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Study: Patents Not A Top Priority At Software and Internet Start-Ups

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SAN FRANCISCO, June 28, 2010 – Patents are deemed by executives at software and internet start-ups as the least important way of boosting competitive advantage, according to a forthcoming survey of more than a thousand companies by the University of California’s Berkeley Center for Law and Technology.

The study, due to be published sometime this summer,  surveyed chief executive and technology officers of more than 1,300 software, biotech, medical device and computer hardware start-up companies founded in the past decade.

The survey found that executives at the internet and software start-ups valued first-mover advantage much more than patents. Medical device and biotech firms valued patents much more highly and are a top priority for those firms.

“Biotech and medical device start-up companies regard patents as key for attaining competitive advantage from their innovations,” said report co-author and Berkeley Law Professor Pamela Samuelson. “Software entrepreneurs, on the other hand, find it’s much more critical to move fast in the marketplace and to use copyright and trademark protections. Patents take a back seat.”

The finding is significant as lawmakers in Congress continue to struggle along trying to reform the patent system. The effort is stuck because of an impasse between the different industries on how key changes would affect companies in those industries differently.

The authors of the study note that a key finding of the survey is that patents are seen as more of a way to limit competition and to attract investment capital rather than to innovate, which is the key economic assumption powering the patent system.

“The capital formation finding is noteworthy, because it’s an aspect of the patent system that has not been systematically established and explored in prior research,” said report co-author and Berkeley Law Professor Robert Merges.

The study, “High Technology Entrepreneurs and the Patent System,” with these and other findings, is scheduled to be published sometime this summer in the Berkley Technology Law Journal.

Sarah Lai Stirland was Contributing Editor for BroadbandBreakfast.com until April 2011. She has covered business, finance and legal affairs, telecommunications and tech policy for 15 years from New York, Washington and San Francisco. She has written for Red Herring, National Journal's Technology Daily, Portfolio.com and Wired.com. She's a native of London and Hong Kong, and is currently based in San Francisco.

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