Title
An Empirical Look at Software Patents
Author
James Bessen, Research on Innovation and MIT (visiting), and Robert M. Hunt, Federal Reserve Bank of Philadelphia
Date
1/01/2005
(Original Publish Date: 2003)
(Original Publish Date: 2003)
Abstract
U.S. legal changes have made it easier to obtain patents on inventions that use software. Software patents now comprise 15% of all patents. Compared with other patents, software patents are more likely to be owned by large U.S. firms. Most are assigned to manufacturing firms; only 6% belong to software publishers. Our regression analysis finds that software patents have become a cheap form of appropriability. This cost advantage, not the profitability of software, accounts for most of their increased use. Also, software patents substitute for firm R&D rather than complement it. Their use is associated with substantially lower R&D intensity, consistent with strategic "patent thicket" behavior.