This thesis is a case study of two companies within the software sector. It investigates how certain factors moderate company strategy with regards to intellectual property, focusing especially on the patenting system as a protection mechanism for software. The sectoral system of innovation theory is used as a framework when analysing the empirical material. Six selected propositions are investigated, and I found that the primary function of the patenting system, to protect the patented object from imitation, is not a significant factor in IP strategy for the two companies. The patent system is used in different ways that seem consistent with company size. The most important factor seems to be the importance of having the ability to negotiate with competitors. Initiative to apply for patents mostly comes from the top management; this seems to be based on the ideals and attitudes most of the technology developers in both companies have towards the patenting system. Organisational structure in the two companies clearly enables technological change and thus encourages innovation, and the investigated companies are recognised as highly innovative. I find that respondents within the two companies to an extent reject patents as accurate indicators of innovation, which presents a significant challenge for the common practice of using of patents as innovation indicators.