Home High Costs Keeping Software Startups from Filing Patents

High Costs Keeping Software Startups from Filing Patents

It seems that every week we hear about another patent lawsuit between tech companies claiming the exclusive rights to various technologies and methods. With large corporations like Apple, Google and Microsoft frequently defending patents in court, smaller companies may get the idea that patents are the best way to protect intellectual property. A recent survey from the University of California, Berkeley found that, in fact, the opposite trend is appearing among these types of companies. The largest reason? Cost.

“These entrepreneurs rate patents as the least important mechanism among seven options for attaining competitive advantage in the marketplace.”
– Pamela Samuelson

According to

Berkeley law professor Pamela Samuelson

, over 1,300 entrepreneurs in the tech startup space – including software, hardware, biotech and medical tech – participated in the university’s recent survey about patents. Among the survey’s most fascinating results is the finding that a majority of software startups are not filing for patents.

“Two-thirds of the approximately 700 software entrepreneurs 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,” writes Samuelson. “These entrepreneurs rate patents as the least important mechanism among seven options for attaining competitive advantage in the marketplace. Even software startups that hold patents regard them as providing only a slight incentive to invest in innovation.”

According to the results, the two largest reasons these companies had forgone filing both relate to the costs of obtaining and enforcing software patents. 28% rated the cost of acquiring a patent as the most influential reason for not filing – more than twice the 12% that said enforcement was the largest detractor. Respondents reported an average costs of $30,000 for obtaining a software patent – a cost many small companies are choosing to avoid.

Software startups actually rated filing for a patent lowest among “methods of capturing competitive advantage” with inventions and innovations. Secrecy, copyrights, trademarks, reverse engineering and complementary assets all rated higher than patents by the same margin. The clear preference in this category, however, was the “first-mover advantage,” which was rated far above any other choice.

Are patents old hat to software startups? If this survey is any indication of the general population of companies, it appears younger companies are finding better ways to hold onto their competitive advantage. The cost of securing and enforcing patents seems to be one that most software startups – though not all – are choosing not to incur.

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