As reported in Businessweek SmallBiz Summer 2005 edition, Ronald Mann, co-director of the Center for Law, Business & Economics at the University of Texas School of Law (does that title even fit on a business card?) found that indeed patents were worthwhile.
Mr. Mann found a strong correlation between the pursuit of patents and the later success of startups in software companies. Startups WITH PATENTS are FOUR TIMES as likely to go public than those without and they are half as likely to fail. Software companies with patents received on average 11 million dollars more in financing than those software companies without patents.
The trends were similar for biotech companies with those with patents fairing much better than those without.
ORIGINALLY PUBLISHED JUNE 22, 2005 BY KURT P. LEYENDECKER
So what can we take from this: patents aren’t going to help a company with bad ideas, concepts or products. They are not a panacea. However, patents will make companies with sound business models, products and services more attractive to potential investors. And with more money a company is better able to whether the ups and downs of launching a new venture thereby increasing its ultimate chances of success.