff themselves.

  33. This would make sense if writing insurance policies actually put out fires.

    Yes, that’s my point. Fire insurance policies don’t put out fires, but VC investment does stave off bankruptcy, and pretty much only ever happens to companies that are financially “on fire” at the time.

    In conclusion, they’re not the same.

  34. Cynical, you may or may not return to the thread where we were discussing Rule 56, but I invite you to return to it after you read …

    Ned, I assume you’re talking to me, and not IANAE, who (incorrectly) claims to be “as cynical as they come.”

    I’ve read it, and I’ve read the thread. IANAE is on the money there.

  35. So, only if the company that ultimately went bankrupt was already pretty hard up for cash when the VC invested?

    Nice try. This would make sense if writing insurance policies actually put out fires. But it doesn’t.

  36. Adam who you gonna ask in a big company?

    These are tech start-ups we’re talking about, not General freaking Electric. The CEO probably has a very good idea what’s going on in the company. Which is a good thing too, because there may not be anybody else around for him to ask.

  37. Adam who you gonna ask in a big company? The CEO is so “big picture” focussed that he has no idea what role patents play, except when he has to pay a big judgment.

    The Chief Patent Counsel is not necessarily the one to ask — she has a dog in the fignt. In fact, just about anyone close enough to the action to be at all knowledgeable has a dog in the fight, and that will skew the results. Marketing says it was their brilliance that wooed the customers. QC says it was the reputation for quality… yada, etc.

  38. “Maybe, but even then it doesn’t follow that success is based on any intrinsic value of the patents themselves.”

    Wouldn’t it be great if we could ask the companies themselves how important patents are to their success? Someone should really do a survey and find out. Then we would have some information instead of random guesses from the Patently-O readership.

  39. Only if the house was already on fire when they wrote the policy.

    So, only if the company that ultimately went bankrupt was already pretty hard up for cash when the VC invested?

    I’m not sure you really understand how venture capital works.

  40. Venture capitalists are in the business of taking big risks. You don’t make fun of an insurance company every time an insured house burns down, do you?

    Only if the house was already on fire when they wrote the policy.

    My point was (and remains) that there was a time when the smart money said that success depended on adding a “.com” to your name. It was true for a while: link to en.wikipedia.org .

  41. Maybe, but even then it doesn’t follow that success is based on any intrinsic value of the patents themselves.

    This is true, of course. My point was only that 6′s conclusion didn’t follow from the empirical evidence and, in fact, seemed to be contradicted by it. A follow-up study would probably be required to really determine the success/failure rate and the likely causes for it. Or maybe that’s been done and will come in parts 2 or 3.

    Perhaps they succeed because they get venture capital funding?

    The survey supports that view (attracting investment was the second most important reason given for seeking patent protection). But even if that were the only reason for obtaining patents, that would suggest patents are still intrinsically valuable even if only as a means of attracting VC funding. And if patents are promoting investment in technology-oriented startups, then it sounds like they’re fulfilling their Constitutional purpose.

    Or perhaps the successful firms file for patents because their VC investors tell them to.

    I think it’s fair to presume that the VC investors know what they’re doing by requiring an investment in patent protection (i.e., that patent protection increases the chances of success in the market). The survey shows that many startup companies place significant value in patents and seek them for a variety of reasons, and presumably VC investors are motivated by similar factors. I suppose the VCs and the startups could be wrong about the value of patents to their businesses, but I find that hard to believe absent strong evidence supporting such a claim.

  42. And yet they invested millions in pets.com,

    Venture capitalists are in the business of taking big risks. A certain number of them will inevitably fail and fail spectacularly.

    You don’t make fun of an insurance company every time an insured house burns down, do you?

    More importantly, VCs are in the business of taking high-probability risks, and protecting themselves from huge losses in the event that those risks fail. If they’re all throwing more money at companies with patents, you should assume they know something you don’t.

  43. I’m going to go out on a limb here and suggest that the venture capitalists that disproportionately favor patent holding startups have, in fact, taken some business classes.

    And yet they invested millions in pets.com, suggesting that they are just as susceptible to the “everybody else is doing it” argument as anyone.

  44. 97% of venture-backed biotechnology companies hold patents or applications…67% of venture-backed software startups do

    I’m going to go out on a limb here and suggest that the venture capitalists that disproportionately favor patent holding startups have, in fact, taken some business classes.

    It may not directly “follow” but it is strongly suggested.

    Strongly suggested by what, exactly? I see nothing in the article that suggests that patent holding startups and non-patent-holding startups succeed and fail at the same rate. Indeed, if that were the case it would suggest that venture capitalists have no idea what they’re doing, since they disproportionately favor patent holding startups.

    Because you would have to be a rtard to think that a patent leads to success in a marketplace where plainly there are 100′s if not millions upon millions of much more important factors. Like, literally.

    Funny then that the study shows that many of the startups themselves seem to disagree with you, as do the venture capitalists. Obviously a patent is not a sufficient condition for success, but in many cases it is a very important or even necessary one.

  45. How do you know that the 25% of startups who do file for patent protection aren’t the startups that succeed while the 75% that don’t are disproportionately the startups that fail? This strikes me as plausible given the association between patent filing and venture capital funding.

    Maybe, but even then it doesn’t follow that success is based on any intrinsic value of the patents themselves. Perhaps they succeed because they get venture capital funding? Or perhaps the succesful firms file for patents because their VC investors tell them to.

  46. “This doesn’t follow. ”

    It may not directly “follow” but it is strongly suggested.

    “How do you know that the 25% of startups who do file for patent protection aren’t the startups that succeed while the 75% that don’t are disproportionately the startups that fail?”

    Because you would have to be a rtard to think that a patent leads to success in a marketplace where plainly there are 100′s if not millions upon millions of much more important factors. Like, literally.

    Or, perhaps, never having taken a business class.

    “This strikes me as plausible given the association between patent filing and venture capital funding.”

    Like I said, a rtard. Ever taken a business class Jamesy?

    But you’re absolutely right Jamesy, for those that don’t have a brain this survey was all in vain because it didn’t go the extra mile to cut your “reasoning”, aka making up outrageous nonsense, off completely. We should continue to be hoodwinked by your nonsense. I suppse I should be glad for you that you still have a tiny glimmer of hope left to cling to, though it be diminished to anyone with half a brain.

    Face it, software patent practicioners are one tiny step above snake oil salesman. A very tiny one. They sell you something that likely won’t work save perhaps by placebo, or sheer dum luck, to remedy a problem you probably never had in the first place and were likely talked into.

    I don’t have any more time to play with you boys I’ve got to do some actual work for some Useful Artists that would like to have a patent on their invention.

  47. 6, “wholly preempt” in Benson was a test stated in connection with mathematical algorithms. In substance, the Supremes decided the claims were directed to the mathematics because the machine was just calculating the math.

    But you extended, in your post, the Benson concept to abstract claims outside of mathematical algorithms context. This is why I asked you the question of “functional at the point of novelty.” Such claims do preempt all way doing what is claimed, whether described, or yet to be invented.

    If they are different, please give us an example of “wholly preempt” outside the MA context that is different from “functional at the point of novelty.”

  48. James, indeed. Exactly.

    Now, I’ve make the point repeatedly. The one thing the big companies do not like whatsoever are patents from startups for the reasons stated above. Thus, they try to rig the system in their own favor and against new companies in any number of ways. We have discussed these previously. But it is important to understand that many of these so-called reforms and positions being advanced by the big companies are not startup friendly at all.

  49. I’ll be darn, woulda thunk it? The whole software industry won’t go up in flames if nobody had patents on them.

    This doesn’t follow. How do you know that the 25% of startups who do file for patent protection aren’t the startups that succeed while the 75% that don’t are disproportionately the startups that fail? This strikes me as plausible given the association between patent filing and venture capital funding.

  50. I would add that I don’t see the problem with companies buying up patents in bankruptcy. If the patents have substantial value in bankruptcy then it encourages creditors to invest in risky startups because they’ll be able to recover some of their investment even in a company that went under before it developed significant tangible assets.

  51. IANAE, true.

    Also, a wise businessman will recognize the investment in patents in a startup is like investing in a gold mine. While your mine business may fail, if they find gold, your shares are worth a lot.

  52. “though most software companies have never filed for patents. ”

    I’ll be darn, woulda thunk it? The whole software industry won’t go up in flames if nobody had patents on them.

  53. After a startup fails, and most of them do, the most valuable assets remaining are the patents.

    And after a puppy mill fails, the most valuable assets remaining are adorable puppies.

    Why should the patent be blamed if its original owner goes bankrupt?

  54. They did miss the point Cowboy was trying to make. After a startup fails, and most of them do, the most valuable assets remaining are the patents.

  55. And if the startup goes out of business and that patent continues in force in the hands of someone who buys it out of bankruptcy or the like… it is the weapon of a Patent Troll!!! Argggh!

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