E-Commerce Clones: Entrepreneurship or Intellectual Property Theft?

Oki, Kelly | November 1, 2014

Electronic commerce (e-commerce) refers to any commercial activity in which an electronic communication medium plays a central role in the exchange of money for goods and services. First made available to consumers in 1991, when the Internet initially opened to commercial activity, the popularity of e-commerce among consumers has grown gradually. As Internet-security technology continued to develop in the early nineties, enhanced website functionality enabled businesses to begin selling products online. By 2012, the U.S. Census Bureau reported that e-commerce sales accounted for approximately five percent of total retail sales. Today, companies such as Amazon and Zappos generate astronomical sums of annual revenue and represent the pinnacle of success for many entrepreneurs hoping to launch similar ideas on the Internet. Of these many hopeful entrepreneurs, the people behind Rocket Internet (Rocket) are arguably the most successful in building new companies based on existing business models. German brothers—Oliver, Marc, and Alexander Samwer—are the topic of much conversation among those interested in technology startups. Operating through their startup incubator, Rocket Internet, the Samwers’ business model is simple: identify existing, successful business models in the United States and imitate them internationally. Claiming to be “execution” rather than “pioneer” entrepreneurs, the Samwer brothers have successfully cloned Ebay, Airbnb, eHarmony, Pinterest, Amazon, and Zappos, among others. Though the Samwers’ strategy is to operate these imitation websites in foreign countries, and thus avoid going head-to-head with their American counterparts, the Samwers often eventually sell the clones to the imitated companies. Many entrepreneurs revile the Samwers as unimaginative concept thieves; however, the Samwers maintain that there are many imitation websites, and that what sets them apart is the efficient execution of the imitated ideas. Additionally, the Samwers point out that many of the most popular technologies, such as Google, iPods, and Facebook were clones of other, less successful products. Even technology giants like Google and Apple were not the first to create the products that fueled their growth and success. For example, despite what many may believe, Google was not the first Internet search engine, and Apple did not invent the MP3 player, the touchscreen smartphone, or the tablet computer. Oliver Samwer explains that “most innovations come on top of other innovations,” and that their approach should be treated no differently than any other invention that has improved upon preexisting technology. This Comment first analyzes and discusses the successes of the Samwer brothers and their startup incubator, Rocket Internet. It further evaluates why intellectual property protection, specifically a business method patent, is not available to protect the business ideas of the companies they clone. Lastly, this Comment explores whether intellectual property protection should be offered to companies with novel and creative ideas, or whether protection would retard, rather than promote, innovation.