Information Technology (IT) Innovation is key to both businesses and their customers. Innovation enables businesses to create superior products and services that provide exceptional value to their customers. In the long run, innovation benefits everyone: businesses, customers, and the community at large.
What to Do About Proprietary Rights? One of the major challenges of IT innovation is how to deal with the proprietary rights of the business or person that owns the idea or invention behind the innovation. If proprietary rights are too restrictive, there is the danger of a new product or service either costing too much or not being available to the widest audience possible. On the other hand if proprietary rights are not honored, there is the danger of businesses and individuals not investing in new technology and ideas as they quite rightly fear that their investment will not be protected.
Definition of Proprietary Rights. Proprietary rights can be defined as the “property rights of the owners of proprietary information which may be protected under law. In contracting, this term refers to the data belonging to the contractor, and may include financial information, intellectual property (concepts, designs, techniques), technical documentation, etc. Proprietary rights for IT software and hardware can be protected by a variety of means to include patents, licensing agreements, agreements, and contracts.
Proprietary Rights – Enabling IT Innovation. Proprietary systems and patents are great enablers for encouraging the development of emerging technologies. Proprietary systems enable businesses to develop new systems quickly, thus enabling them to build systems quickly that meets their unique needs. Patents encourage businesses to invest in IT innovation projects knowing that their investment is protected if they are successful with the project. See WSJ posting, Patent Gridlock Suppresses Innovation, for how the U.S. patent system can protect proprietary rights and at the same time promote innovation.
Proprietary Rights – Inhibiting IT Innovation. Proprietary systems and patents can inhibit IT innovation when a given technology has matured or is in great demand. Additionally, proprietary rights can inhibit innovation if the owner of the patent or proprietary right is not bringing their valuable idea or invention to market. This becomes a non-value-add activity that hurts the community at large. Because of proprietary standards and patents, other businesses are inhibited from leveraging or further innovating a given IT technology, product, or service. In these cases the patent or proprietary system can maintain artificially high prices for users, limits use of a valuable service or product, or worst case, a valuable product is not brought to market. Innovation of a new technology or idea can be severely limited by the originator of the product or service. See News & Observer posting, Patent law must not stifle innovation, on how patents can stifle innovation.
Apple iPhone – Example of How Proprietary Systems Can Restrict Innovation. Proprietary systems are good when they introduce a new technology such as mobile web access. A proprietary system becomes restrictive when it begins to restrict innovation and further advances in a technology field. An example of a proprietary system restricting open networks is the iPhone. The iPhone has helped the industry define mobile web access, but it has some weaknesses that may be hard to overcome such as a background-processing capability (i.e., the ability to run multiple third-party apps at once). See posting, The Android OS – Open Vs Permission-based Mobile Computing, for more on open versus proprietary systems restricting innovation and open networks.
