For example, software for business methods is arguably patentable in the US but not yet in Europe. Yet others may not be able to take advantage of IPRs which have been granted to them because their products are too easily pirated. For example, artists' recorded performances may now be easily downloaded on to the Internet, making it difficult to recoup legitimate fees. 6.17 Alternatively, some companies may not be willing to apply for IPRs because the cost of being granted an IPR is that the innovation must be disclosed. Where a firm's competitive advantage resides in the ingenuity of a product that can be easily codified and imitated, such disclosure may give too much of an advantage to the next round of innovators.
Tacit knowledge is more difficult to copy, but also more difficult to patent.
But in general new regulations will lag behind market developments. Meanwhile, innovators may seek some other form of protection which will complement or bypass outdated rules. They may seek to protect their intellectual property through investment in complementary assets, for example in tacit knowledge which cannot easily be imitated, in company architectures, links with major customers and databases of potential customers, in advertising, brand names or reputations. Nevertheless, all forms of effective protection for innovation, whether through IPRs or market reactions, give innovators at least temporary market power. This may be beneficial where the resulting high market shares or profits are the reward for innovation, or even where long lasting high market shares or profits are the reward for continual innovation which keeps the leader ahead of the pack.