Uncovering GPTS with Patent Data

This paper asks the question: Can we see evidence of General Purpose Technologies in patent data? Using data on three million US patents granted between 1967 and 1999, and their citations received between 1975 and 2002, we construct a number of measures of GPTs, including generality, number of citations, and patent class growth, for patents themselves and for the patents that cite the patents. A selection of the top twenty patents in the tails of the distribution of several of these measures yields a set of mostly ICT technologies, of which the most important are those underlying transactions on the internet and object-oriented software. We conclude with a brief discussion of the problems we encountered in developing our measures and suggestions for future work in this area.

Business and financial method patents, innovation, and policy

Two court decisions in the 1990s are widely viewed as having opened the door to a flood of business method and financial patents at the US Patent and Trademark Office, and to have also impacted other patent offices around the world. A number of scholars, both legal and economic, have critiqued both the quality of these patents and the decisions themselves. This paper reviews the history of business method and financial patents briefly and then explores what economists know about the relationship between the patent system and innovation, in order to draw some tentative conclusions about their likely impact. It concludes by finding some consensus in the literature about the problems associated with this particular expansion of patentable subject matter, highlighting the remaining areas of disagreement, and reviewing the various policy recommendations.intellectual property, State Street, software, internet, business methods, patents, innovation

Not All Bad: An Historical Perspective on Software Patents

This Paper places the current debates about software patents in the historical context of patenting in the information technology industries. The first computer-program products were sold in the mid 1960s when software patents were not generally allowed; as a result, trade secrecy became endemic to the software industry. Software products were also protected by copyright, but in practice this offered little protection against most forms of appropriation by reverse engineering or cloning. By the early 1980s a series of landmark cases led to the acceptance of software patents. It is argued that this development was consistent with the patenting of algorithmic inventions that long predated the invention of the computer. In the 1990s, business method patents were accepted. Again, it is argued that this development was consistent with the virtualization of inventions that long predated the Internet. It is shown that patents offer similar benefits to the software industry as for other technological industries, as well as some old and new disadvantages. The Paper draws three main conclusions. First, from an historical viewpoint, software patents are not radically different from those of other technologies; the patent system has adapted to the particular demands of new technologies over time, and the software patent system is already making such adaptations. Second, patents are superior to the alternative IP regimens of trade secrecy and copyright, primarily because of the public benefits of disclosure. Third, patents offer the most economically efficient way of co-ordinating multiple R&D investments in major software technologies

Not All Bad: An Historical Perspective on Software Patents

This Paper places the current debates about software patents in the historical context of patenting in the information technology industries. The first computer-program products were sold in the mid 1960s when software patents were not generally allowed; as a result, trade secrecy became endemic to the software industry. Software products were also protected by copyright, but in practice this offered little protection against most forms of appropriation by reverse engineering or cloning. By the early 1980s a series of landmark cases led to the acceptance of software patents. It is argued that this development was consistent with the patenting of algorithmic inventions that long predated the invention of the computer. In the 1990s, business method patents were accepted. Again, it is argued that this development was consistent with the virtualization of inventions that long predated the Internet. It is shown that patents offer similar benefits to the software industry as for other technological industries, as well as some old and new disadvantages. The Paper draws three main conclusions. First, from an historical viewpoint, software patents are not radically different from those of other technologies; the patent system has adapted to the particular demands of new technologies over time, and the software patent system is already making such adaptations. Second, patents are superior to the alternative IP regimens of trade secrecy and copyright, primarily because of the public benefits of disclosure. Third, patents offer the most economically efficient way of co-ordinating multiple R&D investments in major software technologies

Patents and the Survival of Internet-related IPOs

We examine the effect of patenting on the survival prospects of 356 internet-related firms that IPO'd at the height of the stock market bubble of the late 1990s. By March 2005, nearly 2/3 of these firms had delisted from the NASDAQ exchange. Although changes in the legal environment in the US in the 1990s made it much easier to obtain patents on software and, ultimately, on business methods, less than half of the firms in this sample obtained, or attempted to obtain, patents. For those that did, we hypothesize that patents conferred competitive advantages that translate into higher probability of survival, though they may also simply be a signal of firm quality. Controlling for age, venture-capital backing, financial characteristics, and stock market conditions, patenting is positively associated with survival. Quite different processes appear to govern exit via acquisition compared to exit via delisting from the exchange due to business failure. Firms that applied for more patents were less likely to be acquired, though obtaining unusually highly cited patents may make them more attractive acquisition target. These findings do not hold for business method patents, which do not appear to confer a survival advantage.

Patenting by Entrepreneurs: An Empirical Study

[T]he Ewing Marion Kauffman Foundation--an organization that studies and promotes entrepreneurship in the United States--funded an effort at the University of California, Berkeley School of Law, to undertake the first comprehensive survey of the relationship between patenting and entrepreneurship in the United States. The authors, along with other investigators, administered the survey in 2008 to approximately 15,000 startup and early-stage companies in the biotechnology, medical device, information technology (IT) hardware, and software and Internet sectors. A portion of the survey examined why entrepreneurs, startups, and early-stage companies do (and do not) seek patents. This Article reports and analyzes results from that survey, showing that several widespread beliefs about startup firm patenting practices are very likely wrong. In brief, like the surveys of large firms, our respondents that hold patents report that the main motivation for patenting is to prevent others from copying their products and services. This result holds--and is statistically valid--across a variety of company characteristics, including firm age, revenues, industry, and patent portfolio size. Because we find that many young technology companies are holding patents, our results offer evidence that is somewhat at odds with frequently cited anecdotal reports that startups, especially in the software and Internet industries, generally do not use patents to protect against the erosion of their profits. We offer one important caveat, however. A substantial fraction of young firms are apparently opting out of the patent system altogether, and this observation is particularly true of companies in the software and Internet sectors. That said, our findings suggest that patent holding, and the strategic use of patents, is more widespread--even among young software and Internet companies--than commentators have previously reported. Additionally, we find--consistent with anecdotal reports--that many startups rely heavily on patents as signals to the market to improve their chances of raising financing, being acquired, and going public. Our results greatly contrast with previous large-firm studies, however, which showed relatively little reliance on patents for these kinds of signaling. Indeed, our results show that as the patent-holding firms in our sample become older and larger, they tend to rely less on patents as signals. This finding is also important because it lends some empirical support--which had been lacking--for the alternative signaling theories of patents, especially for younger startups. Like large firms, our respondents that hold patents report engaging in strategic patenting to help defend against patent infringement suits and to increase negotiating power, possibly for cross-licensing with other firms. Recognizing that startups--and not just those in the biotechnology field--find the strategic use of patents important is a novel finding. Nonetheless, we show that these young technology companies are especially sensitive to the costs of acquiring and enforcing patents, which--at nearly $40,000 per patent--are roughly double the reported average for all patentees. Thus, even though startup firms are well aware of the strategic uses of patents, resource constraints may mean that fewer of them can engage in these strategies as compared with large incumbents. To the extent that strategic patenting is positively related to firm success and survival, we highlight this finding as a policy concern deserving of further study, especially in industries--like electronics--with large numbers of incumbents engaging in similar strategic patenting

Patenting by Entrepreneurs: An Empirical Study

[T]he Ewing Marion Kauffman Foundation--an organization that studies and promotes entrepreneurship in the United States--funded an effort at the University of California, Berkeley School of Law, to undertake the first comprehensive survey of the relationship between patenting and entrepreneurship in the United States. The authors, along with other investigators, administered the survey in 2008 to approximately 15,000 startup and early-stage companies in the biotechnology, medical device, information technology (IT) hardware, and software and Internet sectors. A portion of the survey examined why entrepreneurs, startups, and early-stage companies do (and do not) seek patents. This Article reports and analyzes results from that survey, showing that several widespread beliefs about startup firm patenting practices are very likely wrong. In brief, like the surveys of large firms, our respondents that hold patents report that the main motivation for patenting is to prevent others from copying their products and services. This result holds--and is statistically valid--across a variety of company characteristics, including firm age, revenues, industry, and patent portfolio size. Because we find that many young technology companies are holding patents, our results offer evidence that is somewhat at odds with frequently cited anecdotal reports that startups, especially in the software and Internet industries, generally do not use patents to protect against the erosion of their profits. We offer one important caveat, however. A substantial fraction of young firms are apparently opting out of the patent system altogether, and this observation is particularly true of companies in the software and Internet sectors. That said, our findings suggest that patent holding, and the strategic use of patents, is more widespread--even among young software and Internet companies--than commentators have previously reported. Additionally, we find--consistent with anecdotal reports--that many startups rely heavily on patents as signals to the market to improve their chances of raising financing, being acquired, and going public. Our results greatly contrast with previous large-firm studies, however, which showed relatively little reliance on patents for these kinds of signaling. Indeed, our results show that as the patent-holding firms in our sample become older and larger, they tend to rely less on patents as signals. This finding is also important because it lends some empirical support--which had been lacking--for the alternative signaling theories of patents, especially for younger startups. Like large firms, our respondents that hold patents report engaging in strategic patenting to help defend against patent infringement suits and to increase negotiating power, possibly for cross-licensing with other firms. Recognizing that startups--and not just those in the biotechnology field--find the strategic use of patents important is a novel finding. Nonetheless, we show that these young technology companies are especially sensitive to the costs of acquiring and enforcing patents, which--at nearly $40,000 per patent--are roughly double the reported average for all patentees. Thus, even though startup firms are well aware of the strategic uses of patents, resource constraints may mean that fewer of them can engage in these strategies as compared with large incumbents. To the extent that strategic patenting is positively related to firm success and survival, we highlight this finding as a policy concern deserving of further study, especially in industries--like electronics--with large numbers of incumbents engaging in similar strategic patenting

All Your IP Are Belong to Us: An Analysis of Intellectual Property Rights as Applied to Malware

The cybersecurity and cybercrime industries are tied together in an arms race where both seek out new security vulnerabilities to exploit on offense or to remediate on defense. Malware (malicious software) offers one of the primary weapons pioneering new computer technologies on both sides. However, the average Internet user sees malware at best as an annoyance that is merely the price of surfing the web. It is clear that cybersecurity is a business and a successful one. The cybersecurity industry maintains copyrights and patents on our cyber defense technologies— antivirus software, firewalls, intrusion prevention systems, and more. There are no federal copyrights and patents on malware, even regarding the cybersecurity industry’s creations. From an intellectual property perspective, there is no difference between ordinary software and malicious software. Malware, as offensive software, can and should be protected, just as we protect our defensive software

Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting

In several key industries, including semiconductors, biotechnology, computer software, and the Internet, our patent system is creating a patent thicket: an overlapping set of patent rights requiring that those seeking to commercialize new technology obtain licenses from multiple patentees. The patent thicket is especially thorny when combined with the risk of hold-up, namely the danger that new products will inadvertently infringe on patents issued after these products were designed. The need to navigate the patent thicket and hold-up is especially pronounced in industries such as telecommunications and computing in which formal standard-setting is a core part of bringing new technologies to market. Cross-licenses and patent pools are two natural and effective methods used by market participants to cut through the patent thicket, but each involves some transaction costs. Antitrust law and enforcement, with its historical hostility to cooperation among horizontal rivals, can easily add to these transaction costs. Yet a few relatively simple principles, such as the desirability package licensing for complementary patents but not for substitute patents, can go a long way towards insuring that antitrust will help solve the problems caused by the patent thicket and by hold-up rather than exacerbating them.

Internet Business Model Patents: Obvious by Analogy

This Article contends that part of the problem of Internet business model patents is the narrow view of analogous art employed by judges and USPTO examiners which largely excludes relevant real-world prior art in the determination of non-obviousness under § 103 of the Patent Act. Consequently, part of the solution lies in helping courts and the USPTO properly to define analogous art for a particular invention. To do so, judges and examiners must recognize the interchangeability of computer programming (i.e. e-world activities) to perform a function, with human or mechanical performance of the same function (i.e. real world activities). Such recognition is consistent with binding United States Supreme Court precedent and requires a reversal of the trend towards narrow analogous art definitions in the obviousness inquiry. This Article also identifies an increased potential for abuse of the doctrine of equivalents in the Internet business model context due to a combination of factors that impact the usefulness of traditional controls on the application of the doctrine of equivalents. Such factors include a dearth of properly trained business method USPTO examiners, and a lack of business method and software prior art readily available to examiners to consult in assessing the patentability of such methods. To the extent such factors result in Internet business model patents with the scope, by default, of pioneer patents, limitations on application of the doctrine of equivalents are necessary. To lay the groundwork for this dual analysis, Part I of this Article provides a look at Internet business model patents in light of key patentability requirements mandated by the Patent Act. Part II traces the evolution of the analogous art component of the non-obviousness determination and illustrates how the malleability of the doctrine, as exemplified in several Court of Appeals for the Federal Circuit decisions, has particular relevance to prior art definitions for Internet business model patents. Part III of this Article then examines the doctrine of equivalents and explores how the likelihood of improper application of this doctrine in the Internet business model context is increased. Recognizing that feasible solutions are not limited to doctrinal remedies, this Article also mentions other, more drastic ways of addressing the Internet business model conundrum. It concludes, however, that rational exercise of the elasticity present in both the doctrine of analogous art and the doctrine of equivalents provides a better approach to defining proper Internet business model claim scope