Dilbert Explains Why Just Copying Others Is A Dumb Business Model

from the the-wisdom-of-dilbert dept

One of the common claims that is brought up by patent system defenders when we discuss the idea of a greatly limited or eliminated patent system is that it doesn’t make sense for anyone to innovate, because others will just copy them. Of course, historically we have plenty of evidence that this isn’t true — and it makes sense if you think about it logically. Just copying something doesn’t give anyone a reason to buy from you — and depending on the product, copying them will take time, combined with the additional time to even let people know you’ve got a product in the market. By that time, the real innovator may be much further ahead. Steven points out that a recent Dilbert cartoon makes this point perfectly:

Dilbert.com

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Comments on “Dilbert Explains Why Just Copying Others Is A Dumb Business Model”

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60 Comments
Dark Helmet (profile) says:

Re: I agree

“I see it all the time.. Joe opens a pizza joint, Bill see’s him doing good so opens up another one. Next thing you know there are 10 pizza joints. Five years later they all go out of business do to competition.”

I see the absolute opposite regarding pizza joints on a year by year basis.

On the other hand, I live in Chicago, where we do pizza right and eat it all the time….

Grimp says:

Re: Re: strawman

Some companies’ names are famous enough that people will know to choose them over knockoffs. More obscure companies will not hold this advantage. This is particularly true for inventions that (a) are low-tech or (b) don’t have several ways by which you measure their quality. For example, if the hammer were invented today, it could be knocked off by anyone who could stamp metal in the same shape. All the R&D cost that went into discovering the optimal shape for a hammerhead will be borne by the inventor, while others can knock the shape off easily. The quality of ordinary, handheld hammers does not vary much, as long as the head stays on the handle.

chris (profile) says:

Re: Re: Re: strawman

All the R&D cost that went into discovering the optimal shape for a hammerhead will be borne by the inventor, while others can knock the shape off easily. The quality of ordinary, handheld hammers does not vary much, as long as the head stays on the handle.

precisely! explains why craftsman doesn’t make hammers. due the the high availability of cheap knockoffs.

McBeese says:

Speed to market is only 1 consideration

Many companies have been very successful by being ‘fast followers.’ However, most highly successful companies that I can think of don’t follow this model. Microsoft is the only example, and they’re more of a ‘slow follower.’

Speed-to-market doesn’t resolve all of the issues of the little guy. For example, if I come up with a really clever twist on search, I still have to develop it, build a brand, attract users, etc. Once Google sees what I’m up to, nothing would stop them from reverse engineering my development and adding it to their already well-developed ecosystem and destroying my market opportunity.

I’m not saying that the existing patent system is the answer, because I don’t think it is, but something is needed IMHO.

Matt (profile) says:

Re: Speed to market is only 1 consideration

When you have a good search model, you need to figure out its place in the market. That may require _you_ to identify its place in Google’s ecosystem, and then persuade Google of its value to them (ie – selling out is still selling).

If you don’t think you can make money by selling it to Google, then you will have to find another way to make money. You are absolutely right that Google’s hardfought market position will not be yours overnight, just because you came up with a new search model. (Should it?!) So you will have to find a way to make your money on your search in a way that does not depend on Google-supremacy. Instead of selling eyes and search result placement, maybe your new twist will allow you to sell something else. In other words, what is needed isn’t a government mandate or a socially-enforced monopoly. It is innovation.

Einstein says:

Another lovely from Mike

Logically speaking Michael, if you invest time/money into inventing something, there was an expense. Whether that be the expense of time, money or other would need to be quantified.

Now, if I come along and COPY the end result, one would believe I could sell this cheaper….hence someone wanting to buy/purchase/lease this from me since I did not invest the original time/money.

Think of generic drugs. Why are they “cheaper”? Why do people flock to a generic drug when it comes out? Because it’s less expensive and offered as such since the original design/development didn’t cost them the time/money thereby allowing them to offer it to the public at a far reduced rate.

Same as some Asshole selling copies of copyrighted movies/CD’s at Times Square in NYC. No investment, just burn and turn…..

DJ (profile) says:

Re: Another lovely from Mike

“Same as some Asshole selling copies of copyrighted movies/CD’s at Times Square in NYC. No investment, just burn and turn…..”

NOT the same. To produce a generic drug, as you accurately pointed, there are no R&D costs, so your overhead is much cheaper, etc. However, there must still be some differences, however slight. Thus, that product is now YOURS. An exact duplicate is not yours. Which is what I believe was the ORIGINAL INTENT of copyright/patent laws.

Also, as the cartoon points out, if you try to copy someone who is already up on the game, you can only copy what they’ve already done. You cannot copy what they’re GOING to do, “which is unknowable”. Thus, you must have a RTB your product; usually that means making your product somehow BETTER and not just a copy, “which is stupid”.

Glaze (profile) says:

Re: Re: Another lovely from Mike

There is a little thing missing once a brand has formed a patented drug in the pharma business there is at least a 7 year period that other companies cannot compete with the original manufacturer.

I learned this when the govt. banned the particular type of propellent in the generic albuterol inhaler, I got stuck having to buy a name brand, knowing that i would not get a cheaper one for 7 years, still haven’t.

Derek Kerton (profile) says:

Re: Another lovely from Mike

I agree with you that the copier has cheaper fixed costs to cover, which has a downward effect on generic price versus patented price.

But you should admit that that is not the whole reason the generic drug is cheaper. The main reason, in fact, is that the brand drug was sold under a monopoly for the duration of the patent. And the economic certainty about monopoly is that it drives higher prices and lower volumes.

In fact, the main reason the generics are cheaper is because there are many sources of generics, and competitive markets have lower price and higher supply versus monopoly.

Anonymous Coward says:

The Dilbert strip certainly makes a point, but it is not universally applicable. If a company spends years developing a product and finding a market for it, and the product becomes popular, how well are they going to do when another company can look at the product, copy it within months thanks to all the legwork the original company did, and sell it on the shelf next to the original product for 10% less because they don’t have the years of development costs to recoup? If the original company needs to sell x units (current market) over several years to make a profit, yet someone could come in within a year and take most of the market with a less expensive knock-off, where’s the incentive and income to develop further?

Competition is good, but the patent system was set up to promote innovation by allowing inventors the protections of a temporary monopoly to recoup such costs. The patent system certainly needs protection from trolls and whatnot, but it shouldn’t be abolished.

DJ (profile) says:

Re: Re:

“where’s the incentive and income to develop further?”

There are only TWO certainties that never (significantly) change no matter what happens, or where people are living:
1) People need water
2) People die

Why did I not include food or birth? Because those needs significantly change from place to place, and VERY rapidly.
So unless you sell water or death-related services, you MUST MUST MUST MUST MUST constantly strive to improve your product.

P.S. even water has become a booming business lately, so that is beginning to go the way of food-related needs.

Anonymous Coward says:

Re: Re: Re:

I agree. But if you’re not getting any income from what you’ve already produced, how can one improve? You could borrow to make an improvement, but what happens when that improvement quickly gets copied? It ends in you giving up and going back to digging a well and subsistence farming. Or going into politics. ;p

nasch (profile) says:

Re: Re:

You’re basically saying people won’t take risks in business. They only do something new if they’re sure they won’t have any competition. This is nonsense. If there is a demand not being met, somebody will try to meet it. Usually lots of somebodies. Even without patent protection, someone will decide it’s worth the risk to be the first one in to satisfy a demand.

Anonymous Coward says:

Another lovely from Mike

I forgot to paste these two in. Note Pfizer is now in litigation over Lipitor generics. http://www.fiercepharma.com/story/pfizer-sues-dr-reddys-over-lipitor/2009-12-10

AND….check this out…Pfizer is now getting into the Generic Drug Manufacturing business. Why? Because it’s easier to copy someone else and make a buck rather than put your own R&D into it. If Pfizer can make a generic Aspirin and sell under the PFizer name, which has “Brand Recognition”, then they’re profit margin is that much greater for that product…no R&D.
http://www.bloomberg.com/apps/news?pid=20601080&sid=ayjc2PlZcHnE

6 (profile) says:

“The quality of ordinary, handheld hammers does not vary much, as long as the head stays on the handle.”

Actually that’s not true, and if you hammered nails for a living you’d know that. Some hammers are superior in material/design to the point that a novice can hammer a straight nail just about every time. Hand him the shit y hammer and the same will not apply. I’m speaking from experience.

Lobo Santo's Ugly Cat says:

While the cartoon makes an amusing point, it fails in many ways to explain what really happens in the real world.

First off, If you are in the same business and a year behind, it is unlikely you are copying someone else, but rather trying to get past them. Mere duplication in most cases is very easy.

Second, if it takes a year to only duplicate it, it probably took many more years to develop – so when you do get there, you will have a “cost of many years” advantage over the incumbent, which will allow you to gain market share rapidly (concept supported by the idea that generic drugs often take large chunks of the market away from expired patent holders)

Third, once you have spent a year to catch up to where the other guy was, and they have then spent the year moving ahead, the time to catch up to them next time should be shorter, as you are already most of the way there. If their 5 year development is your 1 year duplication, then their 1 year development is probably a 2 or 3 month duplication. The longer the game goes on, the closer you are all the time.

So sorry Mike, I guess they didn’t teach you this stuff in econ 101, most of us learn about it in RealLife101

nasch (profile) says:

Re: Re:

Third, once you have spent a year to catch up to where the other guy was, and they have then spent the year moving ahead, the time to catch up to them next time should be shorter, as you are already most of the way there. If their 5 year development is your 1 year duplication, then their 1 year development is probably a 2 or 3 month duplication. The longer the game goes on, the closer you are all the time.

By this reasoning, nobody ever does anything new without a patent. Car companies for example don’t bother coming out with new models, because somebody else would just copy them. Toy companies don’t make new toys, they just keep producing what’s been done before. What’s the point when somebody else would just copy it?

So sorry Mike, I guess they didn’t teach you this stuff in econ 101, most of us learn about it in RealLife101

If you pay attention in RealLife 101, you’ll see that companies that don’t do new stuff generally get left behind, regardless of whether they have patents or trademarks stifling competition.

Willton says:

Re: Re: Re:

By this reasoning, nobody ever does anything new without a patent. Car companies for example don’t bother coming out with new models, because somebody else would just copy them. Toy companies don’t make new toys, they just keep producing what’s been done before. What’s the point when somebody else would just copy it?

Just so you know, toy companies and car companies utilize the patent system regularly. And yes, if such companies don’t think the expense of R&D to develop these new car models or new toys will be recouped and then some by selling the product when it can be easily copied, then yes, they probably will not develop said products.

Apparently you don’t think it costs much money to employ automobile design engineers or toy designers. I take it you’ve never been a part of such industries.

nasch (profile) says:

Re: Re: Re: Re:

Just so you know, toy companies and car companies utilize the patent system regularly.

Of course they do. But they cannot patent everything they do. Some updates/new products are not patentable, yet they come to market anyway.

And yes, if such companies don’t think the expense of R&D to develop these new car models or new toys will be recouped and then some by selling the product when it can be easily copied, then yes, they probably will not develop said products.

“Easily copied” is for the most part a myth. You really think a new car model would be “easily copied”? Toys are simpler, but look at Lego compared to the ripoffs. Lego is more expensive and higher quality, and despite other companies copying their product (to the point where you can snap the different brands of bricks together), they still sell in huge numbers. Far, far more than any copycat.

Apparently you don’t think it costs much money to employ automobile design engineers or toy designers. I take it you’ve never been a part of such industries.

Apparently you like making stuff up about what I wrote. And also making completely irrelevant assumptions.

Gene Cavanaugh (profile) says:

Dilbert cartoon

Two problems:

1. This cartoon has nothing to do with whether or not we should have a patent system, and
2. “Those who don’t know history are doomed to repeat it”. There are multiple cases of someone having an invention stolen, or refusing to reveal an innovation, etc., to the public because they could not protect it from theft. In fact, the latter is the real reason the founding fathers mandated such as system.

Even so, I do favor changing the CURRENT system, it is awful.

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