[Patents] Patents required for investment?

[epa98@doc.ic.ac.uk (Edward Avis)]

On Tue, 8 May 2001 patents-request@liberte.aful.org wrote:

>From: Gregory Aharonian <srctran@world.std.com>

>Subject: Re: Re : [Patents] consultation questions

>Here is one absolute guarantee that a
>patent application guarantees you, at least here in the United States.
>It guarantees that you business plan won't be immediately rejected
>by a venture capitalist.

Of course.  In an environment where other companies are ready to sue you
at any moment for patent infrigement (and you cannot afford to defend
all these claims, even if the patents are clearly invalid), you had
better arm yourself too.

>To venture capitalists, patents and patent applications are a form of
>insurance for their investment.  Why invests tens of millions of
>dollars for a new software idea to help create a new market niche,
>only to see that market niche captured by a big software company once
>the startup has done all of the hard initial market creation?

Could you give some examples of where small companies have been able to
use swpats against big companies, without being hit by a wave of
retaliatory lawsuits?

If there are such cases, does the help in getting investment
(and thus getting a product or service developed) outweigh the economic
cost of having a particular market segment exclusively controlled by one
company?

Does the beneficial effect outweigh the effect that swpats have in
_discouraging_ investment, by making any software venture (especially
one that competes directly with a patentholder) much more risky?

>But as it grows, I am sure that the European VCs amd certainly American
>VCs investing in Europe will demand that the SMEs they invest in apply
>for and acquire patents, including software patents.

Oh yes, they will demand it.  Of course they won't be so happy if other
companies sue _them_ due to software patents, but you have to defend
yourself.

The patent system is not about giving venture capitalists or IP lawyers
what they 'demand'.  It is about striking a balance between limited
monopoly and open competition, in the public interest.

-- 
Ed Avis
epa98@doc.ic.ac.uk