During the Global Maker Sustainable Innovation and Development Forum on August 10, someone asked a panel of speakers whether intellectual property protection had become irrelevant given the fast pace of innovation today. The panel included Stephanie Santoso, founding board member of Nation of Makers, Duncan Turner, director of HAX, and Startup Launchpad’s own Ben Wong.
On the face of it, the questions is an interesting one because innovation does happen quickly in China. Shenzhen is routinely churning out iterative new products to the point that everyone is copying everyone else. The pace of innovation is just too fast to wait for the slow-moving, bureaucratic patent process.
That’s the logic according to some. The consensus from the speakers was that in the case of hardware startups, both speed and IP are important. When getting a new product out, don’t wait for a patent. As soon as your product is out, start thinking about what’s next, because copycat competitors are right behind you.
Whether a product sinks or swims without a patent can serve as a test for the market, but a company’s long-term strength must rely on IP. This should include both patents and trademarks. A startup might not be strong enough early on to enforce its IP, and doing so might be ill-advised given the costs involved. If a company and brand can survive based on the merits of its products, however, it will eventually want to start cracking down on unauthorized use of its IP.
This isn’t just purely speculative. It turns out this point can be modeled, as was done in the paper “Patents as Negotiating Assets: Patenting Versus Secrecy for Startups,” which was recently published in “The Economic Journal.” The researchers write that since many startups can’t afford to defend their IP, they may “prefer trade secrecy to a patent for fear of provoking such costly legal disputes.” As the paper goes on to examine, though, “patenting allows the startup to claim a share of such potential future benefits and thus, may outperform trade secrecy in motivating startup innovation in industries where incumbent firms hold large patent portfolios.”
The protection that patents offer can, in the long run, bestow greater benefits on firms regardless of the technology they’re using. This includes “non-revealing” technologies that can be protected as trade secrets. Patents increase the value of companies, which can be useful in future negotiations such as transfers or licensing. So speed to market is important, but IP is far from irrelevant.
There are other developments happening with IP, too. As founder of Nation of Makers and former senior advisor for making to the White House, Santoso offered a unique perspective on what’s happening in more collaborative communities like 3D printing. For this community, creative commons licensing is a popular alternative to copyright as it allows people to freely share designs and build upon them in an open way that still follows some specific, legally-binding guidelines. She noted, though, that copyright and patents are not same thing, so different rules apply depending on what people want to protect.
Other exceptions exist, as well. As Turner pointed out, patents are incredibly important in the medical field because of the massive amount of investment required for research and testing. Health care is one of the most regulated industries, though, so that’s an extreme example.
Most startups will not face the hurdles involved in making medical devices. The concern that should be at the forefront of any startup founder’s mind is how to bring great products to market fast and continuously beat the competition to the next thing. Just don’t forget to file for those patents along the way. You’ll want them later.
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