IP management best practices in Open Innovation

Our modern corporate R&D landscape looks very different. Well-known startups like Amazon, Google, and Facebook grew at breakneck pace and now dominate the Internet. Before them, two upstarts by the name of Apple and Microsoft successfully challenged the status quo. While R&D is essential to all these companies, they came of age in an era during which a premium was (and still is) put on getting to market as quickly as possible. The market demands it; technology evolves too quickly to be left behind.

This paradigm shift counsels companies to rethink their approach to R&D. Closed systems no longer allow the type of development—nor the realization of its benefits—required in today’s marketplace. Rather, R&D should be focused on promoting open innovation-based platforms around which entire ecosystems can be fostered. 

Companies that pursue open innovation strategies share some common traits:

1. They are willing and wish to source and use externalknowledge, ideas, intellectual assets, and technologies to complement their internal capabilities.
2. They understand that such complements allow them to capitalize on opportunities, especially with the right IP structure and strategy in place.
3. They wish to create new products and services.
4. They improve their processes.
5. They design new organizational systems and business models.

Open Innovation and Intellectual Property coincide particularly well when companies  realize that they shall capitalize on opportunities rather than only on properties

And if contradictions exists they are rather in companies’ mindsets than between the actual concepts.

In the Open Innovation camp, stakeholders recommend to use light processes to conduct projects so that information can be shared between innovation seekers and solution providers without unecessary barriers. This is absolutely needed when a company sends a call for ideas in the hope of receiving tens of answers in their selection process. Having NDAs prior to information exchange or keeping innovations secret is not consistent with that plan of course.

Following to these principles, thousands of industrial problems are made public and even more proposals for solutions are shared with the thinest protection of a click on a web page.

With such a contradiction one can legitimately ask questions.

The seeking company’s main questions usually are:

1.  What will happen to my technical challenge? Can’t competitors use it against me ?
2.  How can I protect my products against copycats if I don’t fully own the IPs ?

The experts or providing company’s questions are:

3.  How can I protect my know-how from being stolen with such a light process ?
4.  Am I weakening my position in the long run by sharing or licencing my IPRs ?

Well, as you can guess, as Open Innovation experts we do have the answers :-) and to thank you for reading up to this point I will now give you an overview.

Open Innovation platforms embed the answers

The first question from the seeking company relates to a potential risk in disclosing an industrial problem including to competition. Indeed no one wants that others know the details of our problems, not only in business.

This one is easy to answer, firstly Open Innovation Platforms allow to post questions and challenges anonymously. At Incubatehub we have developed a workflow that allows seeking companies and solvers to enter into anonymous discussions and negotiations until both parties agree to start a collaboration.

Secondly, one shall ask the question of the actual risk if the challenge question is disclosed. In most cases that we have dealt with, the questions asked were related to the improvement of an existing product (so the product and its performances are already known and a disclosure is not a big risk). Others are related to peripheral features of a product so they aren’t in the core activity of the company therefore limiting the risks.

The answer to the second question is slightly more technical. Let’s assume that you have found a technology that you want to incorporate into your next product,  there are two options: the technology is either protected by the provider or it is not. If it is protected by a patent or even only a proof of anteriority, then, as part of your agreement you will ask for a right to use (licence), potentially exclusive, or you may acquire the patents. Indeed a right to use does not allow you to sue potential copycats, however a good laywer will have added a commitment by the IPR owner to assist you and prosecute companies who will infrige your exclusive licence. If you want the maximum security, the patent acquisition is the right option.

If the technology was not protected by the provider then it is probably too late to do so and your agreement will include an exclusive licence on the know-how and secrecy will be the rule regarding this unique technology addition !

But before putting a complex legal framework in place one shall consider the actual premium paid to the company getting first on the market for this product or feature ? In many cases, being first makes such a difference that the risk of being copied one year after has little to no importance. Of course this factor varies significantly depending on the market and the products lifecycle.

The third question (provider protection) is one asked very often. On Open Innovation Platforms, solution providers have to disclose some level of information to tease the seeking company without taking too much risk of having the ideas stollen.

Again, we have two situations here.. If the invention is protected then it can be disclosed and the rights on it can be promoted. If it is not, then information exchange shall be conducted with caution. Lawyers and OI intermediaries are used to this tightrope walker exercise and can support you. At Incubatehub we put the emphasis on describing the external characteristics of inventions, as the key performances, instead of disclosing to much about the implementation. After some anonymized Q&As, when the seeker is convinced about the seriousness of the proposal, then he can decide to enter into a confidentiality agreement.

The answer to the fourth question is a matter of both conviction and realism. Technology licencing and integration is a natural flow in a global world. Both parties benefit from the exchange, one with a new revenue streams the other with an improved time to market. As a matter of fact, universities laboratories have a mission to licence their inventions and companies’ labs often work with their IP department to find new ways to market. Still, caution shall be paid on the licencee’s position in the market; restricted fields of applications may be specified in the licences to avoid a potential competition in the inventor own business area.

Finally, the exact answers to the parties’ concerns depend on: the nature of the Open Innovation project, the situation of the seeking company on IPRs, the nature of the end product and market, and on the technology provider’s situation.

So the seeking company shall ask itself the following questions first:

 – Am I looking for a product core technology, improvements or peripheral functions ?
– What is the added value of the  technology for my product and business ?
– Can the provider compete with me on my market at some point ?
 – Is time to market more important than long term protection for this product ?

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