[This chapter] This chapter concerns the relationship between intellectual property (IP) law and innovation in technology and product design in general. Further chapters return to this topic but within the specific confines of particular legal regimes, such as patents, designs or copyright. A major premise underlying this book is that innovation and imitation are predictable competitive behaviours in a market economy. The choice between the two strategies, in the absence of rule constraints, seems to favour imitation: innovation is uncertain, requires diversion of scarce resources from other activities, and risks immediate subversion by competitive imitation. Imitators on the other hand tread a known path, avoid all the risk and expense of innovation, and can enjoy the full benefit of their natural advantages. Nonetheless, to innovate is a natural ambition, and non-legal strategies allow innovators to capture greater returns from innovation than imitators. Naturally, even though we speak of imitation and innovation as alternatives, they are often closely intertwined processes: firms innovate but also imitate, or imitate but also innovate, and the competitive process may not be accurately identified as entirely one or the other.

[Law, innovation and imitation] Certain parts of intellectual property law act to recast the parameters within which imitation/innovation decisions are made. These rules constrain imitation as a competitive conduct. The central argument justifying this normative interference is that greater social welfare results where the ‘natural’ balance between imitation and innovation is disturbed to favour the latter.