Success is well-known to breed imitators, but it also attracts pirates. As one example, look at the rapidly expanding LED lighting sector, a global market that has been driven in significant part by innovations that have emerged from the Research Triangle.
Many of those locally borne innovations have helped make the LED lighting market a $5 billion annual business that is projected to grow to nearly $50 billion in the next five years as longer-lasting, energy-saving LED lights replace old-style incandescent and fluorescents.
Now here come the pirates.
Their goal: appropriating the intellectual property that has created the LED market, putting out their own, lower-quality LED bulbs and enjoying the benefits. And what of the capital investment, hard work and job creation that were at the core of local innovators’ operations? Why innovate when you can pirate someone else’s innovations and derive the same benefits?
This may sound abstract, but its effects play out in big boxes and hardware stores. People buy LED bulbs for a variety of reasons, but the two primary ones are to save money through energy efficiency and to lower maintenance due to extremely long LED lifetimes. The latest LED bulbs use 85 percent less energy than traditional bulbs, last 25 times longer and help to protect the environment by not using toxic mercury like compact or linear fluorescent products.
Illegitimate copycat LED bulbs, on the other hand, damage the entire market for LEDs by diminishing steadily, thereby eliminating the promised economic advantages while delivering disappointing performance. In other cases, copycat bulbs don’t meet their claimed performance characteristics even from the start, such as by failing to distribute light evenly.
But IP pirates don’t care about meeting promises. For them the equation is a simple one: Rip off someone’s intellectual property in order to get accredited in the LED lighting market and then, once in, lower your manufacturing standards in order to cut costs and increase margins. After all, what consumers don’t know won’t hurt them, right?
That’s exactly why Cree, the company I helped found in 1987 with technology developed at N.C. State, has taken its concerns over copycat LED bulbs to the U.S. International Trade Commission. The ITC is charged with protecting American firms from abuses of exactly this sort. I’m delighted that last week it took up the case and launched an investigation. A single investigation won’t solve the whole problem of IP piracy, but it’s a step in the right direction.
IP infringers call local firms that protect their IP rights “anti-competitive.” In fact, it’s just the opposite. The technology space is founded upon and fueled by honest competition – emphasis on honest. Innovation from one player often spurs innovations elsewhere, leading to collaboration that provides vital, business-supporting revenue streams in the form of licensing agreements. Cliché or not, these are true “win-wins” – everyone benefits: the collaborating licensees, consumers, the larger economy, everyone. Who wins when patent infringers succeed? Only the pirates.
If we value innovation and the benefits it brings – high-value jobs, economic opportunity and, in the case of conversion to LED lighting, up to a 15 percent drop in the amount of energy consumed in the U.S. – we must commensurately value and protect the IP that invariably underpins that innovation.
You can’t get one without the other.
Neal Hunter is a co-founder and the former president, CEO and chairman of Cree, Inc.