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Davis, Lee N. --- "Why do Small High-Tech Firms Take Out Patents, and Why Not?" [2006] ELECD 369; in Andersen, Birgitte (ed), "Intellectual Property Rights" (Edward Elgar Publishing, 2006)

Book Title: Intellectual Property Rights

Editor(s): Andersen, Birgitte

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781845422691

Section: Chapter 5

Section Title: Why do Small High-Tech Firms Take Out Patents, and Why Not?

Author(s): Davis, Lee N.

Number of pages: 29

Extract:

5. Why do small high-tech firms take
out patents, and why not?
Lee N. Davis

ABSTRACT
This chapter seeks to add to our understanding of the strategic and economic
effects of patents by exploring why small firms take out patents, and why not,
and how these choices are linked to their broader business and technology
strategies. To this end, we interviewed patent experts in thirty-four small
Danish firms in telecommunications, software and biotechnology. The major
reasons to take out patents, we determined, were to protect against imitation
and to signal strategic intent. The major reasons not to patent were that the
invention was not patentable, and the high costs of detecting infringements.
Generally speaking, biotech firms found patents essential to create value,
software firms often found patents irrelevant, and telecommunications
firms found them important, but in combination with other factors. Much
depended on the type of innovation, and previous experiences with patents.
Many respondents had developed fine-tuned, `contextual' patent strategies,
focusing patent resources in areas important to them.

Keywords: Patent motivations, Small firms, Biotechnology, Software,
Telecommunications


1 INTRODUCTION
While there is an extensive literature on the benefits and costs of patenting
for innovating firms, including empirical surveys (for example, Cohen et al.,
2000, Levin et al., 1987), and accounts of the strategic use of patents (for
example, Grindley and Teece, 1997, Rivette and Kline, 2000a,b), the analytical
focus is typically large firms (principally US firms) from a variety of industries.
Few scholars explore the patent strategies ...