Innovation: history’s great free lunch

Author:Mark F. Schultz
Position:Director and Senior Scholar, Center for the Protection of Intellectual Property, Antonin Scalia Law School, George Mason University, Arlington, VA, and Professor of Law, Southern Illinois University, Carbondale, IL, United States of America

Innovation as a concept suffers from the paradox of being both overexposed and underappreciated. Countries seek to build innovation economies, regions want to be innovation hubs, companies hope to be seen as innovators, and so on. People certainly see innovation as important and desirable, but they sometimes fail to recognize just how fundamentally important it is to the modern economy.


The role of innovation in driving economic growth is nothing short of astounding. For developed economies, most of today’s economic output can be attributed to the technological innovations of the past 150 years. The world owes much to innovation, and to the intellectual property (IP) systems that secure investment in it.

Defining innovation

The OECD defines innovation as “the implementation of a new or significantly improved product (good or service) or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations.”

Definitions vary, but this one is useful as it casts a wide net over new, economically beneficial activities. Human creativity is constantly seeking ways to improve economic activity, develop new business models and processes and provide us with new goods and services.

The breadth of activities covered by the concept of innovation is also reflected in the annual Global Innovation Index (GII) (see article) produced by WIPO and its partners, which benchmarks the innovation performance of some 130 countries against more than 80 factors.

Innovation is more than just invention. People have great new ideas all the time, but creating a marketable product is the challenge. The economist Joseph Schumpeter famously observed that innovation happens when an invention is brought to market so people can enjoy its benefits. This distinction between invention and innovation helps to highlight the importance of IP as a means of securing the investment needed to develop and commercialize inventions so that they can indeed become innovations.

Three key types of innovation

There are many types of innovation, but let us take a look at three specific categories that attract a lot of attention in international policy circles.

The first, breakthrough innovations, needs little explanation. These are game-changing technologies that transform society and business. They disrupt established practice and can spawn whole new industries. Examples include the internal combustion engine, antibiotics, and more recently the mobile telephone.

Before mobile telephony could take off, wireless networks needed an efficient and nimble way to manage a large number of signals sharing limited radio waves. The breakthrough came in the form of not one, but two, separate innovations. CDMA (Code Division Multiple Access) technology, widely used in the United States, was invented by Irwin Jacobs and...

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