There are other compelling reasons why patents are important. A paper entitled “The Bright Side of Patents” sites the economic benefits that patents bring to start-up businesses. Joan Farre-Mensa of Harvard, Alexander Liunggvist and Deepak Hedge of NYU studied all first-time patent applications filed at the US Patent and Trademark Office (USPRO) by start-ups from 2001- 2013, 45,819 in total. They concluded that patent approvals help startups create jobs and succeed. Key points from the research:
- The first patent application increases a company’s employment growth over the next five years by 36%. The effect on sales growth – a 51% increase – is even larger.
- Approval of a patent application increases a start-up’s probability of securing VC funding by 53% over companies without patents.
- Patents more than double the likelihood that a start-up is eventually listed on a stock exchange.
IBM has been the leader in annual patent procurement for years and years. But, even in Big Blue, not all patents can be commercialized and many other patents are not consistent with its marketing strategies. For these reasons and, it turns out, for tax benefits, the company puts many patents on the market to supplement its licensing royalties.