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A Tech-Econ Mashup with a Libertarian Flavor

Idea vs. Execution

Techdirt’s article on marketplace losers who litigate compares the economic value of an idea vs. the business execution, citing Facebook’s recent settlement with ConnectU, a failed social networking site which accused Mark Zuckerburg of stealing their idea.

Well, we keep seeing scenarios where winners innovate, but losers litigate. That’s because the market “losers” claim that they had the “idea” that allowed the winners to innovate and succeed in the market. But, of course, that overvalues the idea and greatly undervalues the actual execution. Anyone who’s built a successful business recognizes that it’s the process and execution that leads to success — not the idea. But, with courts all too often rewarding the losers, it’s simply too lucrative for marketplace losers not to sue… Imagine being handed millions for failing in the marketplace? Why wouldn’t you litigate? But, if you believe in basic free market capitalism, you should recognize how this is rewarding exactly the wrong behavior. It punishes those who best served the market, and rewards those who couldn’t serve the market.

How do we determine the economic value of a business idea in the first place? Or of intellectual property in general? Should there be protections in the form of copyrights for the original “idea people?” Could not having such protections in place inhibit innovation – by making it riskier and hence less attractive?

I’m open to arguments from all sides regarding IP.

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Filed under: Economics, Tech Biz,

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Whenever you find that you are on the side of the majority, it's time to pause and reflect.
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