Piracy makes companies invest more in innovation, study says

According to a study published by the US Patent and Trademark Office (USPTO), online software piracy tends to drive innovation in companies. According to the material, the practice may motivate companies to invest more in research and development (R&D) in an attempt to inhibit piracy and protect their production.

In this case, the study indicates that piracy does not reduce the amount of new films produced, nor does it slow down music production or innovation. The material was researched by Wendy Bradley, assistant professor at the Cox School of Business, and by Julian Kolev, economist at the USPTO.

The material relates the so-called “piracy shock” in the launch of BitTorrent 20 years ago, as it is considered “ideal” for measuring these effects. That’s because, in addition to the popularity and functionality of file sharing, the software also facilitated illegal dissemination.

Piracy “drives” innovation

In practical terms, the survey shows that if there is a 10% increase in piracy, spending on R&D tends to rise by around 2.8% in companies. “We found that increased piracy increases subsequent spending on R&D, copyrights, trademarks and patents for large software companies,” say the researchers.

Thus, the sample cites that there is “a strong increase in innovative activity after the shock of piracy, but also [que as] companies have changed their intellectual property strategies to seek a more diversified portfolio.”

The survey, which can be read in full on this page, does not mention specific innovations made by companies that are more likely to be at risk for software piracy, such as Microsoft and Adobe.