(i) Creative consumer activity is increasing rapidly as consumers modify existing products and share their innovations online. (ii) Producer responses to creative consumer activity vary widely from actively restricting innovations to actively encouraging them. (iii) The legal landscape around intellectual property is changing slowly as it tries to adapt to the rising consumer innovation, creating a "conflicted velocity regime."

1. THE VELOCITY OF CREATIVE
CONSUMER ACTIVITY, PRODUCER
STANCES AND THE INTELLECTUAL
PROPERTY LANDSCAPE
Ian P. McCarthy

2. INTRODUCTION
• Why do we need to rethink strategies when the consumer creates the
value?
– The innovation landscape has changed
• Who should do the rethinking?
– Creative consumers?
– Policy makers/legislators?
– Firms/producers?
• Draws upon and adds to work by McCarthy et al (2010), Berthon et al
(2007), Fisher (2014), Fauchart & Hippel (2008) and Strandburg (2008)
• I am not a law scholar or a law professional.
• Legal and innovation context is US centric

3. INDUSTRY DYNAMICS: VELOCITY
• Speed is central to industry change (dynamism) and performance.
• High velocity industries (environments):
– “those in which there is a rapid and discontinuous change in
demand, competitors, technology and/or regulation” (Bourgeois
and Eisenhardt 1988: 816)
– “market boundaries are blurred, successful business models are
unclear, and market players (i.e. buyers, suppliers, competitors,
complementers) are ambiguous and shifting”. (Eisenhardt and
Martin 2000: 1111)
• Velocity is the rate (speed) and direction of change

4. PRODUCT VELOCITY
2005
2010
Continuous and 6 new models
Discontinuous
4
From: McCarthy I. P., Lawrence T. B., Wixted B., & Gordon B. R. 2010. A
multidimensional conceptualization of environmental velocity. Academy of
Management Review, 35(4): 604-626

5. REGULATORY VELOCITY
August 9, 2001
Discontinuous:
Increased to
over 1000 lines
Mar 9, 2009
Discontinuous:
Restricted to 21
lines
From: McCarthy I. P., Lawrence T. B., Wixted B., & Gordon B. R. 2010. A
multidimensional conceptualization of environmental velocity. Academy of
Management Review, 35(4): 604-626
5

6. VELOCITY FRAMEWORK
Discontinuous
The velocity of:
(i) creative consumer activity,
Direction of
Change
(ii) producer stances
(iii) intellectual property landscape
Continuous
Low
6
Rate of Change
High

7. USER INNOVATION AND CREATIVE CONSUMERS
• User innovators are “individuals or firms that create novel things to
use, rather than wait for manufacturers to identify, create, and
deliver these things to satisfy the need or desired use” (Hippel,
2007).
• I am focused on:
– Individuals, not firms.
– individuals who modify existing products, as opposed to those
who design completely new products
• These individuals are called ‘creative consumers’ (Berthon et al
2007)

8. DAVE HURBAN – BODY MODIFIER
Click to watch video

9. THE LASSI WASHING MACHINE
Click to watch video

10. CREATIVE CONSUMER ACTIVITY (CCA)
Torrance & von Hippel 2013
Rate of change = high
Direction of change = continuous

11. PRODUCER RESPONSES (PR) Berthon et al 2007
Active
RESIST
Actively restrain
the innovation
e.g., block all,
integration
ENABLE
Actively facilitate
the innovation
DISCOURAGE
Defacto ignore or
tolerate the
innovation e.g.,
acquiesce
ENCOURAGE
Happy to allow
but don’t help the
innovation
Producer action
to CC innovation
Passive
-ve
11
Firms attitude to CC
innovation
+ve
Berthon P. R., Pitt, L. F.,
McCarthy I. P., & Kates S.
M. 2007. When Customers
Get Clever: Managerial
Approaches to Dealing
with Creative Consumers,
Business Horizons, 50(1):
39-47

12. PRODUCER RESPONSES (PR)
Block all, block some, block none (Fisher 2014)
Block all by restricting
Block all by integration

13. PRODUCER REPONSES (PS)
Block some: do no harm
Click to watch video
Block none: acquiesce
Click to watch video

14. PRODUCER REPONSES (PS)
Block none: appropriate
Block none: competitions and tool kits
Rate of change = high
Direction of change = discontinuous

15. THE LEGAL LANDSCAPE
• Producers
– Copyright, patent protection and trademarks.
– Digital Millennium Copyright Act (DMCA)
– Forces: compensation, labour-desert theory and personality
theory (Strandburg 2008)
• Creative consumers
– Fair use doctrine
– First Amendment for freedom of expression
– Forces: market failures, distributive justice, human flourishing
(Strandburg 2008)
– Norms-based IP systems (Fauchart and von Hippel 2008)
Rate of change = low
Direction of change = continuous

16. Stances of
producers
Discontinuous
Continuous
Direction of change
VELOCITY REGIME
A conflicted velocity regime:
“diverse, coupled and
contradictory velocities”
McCarthy et al (2010)
Normsbased IP
systems
Legal
landscape
Low
Creative
consumer
activity
High
Rate of change

17. CONCLUSIONS
• Conflicted velocity regimes present costs to society:
– Misfit costs
– Costs of delays and missed opportunities
• IP Response should consider different innovation contexts: cultural
innovations vs. artifact innovations; medical innovations
• Norms based IP systems.
• A lot of creative consumer activity is hidden and more protected
than is assumed.