Bessen comments “Do Patents Facilitate Financing in the Software Industry?”

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James Bessen, a patent law researcher, comments on the article "Do Patents Facilitate Financing in the Software Industry?” by Ronald J. Mann. Mann concludes that small and medium enterprises benefit from software patents. Bessen points out flaws in Manns reasoning which is based on 60 interviews as an empirical source.

James Bessen concludes

• However, a careful look at the actual empirical findings
  • in the paper points to rather different conclusions. Moreover,
  other empirical evidence, in papers cited by Mann, is also inconsistent with his conclusion.
• .. But the evidence—both in Mann’s work and elsewhere—shows that most software startups don’t get patents, those that do patent get relatively few of them, small and mid-size public software firms also do not get many software patents, and software patents go disproportionately to large firms compared to other types of patents.

• Bessen comments on Mann (pdf)

• Original article of Mann (Austin)

Further remarks

A. Rebentisch

In Germany the Federal Ministry of Economy and Work (BMWA) ordered a study from IFIS which also included a survey of German companies. The results was kept secret before Council adoption and shows that there is no foundation for patent law in the field of software among companies asked. This recent study confirmed earlier studies by the Commision and independend researchers about the macroeconomical effects of software patenting.

This also confirms the empirical results from granted patents by patent offices worldwide. The common observation is that individuals and SME patent less than to be expected from their share in the market.

The interpretation of these results differs much e.g.

• Lack of information: More patent information for SME needed to show them why patents were beneficial

• Size correlates with inventiveness: Large Corporations spend much money in R&D and invent while Small corporations just copy and apply existing technology/techniques (Schumpeter justification of monopolies). Most people who know the software market do not agree on this.

• Comparative disadvantage: Patent law is not designed for !SMEs and freelancers. There are economies of scale and patent market entrance barriers such as attorney costs, further portfolio effects on risk (patents modeled as a lottery with uncertain return).

Contrary some lobbyists such as Francisco Mingorance/BSA or patent attorneys such as Betten incorrectly claim that patents were in favour of !SMEs and !SMEs filed most software patents. This is merely a response on the concerns of !MEPs about the fate of !SMEs under a software patent regime, which is not based on any empirical evidence. !SMEs play a huge role in the European software market. It is intresting to see lobby organisations which represents large non-European corporations present SME cases.

The of SME economic majority in the software market and European citizens are more credible stakeholders to represent SME interests than these astroturfing lobbyists.