Access and Feeds

Security: Does Piracy Spur Innovation?

By Dick Weisinger

‘Piracy Shock’. That’s the aftereffect that businesses go through following the loss of intellectual property (IP). Devastated by their loss, the reaction is to increase security and core business investment. Piracy actually acts as a boost to innovation, according to a recent study by a group of economists. In environments where the business has near monopolistic dominance, piracy provides a sort of competition.

The group studied submissions made for copyrights, patents and trademarks, and found that immediately after being targeted by piracy, businesses typically increased spending on research and development and also increased the volume of applications made to protect their IP.

The researchers found that “when comparing the IP strategies of software firms at risk of piracy (the treatment group) against those of not-at-risk firms (the control group), we find that our treatment group significantly increases its innovative activity after the piracy shock in terms of R&D expenditures and granted copyright, trademark, and patent applications. Our analysis also reveals a dynamic response: firms tend to increase their R&D expenditures and copyright filings sharply in the first two years following the piracy shock, while the impact on patents is most significant over longer horizons of three to seven years.”

One of the authors of the study, Wendy Bradley, assistant professor at Southern Methodist University’s School of Business, told The Register that “many people thought piracy was going to have a tangible and immediate negative impact on firms, especially in the software industry. Instead, increased rates of piracy led software firms to innovate more. This innovation was in the form of new, highly-cited patents in the software sector, specifically.”

Digg This
Reddit This
Stumble Now!
Buzz This
Vote on DZone
Share on Facebook
Bookmark this on Delicious
Kick It on
Shout it
Share on LinkedIn
Bookmark this on Technorati
Post on Twitter
Google Buzz (aka. Google Reader)

Leave a Reply

Your email address will not be published. Required fields are marked *