Legal systems are designed for set ways of society, establishing rules to follow and listing what is a violation of the rule and what not. However, Innovations can change the way things work and they may sometimes fall within the purview of laws as they exist today or may fall in a grey area – where it is difficult to decide if they are on the right or wrong side of the law. Couple this with the fact that existing businesses / models pretty much are built around the existing legal systems and they usually would not allow anything to go outside the legal limits. What happens when an innovation becomes mainstream that not only disrupts the existing businesses but also requires the laws to be modified accordingly.
Incidentally, legal systems take their own time to change, they do not work at the speed of change in the rest of the environment, so while they understand the new system – debate and discuss its merits and the changes that need to be made, the existing laws continue to be relevant. This gives an advantage in the hands of existing players who can use law to stop innovations – at least for the time being.
I think the legal systems response to Innovations could be a good area to explore.
Here read the case of Aereo, a Manhattan-based startup in this HBR Blog Aereo Isn’t Illegal Just Because It Threatens Broadcasters by Orly Lobel