by Mike Masnick

Filed Under:
ip obesity, open source hardware, patents


Sparkfun CEO Explains IP Obesity: Companies Who Rely Too Much On IP Flop

from the a-primer dept

A few folks sent over a great blog post by Sparkfun CEO Nathan Seidle about a recent TEDx presentation he did on the topic of "IP Obesity," in which he argues that companies that focus on patents tend to get fat and lazy while others out-innovate them. He provides the following example, showing this chart:
Here's an interesting example. Kodak is an amazing company that has been in operation for over 130 years. In 1978 Kodak filed for a patent for an electronic still camera, the precursor to the digital photography industry. They had a 25 year head start on the industry. What did Kodak do? They licensed their patent and filed suit against other companies that possibly infringed upon it.
A graph showing the stock value changes of two companies over the past 25 years. I'll let you guess who is Canon and who is Kodak. What happened? Kodak relied too much on their patents. They rested on their laurels and become intellectually unfit. They were afflicted by IP Obesity.
Of course, that's just a single example, but we've noticed it in other cases as well. When we see bigger companies getting more aggressive with patents, it almost always seems to signal a decline in prospects for the company -- because they've become fat and happy resting on their laurels and government-granted monopoly privileges, rather than continuing to innovate in the market place. It's the exact opposite of what we're told patents are for.

You should check out the rest of the post, but Seidle goes on to talk about how ideas get copied all the time, and why that shouldn't concern you. He explains why it makes much more sense to focus on just building your business -- and he's got Sparkfun to prove it. If you don't know (and you should) it's an open source hardware company that has done over $75 million in business since its inception and is apparently on pace to do $25 million alone this year. Seems like you really can build a pretty good business while still being pretty open and not worrying about others copying you.

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  1. identicon
    Andrew D. Todd, 26 Sep 2012 @ 8:28am

    Kodak and Fine Cameras

    Well, I think I would take the view that Thomas P. Hughes expressed in his biography of Elmer Sperry-- that people begin collecting patents when their businesses are going wrong.

    Anonymous Coward #25 is right to observe that Kodak had certain capabilities-- these were mostly centered around the chemistry of making and processing film. Of course, Kodak produced some very sophisticated high-end cameras for specialist laboratory use and the like, but it did not get into the business of mass-producing good cameras, things like the Hasselblad 60mm Single Lens Reflex (SLR), the Linhoff view cameras, the Arriflex and Bolex movie cameras, the Nikon F 35m SLR, and the compact Olympus OM-1 35mm SLR. The market opportunity when electronic cameras were emerging was to democratize a good camera by eliminating its dependence on film and processing. In fact, one of the earliest commercially available electronic cameras was an interchangeable unit for the Hasselblad, which installed in place of the film magazine/film holder assembly. Kodak sold cheap cameras ("Instamatic"), but by the time the price of electronic cameras got down to that range, the die was cast. At the critical point, it worked out to Hasselblad or Nikon saying to the professional photographer: "buy this three thousand dollar accessory, and it will save you time and money in the long run." Kodak simply wasn't positioned to do that kind of thing. By contrast, the upscale camera manufacturers had sold things like expensive lenses to the photographer, and an electronic camera was not so much of a leap in the dark. One illustrative case: Nikon had developed a special 200mm macro lens, with a built-in electronic flash, designed for documenting medical operations while standing well back, behind the surgeon's shoulder. Cannon (and Minolta) would have been described as second-string players in Nikon's market, not as fine as Nikon, not as dashing as Olympus.

    Kodak's specialty products tended to be special films, for use in odd light conditions. For example some photographers discovered that if you used Kodak's color infrared film to photograph banal subjects, you could get some really spooky effects. Of course, nowadays, you can do that kind of thing in Photoshop.

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