Software Firms Overwhelmingly Against Patents

from the not-worth-it dept

There's been plenty of talk about whether or not software patents should be legal, and one of the "debates" we often run into in the comments is over whether or not the "software industry" really believes in patents or not. Some patent system supporters claim that most of the industry does, in fact, support patents, but it's a noisy bunch who is against them. Unfortunately for those who believe that, some new research is suggesting quite a different picture. It seems that a rather large majority of software firms don't seek patents and don't believe they're helpful or provide any real incentives:
Three-quarters of the D&B firms had no patents and were not seeking them. Because the D&B firms are, we believe, typical of the population of software startup firms in the U.S., their responses may be representative of patenting rates among software startups generally. It is, in fact, possible that the overall percentage of software startup patenting is lower than this, insofar as patent holders may have been more likely than other software entrepreneurs to take time to fill out a Berkeley Patent Survey.
For the most part, these firms just didn't think getting a patent was worth it. For all the talk of how patents protect companies and act as an incentive for investment in big projects, most software execs seem to disagree:
One of the most striking findings of our study is that software firms ranked patents dead last among seven strategies for attaining competitive advantage identified by the survey
Instead, they believe that a first mover advantage is a lot more important followed by "complementary assets," which is basically offering scarce services to complement the software.

The execs were also asked how much incentive patents provided for developing software, and the answer was about as close to none as you could expect. On a scale from 0 to 5, software execs said that patents were a 0.96 as an incentive for inventing something new and a 0.93 in commercializing a product and bringing it to market (innovating). And, before you say that this was skewed by people without patents, the report notes:
the results did not change significantly even when focusing only on responses from software entrepreneurs whose firms hold at least one patent or application. Even patent-holding software entrepreneurs reported that patents provide just above a weak incentive for engaging in these innovation-related activities.
The other interesting finding? If a firm is venture-backed, it's more likely to get patents, but this doesn't appear to suggest that the patents are valuable. It seems to indicate that entrepreneurs still believe the old claim that venture capitalists want to see patents, so they feel the need to get patents just to show to investors.

On the whole, it certainly appears that the vast majority of the software industry isn't interested in patents, don't find them useful or important, and certainly don't see them as creating an incentive. Even those who get patents don't see much value in them, and appear to only get them because they feel pressured to get the patents for external reasons. All in all, this is a pretty damning bit of research for those who suggest patents help the software industry.


Reader Comments (rss)

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  •  
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    crade (profile), Jul 29th, 2010 @ 10:10am

    In Canada, at least, you can get Scientific Research and Development grants and tax credits for being an innovative software company, and having patents makes it easier to get a bigger chunk. This is basically the only reason we have ever considered looking at getting anything patented.

     

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    Your myopic congressman, Jul 29th, 2010 @ 10:27am

    Of course the software industry likes patents

    [sarcasm]
    Every software lobbyist I've met with has supported software patents. Why, I've met with industry leaders from IBM, Microsoft, Apple, etc.. They all tell me how crucial patents are to the industry. From the stories they tell, I know they are all big hearted men who seem to care a whole lot about independent inventors.

    Love, Your federal representative
    [/sarcasm]

     

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    Hulser (profile), Jul 29th, 2010 @ 10:30am

    Incentive

    The execs were also asked how much incentive patents provided for developing software, and the answer was about as close to none as you could expect.

    I don't find this suprising at all. If you had to think of the most popular incentives for creating software, I bet it would include: to make money, to help people, to gain recognition, for the pure satisfaction of solving a problem. Maybe it's just the way I'm looking at it, but a patent isn't a direct incentive to create anything, but more of an indirect factor that comes into play after you've already decided to create something. In other words, you may believe that you'll make more money if your idea is patented, but the underlying incentive is to make money, not "the patent system".

     

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      crade (profile), Jul 29th, 2010 @ 11:12am

      Re: Incentive

      The underlying reason you want to make money may also be to buy a house, blow it on cocaine, or whatever. Incentives just need to be a carrot, anything that motivates a course of action. The reason you want them isn't important. If you're boss tells you if you do a good job you will get a promotion, the promotion is acting as an incentive. You may want the promotion because you imagine it means more money, and you may want more money because you want to buy a bigger house, and you may want a bigger house because your mother in law is moving in...

       

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    cc (profile), Jul 29th, 2010 @ 10:51am

    I hate the idea of software patents, but I think you bring up a very interesting point that requires more debate. You say: "...It seems to indicate that entrepreneurs still believe the old claim that venture capitalists want to see patents, so they feel the need to get patents just to show to investors."

    I wonder how important patents (and copyrights!) really are to investors, especially with larger ventures that involve much more risk than small start-ups.

    For example, if someone wants to start making a new type of smartphone in a market full of competition from huge incumbents like Apple and Google, how can he convince investors that he has an "edge" that won't be lost before the investment is at least recovered? Even if the patent is totally worthless in itself, perhaps it provides the investors a false sense of security?

    Similarly, how can someone convince investors to fund the making of a new blockbuster film, if there is no copyright protection that guarantees people will pay to watch it? Again, even if copyright is just an illusion and the film is pirated far and wide, perhaps it will encourage investors to part with their money?

    Of course, if all intellectual monopolies are abolished, investors will still have to cope, right? Or, will they suddenly stop investing..? Even if some of them do stop investing, won't others rise up to take their place and exploit the opportunities they are missing? Important questions, imho.

     

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      Suzanne Lainson (profile), Jul 29th, 2010 @ 11:18am

      Re:

      Of course, if all intellectual monopolies are abolished, investors will still have to cope, right?

      I think people not bothering to apply for patents and people not bothering to enforce copyrights is going to happen long before IP protection is abolished via legislation.

       

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        Anonymous Coward, Jul 29th, 2010 @ 11:41am

        Re: Re:

        Hmmm...I don't think so, a more realistic scenario is a lot of Americans business going broke because they can't enforce that IP in other countries and can't compete with them because they don't have the know how to do so via competition.

         

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          Jay (profile), Aug 1st, 2010 @ 12:21am

          Re: Re: Re:

          Well, that's what the ACTA is supposed to do. But realistically look at it...

          How can you use law to magically make manpower appear?

          It's one of those things that politicians love to use. "It's a code of law that allows people to work closer together"

          The government continues to want to use the law to force America to be better than everyone else. Rather than tell the lobbyists "screw it" and leave well enough alone, supposedly with IP, it's closing the gap and keeping everyone on the same page.

          I believe we all know what happens when everyone is supposedly on the same page...

          That page gets buried under 500 pages of unneeded text.

           

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      Anonymous Coward, Jul 29th, 2010 @ 11:20am

      Re:

      Even if the patent is totally worthless in itself, perhaps it provides the investors a false sense of security?


      The Creepshow "Zombies Ate Her Brain"
      http://www.youtube.com/watch?v=rxCw6poR-3U

      Change "her brain" for "their brains" in the title.

       

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        Anonymous Coward, Jul 31st, 2010 @ 5:57pm

        Re: Re:

        Patents can be good for defensive purposes, to counter sue those who sue you for infringement. Other than that ... that's about it, at least as far as software goes.

         

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    Anonymous Coward, Jul 29th, 2010 @ 11:08am

    Does it really matter?

    I worked for a company that created software for different applications. Talking with developers, most didn't even care if the code they put in was patented, copyrighted, or close-sourced. As long as the company source code was kept under careful lock-and-key, nobody outside the company would really figure it out or pry. As long as the final product didn't look anything like someone else's, it could still do exactly the same thing. If the company doesn't get caught, then who cares? If the company *is* caught, then they would worry about it.

     

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    crade (profile), Jul 29th, 2010 @ 11:12am

    The underlying reason you want to make money may also be to buy a house, blow it on cocaine, or whatever. Incentives just need to be a carrot, anything that motivates a course of action. The reason you want them isn't important. If you're boss tells you if you do a good job you will get a promotion, the promotion is acting as an incentive. You may want the promotion because you imagine it means more money, and you may want more money because you want to buy a bigger house, and you may want a bigger house because your mother in law is moving in...

     

    reply to this | link to this | view in chronology ]

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    Anonymous Coward, Jul 29th, 2010 @ 11:22am

    Most of us don't trust the government to protect us. Why should we pay them for the privilege to sue? We can be sued and sue without any interference from the government. The patent office as we see it is a totally irresponsible group that don't even verify if a patent infringes. If they did their job correctly then we wouldn't have to sue each other.
    Also software algorithms are constantly evolving and the function(s) I protected last year are now new entities and capable of so much more. We copyright our software. We were told by the US Copyright Office that this is the correct way to protect your published work. Did someone miss that word PUBLISHED? Like books, music, Art.
    The copyright office even has a separate category for software. There's no mystery here. Software has been copyrighted since it began, not patented.

     

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      Jay (profile), Jul 29th, 2010 @ 12:01pm

      Problems with patents, copyrights, trademarks

      Bureaucracies in general are inefficient. The thing is, you have an entire group of people who have no direct connection to the things they are "in control" of.

      The copyright office being in charge of DMCA is an example. They get a paycheck regardless of passing a copyright exemption or not.

      The same goes with the Patent Office. The problem is, when you have just such a regulation office in charge, it makes everything difficult for innovation or creation when you have to go to them for everything.

       

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        Lawrence D'Oliveiro, Jul 29th, 2010 @ 8:08pm

        Re: Bureaucracies

        Jay claimed:

        Bureaucracies in general are inefficient.

        And yet China was successfully run by one for over 2000 years.

         

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          Anonymous Coward, Jul 31st, 2010 @ 6:03pm

          Re: Re: Bureaucracies

          Give me a break. Some of the atrocities and mass murders some Chinese leaders have conducted against their citizens are despicable.

           

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          Jay (profile), Jul 31st, 2010 @ 9:43pm

          Re: Re: Bureaucracies

          "And yet China was successfully run by one for over 2000 years"

          Are you aware of the full history of China?

          The Three Kingdoms was very important to them for a reason.

          If I wanted to, I could go into a long diatribe of Chinese history. Rather than do that, I'll give you an example to look up.

          Fireworks. Made by Chinese, expanded upon by western Europe. Too much law is almost as bad as too little. Quite frankly, the US is hitting that point where too much law is getting in the way of progress.

           

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    Anonymous Coward, Jul 29th, 2010 @ 11:27am

    Copyright zombies ate their brains that's how they turned out this way.

     

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    darryl, Jul 29th, 2010 @ 6:37pm

    Software Firms Overwhelmingly Against Patents

    Its amusing how you are able to derive statements like the one above, based on the report provided.

    Lets have a critical and hopefully less biased look.

    "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."

    That would mean one third of the companies surveyed regarded patents (as a single form of IP rights protection) as valuable to them.

    ~33% of those surveys use patents or would like to have patents and use them to create value.

    1/3 patents

    _______________________

    You see the trick you are doing here, and anyone reading this oreilly site, can work that out.

    When you pose a specific question regarding patents on innovation, what has to be done is look at all the forms of IPR or intellectual property rights, or methods of protecting their intellectual.

    your 0.96 figure, is as good as 20% (1 in 5) that equates that 20% of the group surveyed DID use and value patents, and the other 80% used patents less, and some other form of IP rights protection.

    That includes

    COPYRIGHT
    Software well over 50%
    Medical about 50%
    Biotech about about 33%

    So over 50% of software companies rates COPYRIGHT IP protection as good enough.

    Patents:
    (20% or software, hight for other tech inductries
    Yes, software is lower than medical or biotech but it is still very high considering copyright is the strongest force in software protection.

    Trademark - who cares, except the goodwill and name shows competence or not.

    Secrecy is higher than copyright, so its safer to lock up your design, or protect by copyright, Both forms of IP protection.

    First-mover advantage:
    Rates very highly in all fields, that is really a no brainer..


    So what is missing, why are they not asking for copyrigt, or patent IPR reform?

    Getting first to market is seen as the primary advantage, NOT *NOT* being able to access the innovations, copyright or patents from others without permission and providing a copy as a competing product.

    So what you have to do is ADD,

    Add up the forms of property rights employed to protect innovation or invention.
    They copyright (more than 1/3)
    They patent (again more than 20%) (and very high for other techs, who cannot achieve as good copyright protection.

    Secrecy, they lock up their designs, no allow others to see how your thing works.

    so added together the forms of IP protection are over 100% (well over)
    addings
    Secrecy + Patents + copyright.

    All that is left is your good name, and your speed to market, if speed to market is the most critical factor, then innovation will occur, and it will not be by copying someone elses design, that is not innovation, and copying someone elses idea, will not get you to market before the original innovator.

    So by innovating, and inventing they get to market first, and by gaining one form or another of IP rights protection they are able to market their product and gain competitive advantage.

    There is no competitive advantage column that says companies want to be able to view the source code for free, so you can be a market follower not a market leader.

    Anyway, you cannot just pull one aspect of IPR and call "I WIN".

    you have to look at the desired results and the methods for achieving those results.

    They desired result is wanting to protect their innovation, and to innovate/invent.

    They also want to gain some form of protection or multiple forms of protection for their intellectual property, which is their innovative design or invention.

    They may seek copyright, or patents, or secrecy, or trademaks but they WILL USE one of them, one of the available methods of gaining IPR protection, and to gain competitive advantage.

    I do not see a ground swell of companies called for lifting patents or IP laws, or making it easier for steal others IP.

    Ofcourse if you rate first-mover the highest, the reverse engineering would be one of the lowest.

    It also has to do with the rate of technical progress and type of progress in those fields.

    Biotech, with the mapping of the genome and recent advances in DNA analysis, would mean a spurt in innovation and therefore patents in that field, (a very new field of technology).

    Software is OLD, far older than genetic science, therefore there is a vast amount of information, algorithms and methods that have entered the public domain, giving people a huge pool of free to use technologies, you cannot get patent protection on those public domain algorithms and techniques.

    But you CAN get copyright right protection on your application, or you can keep you design secret, that is popular as well.

    So massive support for innovation, invention (first-mover), and IPR protection, to protect their invention or innovation.

    You cannot accurately differnt fields of technology in this way, they also make assumptions that software companies should be typical, so they did not focus only on software but extrapolated the data.

    Software is much older technology than biotech, and biotech devices, that have in the past 15 years have made massive advances, therefore spike the patents lodged and employed.

    Software is older, and a great deal of standard methods are in the public domain, that very same public domain that was created with the patent, copyright IRP laws.

    So its harder to patent software because much is allready done, its easy to patents genetic advancements because we can gather vast amounts of data with new technology.

    They ALL value some form of IPR, and ALOL value first to market.

    NO ONE values the ability to clone, copy or steal others designs.

    First is IPR proections, second is time to market, third is complementry assets (product value enhancements and ongoing innovation)

    Lowest is reverse engineering, and I have to wonder specifically what they mean to do that ?
    RE is going to be low as first to market is high.

    What do you think "complementary assets" are, they would be engineers skilled in specific fields, designs, tests and test results, management and infrastructure, Ill Interlectual property assets.

    Tell me a skilled engineer is an intangable asset, because its only knowledge, let him punch you in the nose then say it.

    Why would you not add up all the forms of IP rights protections these industries use, and relate it to the relative age of each field, and the size of the expired patents involved. (the size of the public domain). Which for software is huge.

    But small for biotech, or if bit there is alot more to easily find, with modern equipment.

    Software and microprocessors have changed very little in the past 20 years, same design, just more and faster.

    Nothing like the rate of change of innovation is biotech.

    What this clearly shows is that all industries and companies surveyed use one or usually MORE THAN ONE form of protection for the innovation or invention, collectively higher than anything else.



    Trademenk (Software well over 33% from the graf)

    SECRECY - (shure that is better than it going into the

    public domain for everyone to use)

     

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    identicon
    darryl, Jul 30th, 2010 @ 9:16am

    Q & A

    Q.

    So how does Google makes so much money ?

    A. Thats easy, they get lots and lots of companies to pay Google to display advertisements.

    Ahh ok.

    Q, What companies ?

    A, EVERYONE, or almost, Google is a big company with millions of companies paying them.

    Q. Ok, I understand that but where does that money come from?

    A. All the millions and millions companies do.

    WOW, thats amazing !!!!

    Q. Where do those companies get that money from ?

    A. They charge a higher price for their product, and transfer that money through too Google.

    Q.
    Really, so does that mean that every time I purchase a product that has been advertised on Google I am paying Google?

    A. Yep.

    Q. Even if I dont use Google ?

    A. Yep.

    Q.
    OK, fair enough, so how do I get onto this Google thing ?

    A. Well, you purchase a computer, and purchase an internet connection.

    Q. so that costs money ?

    A. Yep.

    Q. So even if I never use the internet I still have to pay Google ?

    A. Yep.

    Q. So to get on the internet, and visit google, I have to purchase products that give money to Google, So I can go to Google and pay more for the products I need to get on the net ?

    A. Yes, If you purchase a Dell computer, and they advertise on Google, then some of the cost of that computer will have been paid to Google to host and add for their computer that you cannot access without the computer they adverstise, an add you cannot see because you dont have that computer.

    Q. So they screw me from both ends then ??

    A. Yep.

    Q. What if I dont want to pay ? And dont use the internet?

    A. Too bad, everyone pays.

    Q. What if I dont buy the products that are advertised?

    A. how will you know what is or not, if you are not on the net !

    Q. This sucks.

    A. Yep.

    Q. How "ELSE" do I get screwed by this.

    A. Well your taxes also go towards the internet infrastructure, and it was a government development in the first place.
    So if you pay taxes, and you do with every purchase, you pay for the internet, and you pay for the infrastructure that google uses, to tax you again on every product you purchase, (or dont purchase).

    The entire planets cost of living is higher because of this hidden advertising tax.

    You know, "SOME" people even think they are getting it for free.

    Q. This sucks,,
    There must be a better way..

    A. not according to these guys, who think paying like this is effective, and better than not taxing the planet for advertising.

    Q. Do you think its a good idea to come corporations responsible for news ? is that not like leaving the fox incharge of the hen house (expecially FOX).. ??

    A. I think we can trust big organisations to be honest dont you ??
    The fox is really a wolf in sheeps clothing !!..

     

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      Jay (profile), Aug 1st, 2010 @ 12:14am

      Re: Q & A

      Diatribe is long and spurious.

      Random thought that should have stayed in darryl's head.

      Diagnosis: Darryl has no opinion and only wants to troll.

       

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    soniya, Jul 30th, 2010 @ 12:38pm

    Of course the software industry likes patents

    This is a wonderful opinion. The things mentioned are unanimous and needs to be appreciated by everyone.They all tell me how crucial patents are to the industry.

     

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    Gene Cavanaugh, Jul 30th, 2010 @ 8:53pm

    Software patents

    Good article. I believe the same is true of business method patents; they are useful only for stealing from others.

     

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    Anonymous Coward, Jul 30th, 2010 @ 9:22pm

    There is in my view a significant difference between saying "I see more effective ways of securing a competitive advantage besides patents" and the title to this article.

     

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    identicon
    software companies, Aug 10th, 2010 @ 3:41am

    softech

    This is not a bad concept but not that much true

     

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    petegrif (profile), Oct 19th, 2010 @ 3:53pm

    software patents

    The article says:

    "Three-quarters of the D&B firms had no patents and were not seeking them. Because the D&B firms are, we believe, typical of the population of software startup firms in the U.S., their responses may be representative of patenting rates among software startups generally. It is, in fact, possible that the overall percentage of software startup patenting is lower than this, insofar as patent holders may have been more likely than other software entrepreneurs to take time to fill out a Berkeley Patent Survey."

    What the article does not point out is that a perfectly plausible reason why 3/4 of these firms had no patents and were not seeking them was because they haven't actually invented anything. The standard for a patent is novelty and many many many firms don't actually have anything novel. they are a more or less imaginative rehash of the previous art.

    The patent system exists to provide incentives to innovate. The fact that many people don't innovate doesn't mean that patents are no incentive for those who do.

    I am amused to read so many articles which have so little respect for intellectual property. Apparently IP has, in the eyes of many, no value at all. And software IP less than no value. I find this to be flat out silly. The idea that it is impossible to invent something in software is absurd. It may be hard. Meaningful important such inventions may not be common. But it is perfectly possible.

     

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      identicon
      6, Nov 9th, 2011 @ 12:02pm

      Re: software patents

      "What the article does not point out is that a perfectly plausible reason why 3/4 of these firms had no patents and were not seeking them was because they haven't actually invented anything. The standard for a patent is novelty and many many many firms don't actually have anything novel. they are a more or less imaginative rehash of the previous art. "

      I lulzed.

      I'm sure all those companies are simply copying other products not doing anything new/nonobvious at all.

       

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    •  
      identicon
      6, Nov 9th, 2011 @ 12:04pm

      Re: software patents

      "The idea that it is impossible to invent something in software is absurd. It may be hard. Meaningful important such inventions may not be common. But it is perfectly possible."


      Well it is impossible to "invent" something "in software" because things "in software" are not inventions. That is simply a fundamental property of such items in this universe. It isn't all that hard to write some new and nonobvious software either.

       

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    identicon
    james moylan, May 28th, 2011 @ 12:46pm

    about patents

    I have a web site where I give advise on penny stocks and stocks under five dollars. I have many years of experience with these type of stocks. If their is anyone that is interested in these type of stocks you can check out my web site by just clicking my name. I would like to comment about patents and copyrights so called intellectual property. The problem with all of this stuff in the internet age is this. If I have a blog or just comment on a blog for instance anyone can claim that I violated their trade mark or their intellectual property simply because the law of probability is such with millions and millions of people on the internet each and every hour of the day theirs bound to be someone that invents the same cliche or something else at the same time' you can not possibly regulate this thing and why would anyone want to except for lawyers.

     

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