As lawyers specialising in intellectual property and business law we’re seeing in 2011 a spike of creative destruction at work in the economy, law and in legal practice.

What is the flow of this high level of change, what’s fuelling it, how can your business respond? This post is a brief enquiry into these questions.

We are asking these questions because economics, technology and business changes take place generally well before law changes in response. Understand the former and you’ll be better at anticipating the latter.


Thinking about the flow of creative destruction in the economy, in 2011 one flow pattern looks like this:

  1. Means of production change. Adoption or use of digital communications in a business or industry, or formation by them of effective online communities/intranet/extranet, or use by them of cloud computing > leading to
  2. Network economics kicks in. Redefinition of their business processes, and those of their trading partners, as well as within their markets > leading to
  3. Price expectations change. Redefinition of their prices for products or services. Consider for example the price redefinition of “free” for email accounts or hosting, or Apple’s 99c per song, or Amazon’s $9.99 per ebook, or Coles’ $28 for a case of Foster’s beer) > leading to
  4. Market redefined. Redefinition of their offerings (ie products and services), industries, or industry sectors as pre-step 1 arrangements and structures shift, change, realign, wither or die.
  5. Law redefined around new paradigms. We see this at work in copyright law as it has returned to its roots given as illustrated in a stream of recent Australian cases.

Steps 1 to 5 are a short and general statement of the flow for change. It’s a flow, not a formulae, because the patterns of change vary from case to case. A reminder, the above flow is just a snapshot.


The steps 1 to 5 flow is fuelled, especially step 4, by various developments:

  • Businesses small and big dying or shrinking due to changing supply chain relationships and profit margins. Consider for example the longer term impact of the house brands of Coles and Woolworths when it comes to milk, beer and other groceries. Consider also the decision revealed last week of Bunnings to not stock Wattyl products because Lowe’s (the Woolworths hardware partner) has a relationship with Valspar which now owns Wattyl. In these two examples recognise that Coles, Woolworths and Bunnings are involved in supply chain activities that are a world away from traditional retailing.
  • Digitally mediated production and distribution processes which have growing ramifications in the hidden revolution created by them. We “see” digital products or artefacts, we tend to not “see” changes in the means used to create, produce, and distribute them.
  • Demonetising and remonetising plays. For example consider the impact of the involvement of Google, Apple and Amazon with players in markets for selling text (books, newspapers etc) and music. Each of these powerful companies has had a reason for engaging in these markets motivated by a need to sell something more or something different to just text and music. Like Coles, Woolworths and Bunnings, they have entered markets, demonetised them, and then remonetised them in their own image. As additional examples see their impact also on the market for smart phones and tablet computers.
  • What needs to be known and done is something I’m finding clients increasingly under-appreciate, misunderstand or have confusion about. In my experience that is certainly the case as regards intellectual property identification, licensing and commercialisation. Creative destruction lawyers should point out to their clients what needs to be done, that’s what ethics require. There’s a challenge because clients understandably, but not necessarily justifiably, see advice delivery as something that needs to be done at a faster speed than ever. Clients and lawyers should both be cautious, pre-plan and marshall the required information and financial resources. A caution for clients is – they can measure speed, but many can’t measure the quality of speedily delivered legal advice… until it is too late.

Our response

Intellectual property law is the law for innovation. Creative destruction is innovation on a grand scale. Its effect is to remodel areas of business, industry, markets and technology. After creative destruction flows through, intellectual property and other laws are remodelled.

If we, as a law firm, are to deliver higher value, higher quality professional services then we must understand the changing business, markets and technology landscape being brought about by creative destruction.

Your response

"ip-lawyers-2"If you think you are in a safe industry, check that.

  • Sharpen your business and technology forecasting
  • Gain insights on market forces, patterns and players
  • Test your thinking on trends affecting your business
  • Develop actionable insights for taking informed risks
  • Decide how to implement change as needed

Lawyers and their clients need to be on the same page about such developments. It makes it possible to work together and respond to business and legal problems, issues and needs. Call if you want to review your challenges, ideas and circumstances.

Contact us with any questions or requests.

Noric Dilanchian