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SEEMS LIKE A GOOD CHOICE?
It often takes a significant amount of time, money and effort to register and file intellectual property. Questions about IP’s value might run through an innovator’s head. Why should I wait and pay a significant fee, when I could have my new and exciting product ready for the consumers in three weeks?
With this in mind, first-mover advantage often seems attractive. First-mover advantage is the “ability of pioneering firms to earn positive economic benefits.”[1] Proponents of this theory argue that well-known brands, like Coca-Cola or Ebay profited by taking advantage of first-mover advantage.[2] This all sounds great.
Despite some success stories, there are many potential caveats to first-mover advantage.
FIRST-MOVER ADVANTAGE PROVIDES NO LEGAL PROTECTION
With registered intellectual property, you have some form of legal protection. With first-mover advantage, you have nothing. If a competitor creates a similar product, you could not bring claims of infringement and potentially lose profits. Furthermore, if they patent or trade-mark their product, they might be able to bring a claim of infringement against you. This could cause lost time and money.
By registering or filing your intellectual property, you are potentially saving yourself future legal battles. This is a case of money spent/money saved.
FIRST-MOVER ADVANTAGE IS AD-HOC
First-mover advantage’s success is situation-specific and related to “the pace of technology change” and “the pace of market evolution”.[3] First-mover advantage might not be the most appropriate choice for your field. When corporations successfully used first-mover advantage it was frequently in conjunction with patents.[4] A particular example is Amazon. [5]
WHAT IS THE TAKE-HOME MESSAGE
One should proceed carefully with first-mover advantage. Registered intellectual property always provides the benefit of legal protection.
[1] Marvin Lieberman & David Montgomery, “First-Mover Advantages” (1988) 9 Strategic Management Journal 41 at 41.
[2] Investopedia, “First-Mover” (n.d.), Investopedia (website), online:< http://www.investopedia.com/terms/f/firstmover.asp>.
[3] Fernando Suarez & Gianvito Lanzolla, “The Half-Truth of First-Mover Advantage”, Harvard Business Review, issue number not provided (April 2005) page number not provided, online:< https://hbr.org/2005/04/the-half-truth-of-first-mover-advantage> [The Half-Truth].
[4] Ibid.
[5] [The Half-Truth] note 3.