Relax. Let Your Guard Down

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Most companies would do better to channel their energies away from building legalistic fences around their creations and toward mastering the art of sharing. If you're looking for a role model, forget about Thomas Edison's patenting of the electric light bulb--a patent later ruled invalid after much ugly legal wrangling. Instead, consider the way a consortium of companies came together and agreed upon a standard socket shape for the electric plug. "Looking at IP as something to give away is not as entirely strange as it might seem," says Lawrence Rosen, a lawyer with high-tech law firm Rosenlaw & Einschlag and a lecturer at Stanford Law School. "If you can get cooperation from others on developing your product, there's the potential for your technology to become widely embraced and even ubiquitous, and you ultimately get a bigger ecosystem in which your technology can thrive." In its fullest incarnation, this sort of free swapping of work becomes the open-source approach most famously embodied in the Linux computer operating system, which companies such as Red Hat and Novell profit from--even though, in a sense, Linux is owned by everyone and no one. To be sure, the open-source approach is extreme. But it's nonetheless a useful mindset that could apply to any business.

Of course, there are some situations in which IP aggressiveness may be reasonable and even essential. The minority of industries that are driven not by marketing and customer relations and a bevy of features but by a small number of large, painstakingly developed and easily copied technical breakthroughs probably need strong protection. The pharmaceutical industry is a clear example. It takes about 10 years and the better part of a billion dollars to identify the one molecule out of trillions that works against a disease and then drag it through the multistaged testing process. Once the pill is out, it might take only a week to bring out a perfect imitation that could be sold at cut-rate prices to take over the market, since few people are loyal to any particular drug company.

But it's hard to come up with many other industries that fit this description. Perhaps the blockbuster movie business, where piracy makes it more difficult to recoup the $150 million or so needed to go into the black on big-budget films. But that's just a sliver of the entertainment business. In fact, there really are relatively few cases where easing IP protection would endanger an entire industry or class of product, even if it caused a bit of scrambling to adjust. "Most would do okay without it," says Chapman University's Bell. "Businesses wouldn't be dying, and we'd enjoy most of the products we enjoy now." Hollywood may be screaming bloody murder about the havoc that piracy will wreak, but this is hardly the first time movie moguls have warned that the sky is falling. Jack Valenti, the former head of the Motion Picture Association of America, testified thusly to Congress in 1982: "The VCR is to the American film producer and the American public as the Boston Strangler is to the woman home alone."

Even in the case of small biotech companies, IP protection need only be short term, says Robert Freedman, CEO of Hurel Corp., a biotech start-up in Beverly Hills, California. "As products mature, the balance point of competition shifts away from the uniqueness of the technology and toward the embodiment of the product into fully developed services," he says. In other words, even in big-bang technology businesses, the companies that win in the long term aren't necessarily the ones that do the inventing; it's those who figure out how to bring product improvement and better marketing and customer service to the fore.

Anyway, it may not matter what you or I think about it. It's what the kids think about it that counts. And upcoming generations are not merely less concerned with IP protection, they're appalled at the notion of locking up ideas or works. Sure, it's useful to take that point of view when you're strictly on the receiving end of pilfered IP, but anyone who tries to switch it when it's his or her IP on the line will doubtlessly be roundly booed by his or her peers. It's hard to see how this genie can be put back in the bottle. The breadth and depth of what's available online is simply staggering--including movies that haven't even been released yet, and every episode of what seems like every TV show ever made, from thousands of different sources, downloadable a dozen different ways. "The technology of sharing has changed the world," says Stork. "Business models have to change to adapt to it."

Contributing editor David H. Freedman writes Inc.'s What's Next column.

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David H. Freedman

A Boston-based contributing editor, Freedman is the co-author of A Perfect Mess, which examines the useful role of disorder in daily life, business, and science. His other books include Corps Business: The 30 Management Principles of the U.S. Marines; At Large: The Strange Case of the World's Biggest Internet Invasion (co-authored with Charles C. Mann); and Brainmakers: How Scientists are Moving Beyond Computers to Create a Rival to the Human Brain.

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