Let's say this research costs 1 million dollars, and the company bankrolls this via a loan. They build it and are successful, and begin paying it off.

Their competitor copies their idea, and exploits the fact that they have more capital and less debt to buy up more of the market, and end up the winner.

So, under a zero protection scheme it is optimal to wait until your competitor invests in research, and then just steal it. Which is what happens on a geopolitical level where there is no feasible enforcement possible.

Is it such a bad thing? The United States did it in order to industrialize and I would say that's a good thing.

The underlying issue with Pareto optimal scenarios like this is that we end up trapped in a local minima.

I think in a particular case it's important to look at the context. For this, it likely depends on the scale, so in small town Georgiaville it would prevent innovation, but across the world scope its better* for ideas to be free.

*given most mainstream progressive utility functions and non-zero-sum philosophies

Some inventions are pretty expensive, like mRNA vaccines. If there is no way to profit from them, no one will spend crazy money on the research.

(Notably, mRNA was originally researched by the academic sector, but it did not recognize the importance of the topic and Katalin Karikó had to move to the private sector to finish her work.)