Innovation without protection:A strategy for African Entrepreneurs & Innovators

There are many challenges faced by many African innovators of registering their ideas for protection under intellectual property especially patents. High registration cost, red tape by national bodies just to mention a few.

The rule of thumb is whenever an innovator or inventor comes up with a new idea, first thing they need to do is patent the idea to protect it from the so called vultures as a recipe to success.

On the contrary recent research proposes that refraining from patenting innovations could increase the chances an individual entrepreneur or an organization to succeed.

The innovation-patent-investment path is a well-trodden one for organisations and entrepreneurs. Whether it is a new software programme, a communications technology, or a new cooking recipe, the innovator legally protects their invention before investing heavily in its development.

This may come as a shocker to most of us but historically this has not always been this way. If we take a look at trade history such as the silk trade in China as an example you would realize that social norms were sufficient to sustain long-distance trade even when contract enforcement was unavailable.

It goes to show that perhaps bypassing legal protection might actually encourage greater investment and innovation.

Great Example

Take open source software firm Red Hat. The firm generates millions of dollars of revenues from the sale of its operating system, Red Hat Enterprise Linux. Yet in its annual report it notes that anyone can copy, modify and redistribute Red Hat Enterprise Linux as long as you do not call it Red Hat. Red hat has against the grain gone ahead to invest large sums on research even though they do not have patent protection.

Symbiotic Relationship

Companies that benefit from imitating Red Hat’s technologies – “the parasites” – choose not to be overly aggressive with their pricing and market share acquisition so as not to discourage Red Hat from investing in research.

In doing so they are able to profit from Red Hat’s future innovation. At the same time, it might be prudent for Red Hat to innovate more than it might have done with a legal monopoly, in order to help keep “the parasites” co-operative and avoid a price war.

Yet if Red Hat produces a particularly profitable innovation, imitators may be tempted to take as much value as possible now, rather than rely on the risk of lower profits from future innovation.

African innovators are therefore faced with a dilemma in regards to patent, collect monopoly profits if they register the patent or not register and let imitators copy, price and sell the innovation as they wish.

Thus refraining from patenting innovations may increase the prospects of future innovation and investment in that innovation.

On the other hand some innovators and entrepreneurs may take persuading, however, as proceeding along the no patent route would presumably preclude a firm engaging in patent litigation that can delay or crush emerging competition, and secure billions in damages.

 

https://viffaconsult.co.ke/innovation-without-protectiona-strategy-for-african-entrepreneurs-innovators/