Through the magic of software and computational power, its possible to have steps automated or abstracted down to simple implementation.  But underneath the surface (easy to implement), there are some details to understand.

There are four types of Intellectual Property (IP):  Copyright (software, music, video, books…etc.), Trademark (logo, brand), Trade Secret (like the way Apple does certain things and the Coca Cola recipe), and Patents (inventions).  These various forms of IP have different aspects of how they generate value, from exclusivity or letting others have under specific licensing terms.  The United States, and virtually every other country in the world, have agreed to forms of IP as a legal or constitutional construct as a way to reward creators for creating, and not just having the value taken for free, or cloned.

Dan Abelow is an independent inventor who visualized/created metaphors, documented for the world to see (in exchange for exclusivity) and created value for doing so.  This ideation, as expressed in the patent, enabled a building block for others to build on and create more value.  Like an app developer writing software (a copyright), he created intellectual property (in this case, a patent).  

Many industries study the IP landscape prior to releasing a product or service and either design around or acquire necessary patent rights if they need them to do their solution.  Usually these industries have significant capital at risk to build and/or market, so they have an economic rationale to invest resources up front to understand and clear IP rights.  Oil companies do not drill on land where they don’t have the rights.  Movies aren’t released that don’t clear all the music rights.  Clothing manufacturers license logos from Disney or the NFL to include them in their product.   

Historically, the tech industry did not clear patent rights in advance because the amount of time and effort to do so made no economic sense given the relative low cost to create software and the speed at which products were being released… so a norm has arisen where it’s build and ship now, and worry about clearing the patent rights later.

Now, many tech companies large and small dedicate a portion of their product or services cost to building or acquiring necessary rights.   In some cases, like Apple, they do significant R&D to create their own intellectual property advantages, either to keep exclusively or to license to others (and get economic value for the effort).  Sometimes it necessary to license 3rd party patent rights to enable certain functionality.  For instance, Apple pays license fees for audio compression, video compression and the SD card slot. 

Sometimes the value of hardware, software and patent rights are bundled together for an easier way to acquire them, sometimes certain software or rights are separately available, and not in the bundle.  For convenience, its nice when the bundle includes all necessary rights.  Although sometimes, people don’t want to buy a bundle and they want to buy a la carte because it makes more economic sense for only those using the functionality to buy versus buying for everyone.  Music is a case where consumers moved away from the bundle of a CD towards singles, so that they could buy just the ones that they wanted/needed.  

In a multi-function world, where there are many functionalities included in a product or service, there may be additional IP elements that need to be licensed.  There may only be select application vendors who use certain functionality, but many who do not.  Also, the rights holder may choose to sell into a bundle, or may choose to sell a la carte.

The app vendor relies on IP laws to get paid, and gets to choose whether their app is sold a la carte, or in a bundle, and by which means (retailer, direct…etc).  And of course, these patent rights have a similar set of conditions (except when argued that patents shouldn’t because its inconvenient to take a license or to pay).  Yet every major technology product cycle from agriculture, mining, radio, television, and even into the current mobile handset/network world has dealt with patent considerations. 

 


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