CollaborativEye

Conventional wisdom says that strong intellectual property (IP) protection encourages investment and innovation. The thinking is that financial returns are "secured"  because of the exclusive nature of the IP and the fact that access to the IP comes at a price.  The thinking goes further that without IP protection, incentives for innovation and investment are stifled because others can simply "steal" the IP and flood the market.  If the story were this simple, this blog post would be over.

But the story isn't that simple. Yochai Benkler has written a heavy tome called The Wealth of Networks  in which he explores the implications of what he calls the "networked information economy". Benkler argues convincingly that strong IP protection is a bad idea, and that it actually stifles overall creativity and innovation. Almost all empirical evidence contradicts the conventional wisdom: Benkler refers to a study by Josh Lerner that shows that patent activity (a proxy for overall investment in innovation) actually decreases when patent law is strengthened. WHY???

The key is to understand that true innovators are also true collaborators. Innovators not only produce innovation, they consume existing innovation (intellectual property), play with it, mix it, build on it, and produce new innovation (new intellectual property).  Restricting the flow of IP makes it harder for innovators to freely collaborate : instead of easily building on the innovations of others, they may have to enter into costly contracts to license the IP, forgo the use of the IP, or settle for something inferior. The cost is not only monetary, but consists of time and energy as well. Time and energy and money that could be better spent developing new innovations. Therefore, restricting the free flow of IP, rather than encouraging and increasing innovation, actually curtails it.

Organizations which continue to hold to the industrial age protectionism of strong intellectual property rights should reconsider their strategies and potentially change the locus of their value-add. In the now famous case of IBM and open source Linux, IBM produces an estimated $2B in annual revenues from Linux related services. Their value-add is in helping companies make use of the innovation that is Linux, building on it, and in the process improving Linux and the open-source eco-system as well.  The free flow of innovation makes for truly collaborative industries which will see more innovation and more value-add than restrictive, property-rights based systems.

Collaborate, and bring on the innovation!