06/25/2013 05:33 pm ET Updated Aug 25, 2013

Imitation Is the Sincerest Form of Flattery

Co-written by John von Buelow and Assistant Professor Taehyun Jung

Patents, copyrights and trademarks are, like democracy and capitalism, all relatively new ideas. Originally introduced in Florence in 1474, they reflect the valued role of innovation in advancing the progress of society and were developed alongside concepts of individual and property rights.

For millennia, artisans have incrementally learned from each other, later developing into the crafts and arts in which an apprentice would meticulously copy a master and evolving to industrialized production and distribution. Useful objects evolved over generations to become the artifacts and meaningful objects we recognize but without having singular points of invention.

Today, technology and production have enabled the global market with higher visibility and focused specialization and more identifiable points of origin.

It has been postulated that all of our ideas are perfected through synthesis and discovery and, as such, recognition of both incremental and breakthrough innovation is valuable. Studies of Central American pottery show that inferior pottery makers experiment like crazy, since they have nothing to lose. Mediocre pottery makers produce a consistent range of acceptable pots, while high-end pottery makers experiment profusely, incurring the risk to produce a stream of novel and more useful artifacts to stay ahead of the crowd.

Various business models sustain the complete pottery market and it seems that pottery makers, who stay in business, understand how to combine their skills and market needs to produce cheap pots, acceptable pots and original pots. This model includes people of varied creative abilities and knowledge and these strategies are neither right nor wrong, but are just appropriate for different combinations of supply and demand.

These three pottery makers address different markets that can be characterized by their position in a chain of innovation. Analysis shows that a general principle seems to be at play here. Early Innovators are the first to develop and accept new ideas and comprise 2.5 percent of the market. The early adopters are next, with 13.5 percent of the market, followed by early and late majorities, both at 34 percent, while laggards finish at 16 percent. Each of these markets reflects different levels of creation, distinction and sophistication.

When moving into larger market segments, patents, copyrights and trademarks become significant issues. However intellectual property assets are now often divorced from any tangible product or brand and simply employed as a legal ploy in a threateningly manner against other entities. According to a study by Boston University, patent trolls, who own and license patents without incorporating them into their own products or processes, incurred $29 billion direct costs (i.e. lawyers' bills and license fees) to the US economy in 2011.

Under an asymmetrical structure that exploits settlement instead of costly litigation, too often, this reaches the modestly funded as well, and these are the entities that typically serve the smaller market segments. By broadly allowing IP protection beyond actual competition and functionally similar business models we may be chilling the structure of innovation in a very unnatural and unanticipated way.

Although Intellectual Property protections including copyright, patent and trademarks have different roles, modes of enforcement and nuances best interpreted by a qualified Intellectual Property attorney, the fundamental idea behind these legal instruments is to encourage useful creativity, invention and progress. They are intended to benefit creators and society by balancing creativity, use and commerce. The system needs constant reexamination judicially and by the representatives of the public good to ensure that these principles are not misused or lost.

Special thanks to John von Buelow and Assistant Professor Taehyun Jung for researching and co-writing this article.