Letting Your Guard Down: When Sharing Intellectual Property Drives Innovation


TelstarSat_bLawyers are trained to think about property, including intellectual property, as a “bundle of sticks.”  One stick is the right to possess your property, and another stick is the right to keep others from possessing or using your property.  The right to exclude has long been considered one of the most important sticks in the bundle; the “no trespassing sign” or its equivalent has been one of the definitive elements of property law since the Middle Ages.

In the age of the internet, the right to keep others from using one’s property has been vigorously defended by media companies, whose efforts to prevent piracy of their products have driven a great deal of development in the music and video game industry.  This right has also been reconsidered by software developers, who are finding that loosening the restrictions on the use of their intellectual property is not always a way to lose market power.  Non-profits such as the Apache Software Foundation exist solely to make their intellectual property available to the public free of charge, while major market players like Apple and Google have developed strategies for making their intellectual property available to potential collaborators.

Strategies for allowing the collaborative use of intellectual property fall along a spectrum of restrictiveness.  Apple’s strategy for letting independent developers use its application programming interface (API) falls on the more restrictive end of the spectrum.  Independent developers must work with limited information about the iPhone, and their apps are subject to a review process that ensures their quality and their compatibility with Apple’s vision.  While this  strategy ensures a consistent product and lowers the risk that independent developers will dilute Apple’s market power, it also limits the innovation that independent developers are allowed to bring to the table.

On the other end of the restrictiveness spectrum is the Android platform, an open source platform released by Google under the Apache license.  The “no trespassing” signs have been taken down from this intellectual property; developers are free to use it without a rigorous review process or negotiation with the company that developed it.  This strategy means that low-quality apps will inevitably be developed, and it creates a risk that an independent developer will do something that dilutes Google’s market power.  However, it has also meant that developers designing apps for Google’s Moto X have a much wider range of possibilities for innovation.

In today’s world of fast-paced development, placing less emphasis on the right to exclude others from using one’s intellectual property can be part of a sound business strategy.  Exactly how important the right of exclusion is to a piece of intellectual property depends on where that property fits in with the company’s intellectual property strategy, which in turn depends on how each company organizes its priorities.  Developing a strong strategy for managing intellectual property depends on knowing not only how to guard intellectual property, but also on when to let that guard down.

Garrison Street is committed to helping companies develop innovative strategies that drive their growth; contact us to find out about the solutions we can help develop for your business.

Traditional Versus Fast-Paced Innovation



Innovation is inherently risky, especially in today’s fast-paced marketplaces.  Traditional innovation proceeded slowly: First, find out what causes the customer pain.  Next, experiment with different technologies and market sectors to develop a new product.  Then, build models and test prototypes with potential customers to study acceptance and pricing strategies.  Finally, move into a planned product launch addressing early adopters through laggards in sequence.

True innovation is extremely rare.  Business innovations often involve more than simple novelty.  Innovation requires a confluence of customer needs being met with novel technologies and competitive marketplaces that are receptive to the new product or service.  Invention alone does not make an innovation.

Traditional innovation is now a notation in the history books.  In a recent article in Harvard Business Review (March 2013), Larry Downes and Paul Nunes coin the term “big-bang disruption” to describe innovation in our fast-paced, interconnected world.  Rather than marketing a well-tested new product to a sequence of market segments, innovation are tested en masse and survivors garner windfall earnings.  Big-bang disruptors can seemingly come out of nowhere and beat the competition in the blink of an eye.

While traditional disruptive innovation focused on the low-end customer who previously did not participate in the market, big-bang disruptors combine existing technologies and services to offer new and innovative products and service.  Consider, for example, Amazon’s ability to capture 20% of all book sales revenue by combining existing web and pioneering e-book technologies in a new way.  And to think the Kindle was not even introduced until 2007!

An essential component of all innovation is experimentation.  The difference with big-bang disruption is the speed and number of experiments.  Because the cost is trivial, innovators run many experiments in parallel and in live markets.  Technology makes these multiple, concurrent experiments possible and technology can make a successful innovation turn into a very, very successful product.

Creation Myth



The disconnect between creating new ideas and having them commercialized is discussed in this piece by Malcom Gladwell.  How should organizations create an environment that promotes idea generation and exploration without letting management stifle that creativity by thinking too short term?  Here is the link: Creation Myth

The Interest of Tech Patents


Two tech goliaths, Microsoft and Facebook, have joined forces to acquire more patents.  An interesting merge of companies to combat Google’s presence… and…. 1/2 the deal is now paid for…in less than a month.

Nick Wingfield writes, “The agreement between Microsoft and Facebook, announced on Monday, came less than two weeks after Microsoft agreed to pay more than $1 billion for 925 patents held by AOL. In a second deal, Microsoft said it had turned around and sold 70 percent of those same patents — about 650 in all — to Facebook for $550 million in cash, along with rights to 275 AOL patents Microsoft plans to retain.”

Read the Full Article Here

The Bell Labs Miracle


A very interesting read about the history of innovation in America, and the influence of Bell Labs.  Jon Gertner writes “… to consider the legacy of Bell Labs is to see that we should not mistake small technological steps for huge technological leaps….”  Read The Full Article Here