Innovation without Intellectual Property Protection

I love the story of the development of the Graphical User Interface (GUI). It was developed by Xerox in their Palo Alto Research Center. They used it on their first commercial home PC, the Xerox Star, but that didn’t sell very well. While the history is a bit muddled, Apple definitely knew of the work, and was influenced by the Xerox GUI when they launched the Apple Lisa and then the Mac, both with nicely working GUIs. Microsoft was late to the GUI party with Windows, but we all know where the money ended up.

When I tell this story in class, I talk about how software can’t be patented, and how copyright really doesn’t do much to protect the Intellectual Property of software developers either. When I ask my students what computer firms can do to profit from innovation in this situation, they inevitably come up with a wide range of ideas.

If I just open without the GUI story and ask people how you can profit from your innovations, the first answer is always “patents”, followed by “copyright”, followed by a long silence.

The idea that legal IP is the only way to profit from innovation is pretty deeply embedded, but it’s untrue.

This excellent TED talk by Johanna Blakley uses the example of the fashion industry to show how it is possible to profit from innovation even if you don’t use legal IP protection:

So fashion does just fine without IP protection. Some of Blakley’s key points are:

  • In fashion, the ability to copy leads to increased innovation due to widespread copying, which leads to many new and novel combinations of ideas. Connecting ideas is the fundamental creative act in innovation – so it makes sense that working in an IP regime that makes it easier to connect ideas will create more novel connections.
  • Even if something looks like an exact copy, there are substantial differences between knock-offs and originals. Furthermore, people can tell the difference. Once in Beijing I bought a pair of xRay-Ban sunglasses, just for fun. They fell apart in less than four months. So I went back to a pretty nice pair of sunglasses that cost about 7 times as much. I’ve had them for 17 years and counting, and they’re still in great shape. High quality ends up being a pretty good method for profiting from your innovations.
  • Another way to profit from your innovation is to make things that are too complex to be easily copied. That’s what Charlie Parker was trying to do with bebop. Complex design and complex value creation networks are two very good methods for protecting yourself from copiers.

You can see all of the slides from Blakley’s talk here (and there is more information about her research at ReadyToShare.org) – here is one of the key pictures (grabbed from the talk by Simon Bostock):

This makes the point that industries with low levels of legal IP protection are actually pretty important within the economy. Massively important. The chart is a bit misleading in that there are a few high IP industries that are also pretty big, like pharmaceuticals, which aren’t included. But the main point holds – you don’t need to have legal IP protection to profit from innovation.

There are many ways to win with your great ideas. Being innovative in the business model that you build to support your innovation is one of the best ways to do this. Business models are another thing that aren’t subject to copyright protection. Don’t get hung up on patents and copyright. There are other ways to win with innovations, and many of them are actually more effective. We need to be as creative in making our business models as we are in coming up with new products, new services and new ways of doing things.

Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

Please note: I reserve the right to delete comments that are offensive or off-topic.

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11 thoughts on “Innovation without Intellectual Property Protection

  1. OK, so I am responding as an entrepreneur and IP attorney and saying that–as a general rule–I agree with your sentiment. It is certainly the case that many great companies have emerged without formal IP protection. IP is not the end all, be all of invention.

    With that said, I will say that my experience has been that virtually every industry still relies on some form of IP even if that IP is not patent protection.

    Whether in the food sector (e.g. Coke=trade secrets; McD=brand), fashion (copyrights and brand is crucial) and even automobiles (several famous patents, brand names but also trade secrets around production). There may not be the big fights and lawsuits as in software and music but all of those “low IP” industries still aggressively enforce their rights.

    I also think if you are a company that is selling yourself as an innovator vs fast-follower, IP protection is critical. Without protection and some ability to monetize the unique value you bring, you can expect copycats. Again, not bad–it just means you are selling your ability to execute, not innovate.

    So yes, I agree with the gist that market place performance still drives revenue more than the most sophisticated IP strategy but I would also suggest that starting a company without having any IP at all is a fool’s errand. :)

    Thanks for the thoughtful post.

    Kendall
    @ideasurge

  2. Thanks for the comment Kendall. I think we’re not really too far apart on issues here. I agree that IP is important and an essential part of invention and innovation. Your examples from food & other low IP industries are good examples.

    I end up arguing against the primacy of patents not because I don’t think they’re valuable, but because I have two groups of people I regularly interact with who appear to be convinced that they are the only way forward. One group is students, who often simply haven’t thought of the alternatives, the other is university commercialisation people, who often have ‘patents generated’ as their only KPI.

    So I end up needing to find ways to try to get them to think a bit more broadly. It’s easier with students than with commercialisation people!

  3. Really interesting post Tim. Another alternative (or complement) to a patent based IP system is a norm-based IP system. Emmanuelle Fauchart and Eric von Hippel have a cool article on how French chefs use norm-based IP systems to appropriate value from their recipe-related IP. It’s published in Org. Science but there’s a copy available here:

    “Norms-based intellectual property systems: the case of French chefs”

    http://web.mit.edu/people/evhippel/papers/French%20Chefs%20WP%201-12-07.pdf

    There are some cool parrellels in here between the work on collective action/social capital and that of institutionalists like Ostrom and North.

  4. Thanks for that Sam. I agree that norm-based is an interesting approach – that is apparently the primary method that comedians use too. Joke stealers are ostensibly ostracized…

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