WHAT CAN EXPLAIN THE RECENT SURGE IN SOFTWARE PATENTING IN THE UNITED STATES?

Nidhi THAKUR (University of Arizona)

The concept of software patenting has been a controversial issue in the United States ever since software was first brought before the patent authority in the 1970s. Over time, there were a number of re-interpretations of patent laws, establishment of the Court of Appeals for the Federal Circuit (CAFC) in 1982, and then the granting of 'pure' software patent to IBM, in 1995. This resulted in a considerable increase in the number of software patents and patent-related litigations. In the recent past there has been a surge in software patenting in the United States. This is of concern because of software's potential as an emerging technology and its cumulative research and network effects characteristics. This paper investigates the increase in software patents, by estimating a patent production function for software firms. The function correlates the typical determinants of a firm's decision to patent software, closely monitoring the role of R&D---a typical cause of patenting. We use count data econometrics, to explore a novel data set, self-compiled by closely extracting information from the United States Patent and Trademark Office (USPTO). We control for what can be perceived as a legal regime change. We infer that it is this regime change that is largely responsible for the current surge in software patenting. Thus it is not so much of a proliferation and advancement of technology, as it is the race to establish property rights over a new territory.