Software Patents and VCs

Venture folks are torn on the value of software patents. Some think they are worthwhile, and they point to various business method patents, or even to some of the many patents underlying DVD players. Others think that software patents are near-worthless, arguing that by the time you receive a software patent there is an excellent chance the market it is supposed to lock for you will have opened and closed.

I think patents are somewhat valuable, at least insofar as they are secondary spin-centric indicators of technical chops. Some venture folks and other investors sit up and take notice when you tell them that you have various patents — said folks are sometimes so excited that they don’t even ask what the patents are for.

Anyway, even that cynical view of software patents is up in the air. There is some research in the Chicago-Kent Journal of Intellectual Property concluding that there is roughly a 75% likelihood your patent application will turn into an issued patent. It is a fairly remarkable number, and savvy investors will realize that an issued (and unlitigated/unlicensed) patent is even less valuable than they once thought.

Research Reveals Patent Grant Rate of 75%

Conclusion: Given no knowledge about the particular invention, a patent application has a 75% chance of resulting in a patent on the invention.