Start-up patenting strategies have become as sophisticated as those of incumbent companies and start-up patenting costs have reached new heights — the average reported cost of a single patent was $38,000. (See the Kauffman-funded Berkeley Patent Survey of 2008, by Stuart Graham, Tech Sichelman, Robert Merges, and Pam Samuelson). The Survey data on start-up patent strategies offers insight into our current university model of start-up formation.
US universities spin off hundreds of new start-ups each year and spend millions of dollars to help their start-ups get patents. By way of background: a university start-up takes shape when an entrepreneur with a passion for the university-owned technology – typically the faculty member or student who invented the technology — licenses it from the university. New university-based start-ups, like most start-ups, want patents but don’t have the money to pay outside attorneys. To help their fledgling start-ups develop into mature technology companies, universities pay their patent costs with the contractual understanding that they start-up will later pay them back. Payback can take the form of an IOU for cash plus interest, or at some universities, the start-up agrees to give the university a chunk of equity in the company.