The Innovator’s Secret

I know from experience that a trademark infringement letter arrives like a kick in the stomach.

It introduces a sudden, lingering uncertainty about the future: Can we even continue our business the way we’d planned? The sinking feeling often turns into a striking question: Can they sue? Can we?

Being called out for copying someone else’s ideas feels stupid, too. The first rule of building new products is to research the market, so an attorney’s letter is quite a silly way to learn about an important competitor or a crucial invention.

When Minnesota’s Amazon Bookstore set up shop in 1970, there was no internet, and there were no online bookshops either. Having “amazon” in their name didn’t cause any problems until 1994 when Amazon.com arrived, and—spoiler alert—today, only the younger Amazon bookstore has the right to use the name. Being two decades late to the party didn’t stop a startup from taking an established company’s name.

Navigating intellectual property is not for the faint of heart—even though the system was designed to foster innovation.

The whole idea behind IP rights was to encourage creators to contribute more freely so that the larger community could enjoy the fruits of these innovations. The success of this system banks on its ability to influence human behavior.

Potential innovators need to feel safe when bringing their ideas into the world. If they are afraid that their innovation will get ripped off by everyone and their mother, why would they bother investing in it in the first place?

Understanding how people react to intellectual property protections is critical to designing them.

The valuation of creativity

Truly new inventions can seem blatantly obvious once someone has discovered them—in much the same way as it is impossible to tell whether we could have solved a riddle once we’ve been told the solution. Once a patent is awarded, it would be hard to argue that it was an “obvious” innovation.

One of the legal system's first important functions is establishing a threshold of creativity to determine which ideas should be considered “new.” Researchers Christopher Buccafusco, Zachary Burns, Jeanne Fromer, and Christopher Sprigman designed an experiment to try to test the effects of different thresholds on creative efforts. They found that people tended to perform more creatively when there was a threshold for receiving a reward: when IP law required the idea to be genuinely new.

Another important aspect of the legal system is determining how infringement should be punished: Should the law call for a monetary payment, an injunction, or both?

University professors Bill Tomlinson and Andrew W. Torrance found that a model with both damages and injunctions resulted in fewer innovation filings. The greatest rate of innovation occurred within the model in which there was no remedy for infringement.

Fashionable magic

In fashion, innovation seems to thrive in the absence of strong IP protections. One explanation is that top designers actually want their designs to be copied: As designs trickle down fashion’s status pyramid, demand for new high-fashion designs from the top is created, fueling a continuous cycle.

Another area in which intellectual property is without a legal system: stage magicians. Their ability to make magic happen lies in keeping their tricks a secret. As the Roman philosopher Seneca wrote, “It is the very trickery that pleases me. But show me how the trick is done, and I have lost my interest therein.”

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Magicians are always seeking the latest trick or clever new technique to add to their acts. By way of trade journals, books, dealers, and organizations, ideas flow freely and actively within the magic community. But despite the overwhelming importance of intellectual property, the law offers magicians very little assistance. Instead, magicians have developed a unique set of informal norms and sanctions for violators.

Cheap secrets

The most well-known rule in the magic community is never to expose a secret to a non-magician.

Of course, not all secrets are created equal. Popular magic is easy to find. Anyone can visit a local magic shop or look up tutorials online to get started. The easy availability of popular magic serves to satisfy those in search of a cheap secret.

Real magic books are harder to get and might even require membership in one of the magicians’ associations. All the major organizations have well-established codes of ethics and often require auditions or sponsorship by current members for admission.

Proprietary magic remains difficult to access and involves earning the respect of the community. Typically, innovative magicians will keep a new idea to themselves for a while but will share the secret with the wider community of magicians once their performance no longer depends on it. Many seasoned magicians take pride in sharing their modus operandi with the next generation of magicians.

Valued creators

Picasso had a saying: “Good artists copy, great artists steal.”

People value things much more highly if they own them. The endowment effect has been demonstrated in a wide variety of contexts, and for intellectual property, there appears to be an additional “creativity effect.” Christopher Buccafusco and Christopher Sprigman ran a series of experiments to show that people value creative work more when they are the one who created it.

For example, in one experiment, paintings were valued by those who painted them, those who owned them, and by potential buyers; the largest price tag was consistently applied by the paintings’ creators.

It seems that when it comes to our own creativity, we’re not that hard to impress.