[via Joi]

A great post from Joi Ito about the added value for a company of Software patents. Some very challenging and out-of-the-box inputs! I totally agree with his view.

Generally speaking, filing for patents is an expensive and time consuming task. Most startup CEOs don’t understand and can’t afford a patent strategy. I have done a number of calculations on the cost of filing and maintaining software patents, and one estimate we did for a company that I am working on was that it would cost about $750,000 to file and maintain a single patent in the major markets over the lifetime of the patent. Most companies I invest in raise only $1M or less their first round. In addition, to properly protect a technology and continuing developments around a technology, a portfolio of patents must be filed or you can be “surrounded” by application patents and derivatives filed by competitors. In away, filing a patent is practically like putting up an ad balloon for people to see where you are focusing.

Some startup companies I have looked at and worked with have in fact, invested in a portfolio of patents, but from my experience, most of these companies end up spending so much time on their patents that often the products never make it to market. The patents just become fodder for some large company when they are purchased in the bankruptcy fire-sale.

I personally believe that software patents are primarily the tool of large companies with portfolios of patents which they cross-license with each other. Generally, it serve to keep competition out of the market and allows those with patents to push those without patents around or cut them out of markets entirely. A number of open source licenses are now dealing with software patent issues by creating incentives for participants not to litigate against each other. A focus on open standards is also another important way to try to keep innovation unencumbered by patents.

I am not against patents generally and I have worked in materials science and manufacturing technology companies where patents serve as a strong incentive for innovation and royalties provide a fair return for the investments. I just believe that the notion that software patents somehow help venture businesses is a red herring and that software patents are primarily a tool for software monopolies to stay keep the little guys out.