In The Bright Side of Patents, Joan Farre-Mensa of Harvard Business School and Deepak Hegde and Alexander Ljungqvist of NYU's School of Business investigate and conclude patents help startups. I would add this is my experience working with startups over two decades. I have seen startups mainly fail for lack of sales, but if you are a technology leader and have even moderate commercial success the world is ready to copy you. We have seen it too many times. Patents can help a startup acquire a sustainable competitive advantage. So if trade secret is not an option, you should definitely think about it.
From the Abstract: "Motivated by concerns that the patent system is hindering innovation, particularly for small inventors, this study investigates the bright side of patents. We examine whether patents help startups grow and succeed using detailed micro data on all patent applications filed by startups at the U.S. Patent and Trademark Office (USPTO) since 2001 and approved or rejected before 2014. We leverage the fact that patent applications are assigned quasi-randomly to USPTO examiners and instrument for the probability that an application is approved with individual examiners’ historical approval rates. We find that patent approvals help startups create jobs, grow their sales, innovate, and reward their investors. Exogenous delays in the patent examination process significantly reduce firm growth, job creation, and innovation, even when a firm’s patent application is eventually approved. Our results suggest that patents act as a catalyst that sets startups on a growth path by facilitating their access to capital. Proposals for patent reform should consider these benefits of patents alongside their potential costs."
Copyright © 2016 Robert Moll. All rights reserved.
