Are Knock-off Products Good for Innovation?

Thomas Edison invented the lightbulb but he didn’t invent all of the components that ultimately made it work. In fact Edison “borrowed” from fellow inventors who had experimented with vacuum tubes and other aspects of bulb creation. Ultimately his “tweaks” to those technologies helped bring about the first generation of light houses inside a glass ball. Fast forward to the present day and innovators are working at breakneck speed to secure patents that ultimately attempt to stifle innovation. Yet despite dozens of patent lawsuits filed by Apple, Samsung, Motorola and others, knockoffs continue to thrive and that’s good for innovation.

Upon the release of the Apple iPad mini a Chinese company unveiled a much cheaper device called the GooPad. A device that looks and operates much like the iPad but with the open source Google Android OS.

So what exactly does that mean for Apple? Essentially that the company must continue to innovate in order to keep customers away from a much cheaper device. If a knockoff includes GPS in its system and the iPad Mini does not include GPS it leaves Apple with the need to leverage its tech know-how the second time around. Essentially knock-off products, even if inferior, force company’s to add better options in order to justify their higher selling prices. If the Apple iPad mini was sitting on the market by itself and Apple was reaping the rewards, what incentive would the company have to make better products?

Yes there is the argument that legitimate competitors make Apple better, for example the Samsung Galaxy S III implements NFC technology and the Google Android OS. However even those company’s “borrow” from one another and Samsung’s recently $1.1 billion court loss to Apple shows the consequences of those actions. Some knock-off company in China however is more likely to blatantly steal products and add new features, with less fear of paying out a massive court settlement that will never be collected.

Knock-offs also lead to new and better designs. The Apple iPad is immediately recognizable because of its rounded edges, large screen and clean features, however if a myriad of devices arrive on the market with those same features it forces the company to focus on creating a more ergonomic or stylish device.

Knock-off products or even just component copying can also have the advantageous ability to create more workable profits for a company. While courts have largely disagreed on Samsung’s patenting infringements against Apple there is no doubt that the company has earned billions of dollars in profits from its Samsung smartphone and tablet devices. Samsung has turned around and sunk much of that money back into research and development. That R&D has in turn created NFC friendly devices with large and crisp displays that users have come to love. Money is needed to spur innovation and sometimes taking from the innovator and giving to the people is a way to raise that capital.

Do I think company’s should freely steal from one another? In terms of pure knock-offs absolutely not, but taking the basic premise of a device and building off of it can lead to innovation. Looking back at Samsung, they may have started with products that some analysts have called direct ripoffs of Apple but through those knock-off features Samsung has led the way with the industry’s first NFC and 4G LTE devices and they continue to innovate with better battery and camera technology, better GPS features and a myriad of other options.

FRAND ( fair reasonable and nondiscriminatory) licensing attempts to hand over innovation to outside companies at a fair price, however when that licensing fails to meet the needs of an industrial sector knock-offs often showcase that a patent has become “industry standard” and therefore should come with legally applicable costs for licensing that don’t bankrupt companies attempting to use that same technology.

Do you think knock-off products are ultimately good for innovation? Remember when Steve Jobs called Apple’s IP theft of Xerox’s user interface “shameless stealing.” Apple is the perfect example of how far the theft of technology can take us in a rather short period of time.

[Images via BusinessWeek & techzilla]