Friday, March 09, 2012

Fast Follower or Infringement??

(Note - I have to give credit for finding this to Business Week, but you have to be a subscriber to see the article online, so I can't link to it).

Here is a business model that is right on the gray line between intellectual property infringement and fast follower. There is a German company called Bamarang that is a pure fast follower. A few months after a company called launched in New York City (it is a flash deal site for vintage accessories like vinyl records, Bauhaus posters, etc), Bamarang came out with an identical business in Germany. And as a web company, it is just as accessible to customers all over the world. What makes their "cloning" a little over the top is that the color scheme of the site, the layout, typeface, and even the photos on the home page look exactly the same as Fab. There was once a lawsuit between Apple and Microsoft over the similar look and feel of their Office products. But apparently Bamarang knows how to skirt these laws by registering only in Germany.

They cloned EBay in 1999. Since then, they have cloned eHarmony, Groupon, Facebook, Zappos, Airbnb, Pinterest, and 100 other web-based companies. They don’t need to spend a penny on R&D, just copy and paste. They create the company, build up some sales, and then sell it off to VCs for hundreds of millions of euros. For example, their Groupon clone was the top deal of the day site in half of Europe. Because they know how to get around international copyright and trademark laws (they don’t register in the US – the home country of the companies they are cloning), there is little the US companies can do. Groupon threw in the towel by buying the clone for shares currently worth about $1 billion.  Not bad for a simple copy and paste action. 

One last note – would you believe that the founders are brothers whose parents are corporate lawyers?

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