IP Outreach Research > IP Use and Awareness
Reference
| Title: | Use of Patents in Securing Financing: A Survey of New England Firms |
| Author: | Venky Venkatachalam [University of New Hampshire] |
| Source: | |
| Year: | 2007 |
Details
| Subject/Type: | IP Protection |
| Focus: | Economic / Financial Impact, Patents |
| Country/Territory: | United States of America |
| Objective: | To assess the extent to which small and medium-sized enterprises (SMEs) in New England use intellectual property assets to secure financing to manage their operations. |
| Sample: | 51 New England firms |
| Methodology: | Mail survey |
Main Findings
78% of the small and medium-sized enterprises (SMEs) surveyed either held title to patent(s) or had patent application(s) or provisional patent application(s) pending at the time the survey was taken. Patents were mostly developed in-house (75%), licensed from others (17%), acquired through a merger/acquisition (4%), or purchased (4%).
43% of the firms surveyed own between 1-5 patents; 21% own between 6-25 patents; and 6% more than 25 patents. In a typical year, 49% reported filing between 1-5 patents with the United States Patent and Trademark Office (USPTO), while 12% reported no filings, and 6% reported filing 6-10 patent applications.
In a typical year, 16% of respondents reported filing between 1-5 international (PCT) patent applications, 14% filed no international patent applications, and 2% filed between 6-10 applications. Over the past three years, 13% reported filing no international patent applications; 12% filed fewer than 6 applications; 4% filed between 6-10 applications, and 3% filed between 11-50 international applications.
Patents are mostly used to improve new or existing products (27%), but also to be sold (8%), to be licensed out (3%), or to create joint ventures (2%). Most firms surveyed have never sold their patents to others (57%) – just 6% had sold between 1-5 patents. Licensing is slightly more popular than selling: while 49% have never licensed their patents to others, 15% had licensed between 1-6 patents. 12% had licensed between 1-5 patents from others, and 6% between 6-10 patents. 47% of companies reported never buying a patent license.
18% of the companies surveyed said they had used patents as collateral to secure financing, while 61% had not. 47% of respondents said they had not used patents as collateral to obtain equity financing; 6% indicated using it to obtain less than $500,000; 4% between $1-3 million. 22% of the companies planned to use patents as collateral in the future while 29% did not. 14% of the respondents were not sure.
The author concludes that SMEs use Patents mainly as a tool to enhance competitive advantage through the development of new products and/or the improvement of existing products. A major obstacle to using intellectual property as collateral does seem to be the inability of many venture capital firms to assess the commercial value of patents.
[Date Added: Feb 3, 2010 ]