23 Jul 2019

Summertime reading: On the Sociology of Patenting

Burk, Dan L., On the Sociology of Patenting (March 2, 2016).
101 Minnesota Law Review, 421 (2016);
UC Irvine School of Law Research Paper No. 2016-15. Available at SSRN: https://ssrn.com/abstract=2740947
(also discussed on the IPKat blog here).

"Rather, patent law carries a narrative as to what is socially acceptable or desirable; patent acquisition  [= patent prosecution; PJL ] is then either routinely accepted as what organizations ought to do, or may even be instrumentally deployed to signal conformity with that narrative. In either case, acquisition of patents appears strongly ceremonial, demonstrating organizational adherence to prevalent narratives of innovation, competition, and success. Patents may demonstrate to venture capitalists, shareholders, creditors and other constituencies that the firm is behaving as it ought. Patent acquisition may satisfy these constituencies that the firm is technologically progressive and innovative, worthy of the trust that investment or employment entails.
On this theory, acquisition of patents sends a type of signal to competitors, employees and investors [.] (...) The firm may or may not in fact be innovative, competent, or competitive, but that is largely beside the point: holding patents demonstrates [the firm's] adoption of the proper role in the proper social script. (...)
This may go a considerable way towards explaining certain puzzles involving patents, such as the puzzle of start-up financing. As I have mentioned above, it seems clear as a factual matter that before investing in a start-up technology firm, venture capitalists like the firm to hold patents. Exactly why venture capitalists prefer to see patents is more a mystery. (...) The most straightforward explanation may simply be (...) that venture capitalists look for patents as a marker of innovation because patents are what innovative firms are supposed to have" (internal footnotes omitted; line breaks added).

I leave out here the extensive theoretical foundation and framework of Mr. Burk, which is actually the major part of his article. The article is not an easy read (for me at least, I don't have a sociology background) but is worth the effort.

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