Startups and Patents: New Study Sheds Light on Practices and Reasons for Filing

The recently published Berkeley Patent Survey is one of the most comprehensive studies to date on the use of patents by startups and entrepreneurs. PatentlyO discusses the study and offers some helpful insights. The study shows that startups are using patents more than was previously recognized, for past analysis based was limited by incomplete USPTO data on patent assignments. Search results for patents owned by a particular startup may miss the patents owned by founders and others that are being used by the startup but may not yet be listed in the USPTO database as being assigned to the company. By interviewing entrepreneurs, the authors were able to determine that:

[A]bout 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%.

–From Robert Merges and Pamela Samuelson, UC Berkeley School of Law and Ted Sichelman, University of San Diego School of Law, in “Patenting by Entrepreneurs: The Berkeley Patent Survey (Part I of III),”, July 19, 2010.

In our experience, many of the best startups take IP seriously and seek to file patents when they have something potentially patentable. In our experience, Venture Capitalists look for patents as a way to increase the chances of meaningful returns. Patents are an important part of the recipe for success and long-term profits for a startup. Don’t neglect them!

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