IP consultancy, innovation and the 4 horsemen of the IP apocalypse

By Joren De Wachter

I’ve been in Intellectual Property (“IP”) consultancy for over seven years now; having started the field back in 2008 when it was still very much a novelty.

Especially for the Information Technology industry, where a lot of software companies were ignoring IP, and its relevance on their business models.

Things have  changed in the mean time. The industry has changed, IP has changed, and I’ve changed.

Over the years, I’ve learned that IP is not what it portrays to be. IP is not about ownership. It’s not about rewarding innovation.

IP is about blocking innovation, and ensuring that old dinosaurs can stay alive. IP shields existing businesses from competitors and startups. It raises the cost of entry into markets. It blocks, prevents and stifles innovation. And it transfers huge amounts of money from the not-so-rich to the very rich; it is a key operator in increasing inequality and ensuring that median incomes remain low, in spite of formal economic growth.

Ever wonder why an Apple connection cable easily costs €40-50, where you know its production cost is around €1 and the distribution margin should be not higher than €2? The answer is IP – the ultimate rip-off of consumers. More value is hoarded by IP every year – which means that more value is stolen from customers, consumers, inventors and creative people everywhere, to the benefit of shareholders of existing distribution channels everywhere. More innovation is blocked, prevented, or taxed by the old guard.  It is really not a coincidence that truly innovative businesses such as Tesla open up their patent portfolio. They are not afraid of competition.

Luckily, there is hope. There are a number of trends in technology that are reducing IP’s ability to tax or block innovation and prevent copying. Copying, which is at the heart of both the freedom of enterprise and the ability to create.

As my IP consultancy activities are slowly being replaced by other, more interesting work, I’m publishing a short set of final blogs on IP. They are a rework of articles I wrote end of 2014 – slightly reworked to take into account what happened over the last twelve months.

The basic message is positive: IP is slowly crumbling. Not because our legislators all of a sudden favour startups and innovation over existing dinosaurs who pay their election campaigns, and have started to tear down the walls of IP protection that shield existing business from real competition. They don’t.

But because technology is allowing for ever more disintermediation and the destruction of barriers to innovation. In the end, the IP-tax on innovation will become unenforceable.

And innovation is the ultimate buzzword in this second decade of the 21^st century. It is supposed to be the driver of technological, economical, and even social progress (“Like” it or not).

Innovation is driven by a number of factors – one of which is public policy in the form of Intellectual Property Rights (“IPRs”).

IPRs are a tool of economic policy – they consist of a number of legal tools, such as copyright, patents, trademarks, designs and others. IPRs official purpose is to reward and stimulate innovation. While that theory does not go unchallenged, my blog posts will take a different approach.

The assertion made is that there are a number of technological innovations that will fundamentally alter IPRs, to the point of making them superfluous or inefficient.

In other words, rather than looking at the effect of IPRs on innovation, this article looks at the effects of innovation on IPRs.

We will look at four innovations: Big Data, 3D-Printing, Open Source, and Social Media/Peer-to-Peer. Those innovations play out in different fields, but are all, in essence, based on Information Technology.

And, as we will see, their effects on IPRs are not benign – far from it. In fact, they are so devastating, that it is right to call them the four horsemen of the apocalypse for Intellectual Property Rights.

In the next four blog posts, I will deal with each of them.

[This post originally appeared at JorenDeWachter.com.]