Until recently the protection of intellectual property law has focused on protecting physical devices. With the shift to a more connected society and the rise of agile/lean business principles to develop better products the old way of protecting intellectual property stifles innovation.
What is the internet of things
The internet of things is the term used to describe the many new internet-enabled devices that are connected through a network. No one knows exactly what will happen in the future but the impact of the internet of things on business will increase business efficiencies, require you to store a lot more data and make many business processes a lot faster.
Estimates put the potential market of the Internet of Things in Australia at around $120 billion by 2025. In Australia many businesses see the technology as game changing and Australia ranks 22nd in the World Economic Forum Global Competitiveness Index of 2016-2017 down one place from 2015-2016. In its 2017 report, IP Australia noted that there has been a decline in the amount of applications to register patents in Australia.
In a country where entrepreneurs and scientists see the benefits of the rise in technology why is there a decline in the protection of intellectual property?
An old system
The current ways of protecting intellectual property in particular patents is a system that has been around for around 30 years. While the legislation has been adapted the application process for protecting intellectual property is still built on the old system. A system that came before the rise of Internet 2.0 and the move, by software designers, away from traditional waterfall development methods to the agile principles (for example, Kanban, Lean Scrum etc).
Why this doesn’t work
The old system allowed legal advisors to protect software in a sequential way, as software was developed in this way. With the adoption of agile principles, that teach developers to make small improvements to products, test them in the market and then make small changes, it is difficult for legal advisors to protect intellectual property in the same way. Put simply the agile principles do not allow for a developer to create a product and then wait months for intellectual property protection before it is taken to customers.
What does this mean for intellectual property protection?
It is for this reason that many software developers are not protecting their intellectual property as it simply stifles their ability to innovate their products. This has resulted in a rise of open source software where developers licence their intellectual property to allow others to build better and more innovative products. One recent example involves a startup business developing an online software as a service business. While they acknowledge their business might be able to be protected they only see the intellectual property protection regime as a burden that will not allow them to quickly adapt the development of their software. At the end of the day they see the data that they will obtain from early testing and development as far more valuable than intellectual property protection.
The rise of the internet of things and more use of the agile business principles does not spell the end of intellectual property protection. It is unlikely that the law will change to meet the new way of developing software any time soon so legal advisors need to work with their clients to take a commercial approach. Protection for protection’s sake is not the way forward, in an era when so many businesses are starting up lean the actual cost as well as the lost opportunity cost mean that businesses need to assess whether it is commercially viable to protect their intellectual property in the old system.
