Monday, October 1, 2012

A Question on IPR

Anonymous asks:

John, In the comments section of the website, I found an interesting point raised by a user. What do you do when you invested into a research project that took 4 years, 20 people, and millions of dollars? Hand out all your results to your competitors so they can clone your work and sell it? But then, won't they have an advantage since they invested nothing into the project and are now millions of dollars ahead of you? Could this be an exception for patents? In a free society, could this be one of these situations in which you keep your results secret WITHOUT preventing others from discovering and eventually using your secret? Oh, I included the employee # because I couldn't believe my eyes how an open source company could make so much money to pay all these people. You should also check out the following disturbing news: MakerBot, a leader manufacturer of open source 3D printers whose founders were always encouraging open source, has decided to CLOSE source its new 3D printer on 431 Unpatented Products

There are no exceptions to the rejection of patents.  In essence patents are a violence-based regime, and there is no way to fix that flaw.

Hypotheticals are difficult, I prefer to deal with a real case in which someone took 4 years, 20 people and spent millions of dollars on a project.  But I understand that the problem you pose never occurs in the real world, so we must work with a hypothetical.  I'll answer the question as it is:

1.  Why hand the designs out?  Offer them for sale for $100 million dollars or fifty cents or whatever.  Or not.  What does it matter what someone else does with their own means of production?  You might make some money helping the competitors getting up to speed, but why hand them out?

2.  If the copy cat proposes to offer some lower cost version, then it is not the same thing.

A. the developer sees customers prefer a lower cost version.  The developer can
  i ignore the lower cost market
  ii exploit the newly discovered lower cost market.

B. If the copy cat proposes to go head to head for the same customers at the same price, why would your customers prefer to deal with a copycat, and not the entity that designed and created the project?  How come, in the above scenario, is the developer so odious to the customers?

How is the person who has not put a dime in R&D millions of dollars ahead?  The work of marketing and production and logistics still has to be done, which requires additional dollars.  Where will they come from?  Do you expect financiers to invest the next 5 million with a copy cat instead of with the developer?  Does that sound smart?  R&D is sunk cost.  You make moneys selling things. Not designing them.  That is why design can be farmed out.

Why did someone spend four years and millions of dollars and 20 people?  Design innovation is marginal.  See Apple. Why are the people in this hypothetical not spending 3 months and $100,000 and 20 people to make more iterations better market tested?

Properly managed, a business directs R&D at customer needs.  So after 4 years, millions of dollars and 20 people, directly integrated with the needs of customers, someone else can walk in and take the business away from those who developed the item?  With no knowledge or experience?

This is grounded in the false impression that genius produces in a vacuum and the whole wolrd breathlessly welcomes the great ideas developed in secret.  Nonsense.  Great ideas are developed in consultation with customers, the customers are are very unlikely to go to a 3rd party with no experience to purchase the new idea.  The whole scenario is absurd.

Why are you surprised that an open sourced company with so many employees can make money.  Almost everything ever sold is open sourced.  Food, clothes, house, oil, the wheel, almost everything.  The IPR stuff is where we get less, worse, more expensive and slow.

Without checking, I imagine maker bot decided to close source as a condition of more financing.  That would be going way of capitalistic "grounded-in-violence" system.  We love a system that makes money for us, and everyone has a price.  But it is wrong to keep others from using their creativity to work with customers will to work with them.

Feel free to forward this by email to three of your friends.


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