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An Empirical Look at Software Patents 9

Posted by timothy
from the e-true-patent-office-story dept.
JPMH writes "At last, some quantitative analysis about software patents. This paper by Bessen and Hunt looks at the econometrics of who is being granted sw patents. It finds that far from encouraging innovation, software patenting is associated with firms which have *lower* then expected R&D spending as a proportion of sales (and even lower as a proportion of costs). Also, the companies which are most orientated towards software patenting (ie which have the largest proportion of their new patents in software) are the same companies who for their size are the most aggressive in the area of non-software patenting generally. This suggests that software patents are an unusually cheap and easy option for firms trying to build strategic "patent thickets" around their positions. Software patents have become a substitute, not an incentive, for innovation.
(Note: the key EU parliament committee vote in the debate on new legislation on software patenting in Europe is now expected on 10 June, not May 21. Still time to write those letters)."
Read on for some interesting findings from the study.

"The paper itself is quite technical, with a detailed presentation of the mathematical economics involved, so here are some of Bessen and Hunt's more interesting results (see especially the tables at the end of the paper for more details):

  • 69% of software patents in 1995-99 were assigned to manufacturing companies, despite these only employing 10% of programmers and analysts.
  • Pure software publishers obtain unusually few patents per $10m R&D, only about a quarter of the rate for the whole economy. (But software services firms, and especially IBM, patent significantly more).
  • In the 1980s, when software patents were hard to obtain, firms whose patents were mostly in software had unusally low numbers of patents in total (allowing for their size, R&D spending etc).
  • Now this has reversed, and the firms with the largest proportion of their patents in software are those which are also granted the largest number of non-software patents (again, allowing for their size, R&D spending etc).
  • A higher proportion of software patents is associated with a reduction in R&D as a proportion of sales, and an even larger reduction in R&D as a proportion of costs.
  • Without the substitution of patent activity for research, "thumbnail calculations imply that at the end of the 90s R&D would have been about 10-15% higher" for the economy as a whole."
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An Empirical Look at Software Patents

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  • free as on freedom (Score:2, Insightful)

    by raffe (28595)
    We can only hope for a no! Please sign and help out.
    We need our freedom.
  • by rumpledstiltskin (528544) on Sunday May 25, 2003 @09:40AM (#6034656) Homepage Journal
    Having not read the article and going by the blurb, there's something wrong with this. I'm sure that most "pure software" companies create their products on a work for hire basis. they *can't* patent what they develop, because they are probably developing it for these manufacturing companies. Also, what about the incentive for those companies that *do* innovate? is there no benefit of the doubt anymore? I think that for Free software a la the GPL to survive, there has to be a counter to the GPL, in that the GPL is designed to flip traditional license agreements. Without it, companies will simply close their source in incredible obfuscation and nobody would be able to get anything done.
    this was written in a hurry, so if it makes no sense, I apologize.
    • by pstemari (579210) <paul_j@ste-marie.org> on Sunday May 25, 2003 @10:43AM (#6034848) Homepage Journal

      No, the blurb distinguishes services companies, which do work for hire, from software publishers.

      Pure software publishers obtain unusually few patents per $10m R&D, only about a quarter of the rate for the whole economy. (But
      software services firms, and especially IBM, patent significantly more).

      Remember, IBM Global Services is the largest work-for-hire outfit in the world.

      That result is more than slightly counter-intuitive, but there you have it.

    • The article is about the fact that there were changes in the patent rules. For instance there used to be a rule that you couldn't patent mathematical algorithms. That seems like a pretty good rule to me. But they eliminated that rule. Now IBM has a patent on a method of turning a line into a rectangle. [forbes.com] He also explains how software patents are held to a much lower standard than other patents.

      According to his economic/mathematic analysis this change in patent rules has caused a decrease in R&D and innov
    • what about the incentive for those companies that *do* innovate?

      How about knowing that their product will be first on the market, without being squashed by the legal team of some corporate mastodon?

      is there no benefit of the doubt anymore?

      When in doubt, what do you do?
      A) Forbid people using existing inventions
      B) Allow anyone to make good ideas better

      I don't know about you, but I'm like, so option B...
  • I've got 10 applications submitted and pending for SW patents, 9 with HP and 1 with Sharp Labs of America. In the US, UK, JP and ES. Simply for solving problems lots of people (at least the smarter ones) would have solved in similar situations. At the end of the day, while you guys are whining about the PTOs giving out patents willy-nilly, I'll be gloating over the ones hanging on my wall. So there. Ha ha. Screw the ethics. My company was willing to spend the money. I probably violate 10 patents everytime

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