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Patents and Business Models for Software Firms

39 Pages Posted: 11 Apr 2006  

John R. Allison

University of Texas - McCombs School of Business

Abe Dunn

University of Texas at Austin - Department of Economics

Ronald J. Mann

Columbia University - Law School

Date Written: March 24, 2006

Abstract

We analyze the relation between patents and the different business models available to firms in the software industry. The paper builds on Cusumano's work defining the differences among firms that sell products, those that provide services, and the hybrid firms that fall between those polar categories. Combining data from five years of Software Magazine's Software 500 with data about the patenting practices of those software firms, we analyze the relation between the share of revenues derived from product sales and the firm's patenting practices. Accounting for size, R&D intensity, and sector-specific effects, the paper finds a robust positive correlation between product-based business models and patenting rates. We also present in this draft preliminary results suggesting that there is no significant relation between patenting practices and the extent to which the firm's revenues are derived from software products and services, as opposed to hardware or other lines of business.

Keywords: patent, business, software, IP, model

JEL Classification: K20, K29, L10

Suggested Citation

Allison, John R. and Dunn, Abe and Mann, Ronald J., Patents and Business Models for Software Firms (March 24, 2006). U of Texas Law, Law and Econ Research Paper No. 77. Available at SSRN: https://ssrn.com/abstract=895361 or http://dx.doi.org/10.2139/ssrn.895361

John R. Allison

University of Texas - McCombs School of Business ( email )

CBA 5.202
University of Texas at Austin
Austin, TX 78712
United States

Abe Dunn

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States

Ronald J. Mann (Contact Author)

Columbia University - Law School ( email )

435 West 116th Street
New York, NY 10025
United States

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