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Managing External Relationships and Intellectual Property

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External Innovation
In his seminal book Open Innovation: The New Imperative for Creating and Profiting from Technology (2003), Henry Chesbrough defines open innovation as the act of allowing external information derived from sources such as cooperation with universities or (corporate) venture capital efforts to become part of a companys innovation process. Thus, open refers to the companys facilitation of external information permeating the

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Today, innovation is about much more than just new products. It is about reinventing business processes and building entirely new markets that meet untapped customer needs. Most importantly, as the Internet and globalisation widen the pool of new ideas, it is about selecting and executing the right ideas and bringing them to market in record time. Innovation is not something that is unique to the R&D part of your organisation or company. Good ideas may come from anyone inside or outside the organisation. R&D spending is not the same as spending on innovation, and one of the ways in which companies are trying to encourage innovation is by opening their research and development. Through collaboration with suppliers and customers, sharing of software code with programmers and tapping the networks of scientists and entrepreneurs, they aim to broaden their level of feedback whilst gaining a greater understanding of the demand and response to their products and services. They are basically looking externally. Traditionally, internal innovation was the paradigm in which most companies operated. Most innovating companies kept their discoveries highly secret and made no attempt to assimilate information from outside their own research and development laboratories. This was driven by the belief that the smart people in our field work for us. However, in recent years the world has seen major advances in technology and society, changes which have facilitated the diffusion of information. Companies have also come to realise that not all the smart people work for us, and that we need to work with smart people inside and outside our company. Most companies will argue that they are already well versed in working with others. However, we are seeing a fundamental shift taking place. Whereas in the past companies worked with others, such as suppliers, distributors and subcontractors to conduct their normal business operations, we are now seeing companies recognising the need to collaborate and cooperate with external parties in the more innovative or researchoriented areas of their business. Of course, innovation can arise independently of whether or not innovation was the main reason for the collaboration.

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Not all of the smart people work for you. Complexity means that you probably cannot do it all yourself anyway. Simple economics means that you probably cannot afford to do it all yourself. Trying to do it all means that you may lack focus. Your internal innovation is not succeeding.

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companys boundaries, from outside to inside. Organisations need to achieve a perforated funnel where product development efforts may be started and supported by internal and/or external knowledge. The concept of open innovation is one of many pathways being created in the company, to allow new product ideas to travel inside and outside the firms boundaries and to be bundled with external skills and knowledge. In a world of abundant knowledge, hoarding technology is a self-limiting strategy. Nor can any organisation, even the largest, afford any longer to ignore the tremendous external pools of knowledge that exist. Open Innovation has become a very popular way to define external innovation in recent times. However, this can be a very confusing phrase at times and there are many instances where the term has been misunderstood or misrepresented. Some people have taken open to mean open to all, while others have understood open to mean free. Others still have taken the word open to mean that it is an IP rights or patent free zone. Therefore, the word external has been used in this book to try to avoid any such misunderstandings. External innovation can take many forms, including working with universities, cooperating closely with key suppliers and vendors, collaborating with application developers, content providers, technology and design houses, plus working with various communities including open communities, innovation networks and standardisation bodies, as well as customers and end-users. It can also involve working with start-ups and venture-capital-funded entities. External innovation can also vary in terms of the number of parties involved, the nature of the research or development type work in question, the actual technology classification, the funding model applied, the timescales involved and the overall scope of the collaboration and cooperation. Collaborating with an external innovator might be thought to mean an equal partnership between two parties who are pursuing mutually interesting and beneficial research or development type work. Today, however, many collaborations involve parties from very different types of organisations and of very differing stature and funding status. External innovators collaborate in many ways and innovators may find themselves working together on a sponsored project. They may make equal contributions to the project or one may be leading the project whilst the other is providing expertise on a smaller or more narrowly defined aspect of the project. Interdisciplinary projects occur when innovators from different disciplines are involved in a project in which, for example, they are looking at a problem from different perspectives, or when a project involves a complex set of questions that cross disciplines. Sometimes innovators work separately and yet collaborate on a project and this can occur in a variety of ways, but most frequently it is when they are working on different aspects of the same project, but exchanging data between one another. Based on research and analysis, and discussions with various companies and organisations, there appear to be a number of fundamental reasons behind why companies are embracing external innovation; for example:

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Given the number of different hardware and/or software layers and various technology building blocks integrated into many modern products and services, it is simply not possible for a single company to be the master of each and every single one. Making products and services which are feature- and functionality-rich introduces a lot of complexity, although it should be said that many end-users themselves prefer simplicity and ease of use with new products. However, technology is becoming more and more sophisticated. This, of course, provides some great opportunities to innovate but does stretch a companys engineering resource and competence capabilities and this increased product and services complexity is easy to see. The launch of many new end-user services taking advantage of the latest internet, wireless, mobile data and/or multimedia technologies is a good illustration of this increasingly complex technical and market environment. To be able to address these customer challenges in a better way, companies have to decide either to expand the scope and scale of all their related activities in the development, deployment and support of these new end-user services internally, or to engage in some form of external innovation. In the world of location-based products and services, the ability to sense, interact with, actuate and locate anything anywhere gives rise to a new services and applications paradigm. As information attached to things and places will be based on interoperability with other devices, consumers will then be

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The title of this section of the book is from the quotation by Bill Joy of Sun Microsystems, taken from an interview he gave on PBS TV in 2005. Bill had expressed concerns that there were not enough people entering science and technology careers and that these subjects were not as popular as they once were. He was asked by the interviewer if this really mattered and was it perhaps enough to have 12 really, really, really smart people so that you do not need 100,000 pretty smart people to support them? Bill argued that Silicon Valley would suggest otherwise. In his opinion, the real strength of Silicon Valley lay in the cross-play between the people and the existence of the infrastructure to go out and get new problems solved and to set things out so that you do not have to make your enterprises so large to achieve great things. Smart people are uniformly distributed and not all the smart people are working for you. There are many more smart people in other places, as there are within your company or organisation. Those companies succeeding with external innovation aim for a win-win relationship, believing that growing the pie means more for everyone. They will be determined to avoid non-cooperative, zero-sum relationships, aggressive bidding and playing one external party off against another. Companies wish to engage with the external innovator community, which is made up from a diverse collection of groups and individuals. They may be found at universities, at other companies or organisations or within your customer and end-user base. They may be found upstream or downstream from where your own company operates. They may also be employees of small, medium or large enterprises or may even be independent individuals. These companies are recognising that not all of the smart people may be found within their own organisations.

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Economic downturns adversely impact the business of many companies, with consumer demand significantly down and markets shrinking. Companies find themselves having to adapt their operations and cost-base to reflect the drastically changed business environment and in order to safeguard their ability to invest in its future growth and competitiveness. To help achieve the required cost-savings, companies typically assess all the available means to cut costs. First and foremost, acute economic situations and the related cost-cutting will demand that action is taken. At the same time, companies need to prioritise their activities and make sure that they focus on those tasks that are of importance when it comes to supporting the companys business and maintaining their competitiveness. Acute economic situations have made the need to evolve ways of working even more pronounced. Companies are forced to adjust their business activities in such situations, which will have a direct impact on their core activities. Tough economics times make it necessary for a company to develop its operational model to enable better focus and execution of key activities. Companies will also take various measures in order to increase their efficiency, including pruning of certain activities. This means that some of the activities of companies will almost certainly be downsized. Really tough economic situations increase the urgency of coming up with further cost-savings. Companies will find themselves exploring new ways of working,

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provided with immediate access to a new set of internet services in their environment. Again, this is a complexity challenge for the companies involved. If you have bought a premium-class automobile recently, it probably contains close to 100 million lines of software code, according to Manfred Broy, Professor of Informatics at Technical University, Munich, and a leading expert on software in cars. All that software executes on 70 to 100 microprocessor-based electronic control units networked throughout the body of your car. It is estimated that cars will require 200300 million lines of software code in the near future, thus highlighting the increasing electronic complexity of cars. Nowadays this increasing complexity of cars has become a major challenge due to the growing rate of electronic components and software and this trend has an impact on all phases of the life cycle of the car. Technological improvements, which have extended part-life and car reliability, have also increased the sophistication and complexity of car parts. One example is the hybrid car, which is basically a normal, fuel efficient car that has two motors, these being an electric motor and a gasoline-powered motor. It also has a special system to capture braking energy to store in an onboard battery. A hybrid car is indeed complex as it has two motors and all the ancillary systems to manage them, plus a heavy battery and a regeneration system which is used to produce electricity during breaking. The size and breadth of a companys product portfolio may also introduce a complexity which requires an army of support in terms of research and development, marketing, manufacturing, distribution and the supply chain. This can leave a company strategically vulnerable because as market leaders, and with a broad spectrum of products, they leave themselves open to niche competitors to come in and cherry-pick.

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Companies strive to achieve clear focus in their business and the enabling technologies. This is evident in the ongoing debates which rage about the vertical versus horizontalisation of business models or core versus context business-focus. Many companies take a horizontal business-model approach, supplying perhaps one layer with little other involvement. Others favour a vertical approach, which gives greater ownership of the solution and potentially greater business opportunities, but also means less focus and more risks. This focus debate is very obvious in the gaming console industry. The rapid shift in technology driven by the new generation of gaming consoles, such as the PlayStation 3 and the Wii is forcing companies in the gaming-console industry to really focus on their offering. With their high-definition graphics, frame rate and interface it is allowing the user, within minutes of booting for the first time, to be paired with a WiFi network, registered with the online community and downloading their first game from the Internet. This is a clear case where two companies, Sony and Nintendo, have taken a time-worn concept and made their own niche, focusing their efforts on offering a unique experience. Often he who does too much does too little.

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including centralisation of some activities and pooling activities where it makes sense, plus many other alternative ways of working. To be successful, every company needs to ensure effective operations and the profitability of its business. They need to increase their efficiency and competitiveness as well as maintaining a healthy cost-structure in order to take good care of the business for the benefit of both the company and the entire workforce. Only a healthy company can survive in the long term and offer job opportunities to its people. However, the smart companies are not just focused on cost-cutting, but are also looking to innovate their way through a recession and as a result, external innovation will most likely grow and expand for these companies. Sometimes it can be less expensive to have others do your innovating for you. It is possible to implement solutions which make it possible to delegate more of the management of innovation to a network of suppliers, universities and other independent specialists who interact with each other to co-create products and services. With a recession in full swing, the opportunity to collaborate with others in finding and developing new ideas is a strategic move that many companies are considering as a priority. External innovation has been adopted as part of a businesses dominant strategy as they have seen the power that tapping so much brainpower can yield. External innovation is most crucial in a recession when cost-cutting measures and redundancies are adopted and companies are required to do more with less. Many companies are finding that they no longer have the luxury of large research and development budgets and overhead expenses. Excessive budgets and long development cycles simply cannot be supported in a depressed economic environment. Instead, companies need to get a product or service to market as quickly and inexpensively as possible and external innovation represents a badly needed solution. By pooling resources and competencies, a company can develop new innovative products and services and can access new markets whilst reducing costs.

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An effective reward system must exist to encourage innovative activity. This reward system must consider objectives and feedback and have an emphasis on individual responsibility and results-based incentives. The willingness of senior management to promote and facilitate innovative activity in the company, including championing innovative ideas as well as providing necessary resources, expertise or protection, is critical. The necessary resources must be made available for innovative activities to encourage experimentation and risk-taking.

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Concern has been raised in recent years, especially within larger companies, that corporate research and development has sometimes not worked as well as it was hoped. These companies have indeed invested in research and development but without reaping any significant benefits, and whilst being outperformed by others. There has been much study of this subject and many diverse reasons for this have been identified. A company with internal technical strength is often tempted to develop its own technology and perhaps ignore other, better, technologies. Some companies, as they begin to grow, will become risk-averse. There may also be a lack of user understanding, appreciation and involvement and within larger companies, it is sometimes very difficult to keep everyone linked to the end-user. This lack of contact may be one reason for the failure of internal innovation. The management structure of companies will also change over time, especially as companies grow in size. Companies may have started out with many creative people in management, but are now managed by less-creative types or rather by people with less understanding and appreciation of the innovation process. The focus of the company may now be less on innovation and more on cost and financial matters. Some companies may be too organised or too disorganised, therefore making it very difficult for innovative projects to succeed. Certain studies have found that one of the most significant causes for new product failure in larger companies is the lack of integration of their internal research and development and marketing early in the innovation process. Despite its importance, a high degree of cross-functional integration is a rare phenomenon in many organisations that depend on successful development of new products and services. Literature does converge on at least five possible factors to explain the success or failure of internal innovation:

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Companies involved both directly and indirectly in the integrated circuit or chipset business are well aware of the need for a focused technology and business strategy. Some strive to create a unique chipset ecosystem by licensing some of their technologies to chipset vendors but avoid actually designing and manufacturing chipsets themselves. The chipset vendors then create commercial chipsets which they sell to all customers including their key partner or partners. Companies adopt this strategy to ensure continued competitiveness and it also ensures continued competitiveness in the changing external industry environment. This helps avoid very large investments that will continue to increase as the complexity of the devices increases. Such chipset strategies seek to tackle that complexity and the increased investment requirements.

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Cooperation and collaboration between two or more parties is not easy and the simple matter of getting multiple parties to start talking together can be a challenge. What is each party bringing to the table in terms of knowledge, competence and skills, how are the parties actually going to work together in practice, what is each party going to contribute and what sort of framework will govern the work conducted are some of the questions which must be answered. What do all parties ultimately wish to get out of the mix and how should success ultimately be measured are also questions which need to be answered in a way which satisfies all parties involved. Engagement in external innovation may pose considerable difficulties for companies, as working with external parties can create conflicts over IP and may remove the innovation process beyond their immediate control. Thus, many companies struggle to develop appropriate processes and systems to deal with external innovation and IP. When problems arise it is usually because the parties involved have different expectations and have not communicated with each other either sufficiently or effectively enough to express, understand and then resolve these differing expectations. The challenge is to create an understanding in all parties who participate and collaborate together, to ensure that differing opinions are to be expected and are acceptable. The ultimate goal is to create an environment in which disagreements can be expressed without fear. The values and principles which form the basis of a commitment to work together, and to resolve any conflicts, need to be clearly defined and accepted by all involved. For collaborative innovation to work well, the process must be conducted in an environment which promotes trust and respect, together with skill and knowledgesharing. Without some element of trust there will be no cooperation and collaboration and no innovation. It is also the responsibility of everyone to show respect to one another. Respect for emotional as well as logical concerns promotes the right kind of environment needed for collaborative innovation to flourish. Unity of purpose is a basic understanding of the goals and purpose of the group, as they collaborate together. Of course, there will be varying opinions on the best way to accomplish these goals and a good starting point is to have a unifying base and a common starting point, which is recognised and accepted by all. Collaborative innovation depends upon the courage and self-empowerment of those directly involved and accepting responsibility for the groups decisions. Unfortunately, our competitive nature can harm collaborative innovation and

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Researchers have interviewed the CEOs of many companies about this subject matter, and their concerns and findings about the efficiency and effectiveness of internal research and development have encouraged many companies to explore various alternative forms of external innovation.

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The organisational structure and mode of operation must include administrative mechanisms by which innovative ideas are evaluated, chosen, and implemented. Structural or functional boundaries tend to be a major stumbling block for many innovative people. The environment within the company must encourage calculated risk-taking whilst maintaining a reasonable tolerance for failure.

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situations can develop, where winning the argument becomes more important than achieving the group goals, thereby making cooperation difficult, if not impossible to achieve. An attitude of helpfulness and support will build and grow cooperation within a group. The free flow of ideas, even among friends, can inevitably lead to conflict. Diverse viewpoints will bring into focus and explore the strengths and weaknesses of the ideas being discussed and their associated assumptions. This presence of conflict can and does create an occasion for growth. Learn to use it as a catalyst for discovering creative resolutions and for developing better innovations. Many people participate in collaborative group work in a very egocentric way, but it is important to put this aside and accept the shared responsibility of helping to find solutions to other peoples concerns. Active participation is needed by all, and all sincere contributions are important and valuable. Because of differences in peoples skills, competencies, experiences, assertiveness, social conditioning, access to relevant information, and political and economic disparities, some people involved in collaborative innovation inevitably have more effective power than others. To balance this inequality, everyone needs to consciously attempt to creatively share power, their skills and information. Innovation cannot always be rushed. Often it will function smoothly, producing effective, stable results, but sometimes, when difficult situations arise, it requires more time to allow for the creative interplay of ideas. During these times, patience is more advantageous than tense, urgent or aggressive behaviour and success can be possible, as long as each individual acts patiently and respectfully. It can be difficult and frustrating for a group to actively engage in collaborative innovation when it is part of a larger organisation structure which does not recognise, support or participate in the process. Therefore, it is desirable for individuals and groups to recognise that they can be autonomous in relation to external power, if they are willing to take responsibility for their actions. Everyone has been exposed to bias, assumption and prejudice, which will inevitably interfere with a spirit of cooperation, collaboration and equal participation. Members must be responsible for acknowledging when their attitudes are adversely impacting any form of collaboration and for making the necessary changes to their attitude. When there is a supportive atmosphere for recognising and changing undesirable attitudes, then the group as a whole will benefit. Companies may claim to have fairly long traditions in collaboration with external parties, and that in many areas they are already dependent on external innovation, technologies and competencies, by saying that they are already engaging with suppliers and other external parties in collaboration projects and that this collaboration happens in various modes. However, companies will need to spend even more significant amounts of time and energy in co-creation collaboration and its importance will further increase going forward. It is also obvious that collaboration needs to take new flexible and more fluid forms in the future. Although companies may already have been involved in more traditional collaboration, for instance with key technology partners, they may still be struggling with some of the basics. Their processes, ways of working, skills and computer systems and services may be sufficient for internal collaboration, but may not yet measure up when it comes to external collaborative innovation. Consequently, a companys somewhat ad hoc working practices cannot provide it with the accumulated knowledge that is needed. Collaboration with suppliers and external parties may not yet be seen as a normal way of working in all areas. At its worst, this leads to a not invented here thinking, with internal barriers

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and sometimes very basic systems and tools slowing down any collaborative innovation projects, and at the same time making them inefficient and causing slippage.

Intellectual Property is the Currency of External Innovation

For most companies innovation is a prerequisite for success, since companies are under constant pressure to improve existing products, processes and services and to create new ones that will assure a constant stream of revenue for the firm. In addition to the uncertainty and risk inherent in the innovation process, companies face new challenges from the globalisation of research, including increasingly rapid and complex technological changes, a shorter time to market and increasing costs. Some industries, such as pharmaceuticals, are facing additional pressures in the form of patent expiration and price controls. As a result, many companies acknowledge that they can no longer innovate successfully on their own and need to engage in more aggressive and strategic collaborative research, with a wide range of partners, in order to be innovative. Air Products was founded in 1940 in Detroit, Michigan on the strength of a simple, but then revolutionary, idea: the on-site concept of producing and selling industrial gases, primarily oxygen. At the time, most oxygen was sold as a highly compressed gas in cylinders that weighed five times more than the gas product. Air Products proposed building oxygen-gas generating facilities adjacent to large-volume gas users, thereby reducing distribution costs. This concept of piping the gas directly from the generator to the point of use proved sound and technically solvable. In the intervening years, the company expanded its business through internal development and acquisitions and Air Products now serves customers from a variety of worldwide markets, including the industrial, energy, technology and healthcare areas, with a unique portfolio of atmospheric gases, process and speciality gases, performance materials and other equipment and services. Air Products also embraces various forms of collaborative innovation and has done so since its inception. Leonard Pool, the founder of Air Products, utilised partnerships with the US federal government to develop unique industrial gas generating systems in the early 1940s and the company has sustained and nurtured this tradition of collaboration with other companies, universities, governments and institutions around the world. In late 1995, the company established the Corporate Technology Partnerships Department, whose mission is to enhance the companys core technologies through strategic alliances with universities, government laboratories and unique research and development companies, including start-ups. Air Products is striving to accelerate the development of new innovations by identifying and facilitating early access to the worlds best technologies and expertise. It seeks to strengthen its technological options and create new ones through early-stage participation with potential customers and strong linkage to innovative organisations. It aims to expand its competitive technologies and to leverage its internal R&D through long-term collaboration, for both speed and cost-effectiveness. Their external affiliations are born of a strategic win-win outcome for both groups and are nurtured to deliver results through strong personal relationships on both sides. If you want to be incrementally better, be competitive. If you want to be exponentially better, be cooperative.

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Air Products has historically joined with universities through sponsored research agreements, patent donations, university research alliances and cooperative arrangements, as through this process it benefits from high-calibre technology networking. In addition to these collaborations with universities it works with institutions such as Federal Research Laboratories where each party owns the right to its individual research, with certain projects being jointly owned. Air Products has innovated with external companies by multiple mechanisms, including joint development with large and small companies, investing in small venture-backed companies covering a wide range of technologies, joint ventures and in/out-licensing. In these open innovation activities with external companies, the companies shared their expertise, including know-how and patent licensing. These on-purpose transactions are formed to advance the cause and pace of innovation to share future value between the two sharing organisations. The key IP consideration for Air Products is the ownership of foreground developed IP, especially patents. Jointly owned patents are not easily managed because individual countries have different laws regarding the rights of a joint-patent owner. For instance, some countries allow a joint owner to license patent rights without the consent of the co-owner, whereas other countries require consent by all the parties. There are also issues regarding the country or countries in which to file the patent. This often results in one party owning the patent in several countries, the other party owning it in another set of different countries, and possibly joint ownership in yet more countries. Patent filings are expensive and Air Products have found that it is difficult to get a consensus on where to file. Often it is easier to have ownership reside within one company and then provide a license for the other party to use the patent. When dealing with universities, Air Products has often run into the issue that by their charters, they are required to own IP that they develop, including jointly developed IP. While the university may own the patents, they often require the industrial participant to pay for, or at least share in the cost of the patent filings and maintenance. Another issue is the right to background IP, at least to the extent that it is necessary to practise jointly developed foreground technology. Many research laboratories and universities baulk at granting royalty-free rights to background IP and this makes it very important to carry out thorough due diligence prior to entering into a joint research agreement. It is important to know in advance that a company will be able to practise the technology that is jointly developed, without the need to negotiate a licence for foreground rights after the fact. Air Products is well known for its support of various forms of external innovation and it understands and appreciates the important role IP plays in supporting this model, where innovative solutions are identified and accelerated utilising relationship strategies such as university research and development alliances, global research and development in-sourcing, external providers, licensing-in, and joint development. Ultimately, IP is the exchanged matter or currency in open innovation transactions and having an understanding of how to manage this currency in such transactions can be a hidden intangible asset for large companies such as Air Products.

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Collaborating with external innovators can take many forms. Those collaborating have expectations as to what the nature of the relationship should be, including the rights and responsibilities of each party. Sometimes, the term collaboration may have different meanings to the collaborators and others who may be directly or indirectly involved. If these differences are not identified early in the relationship and resolved through clear communication, they can become contentious when interpretations vary concerning emerging issues, such as the access to and use of the data generated or the ownership of IP. Initially the primary focus of the cooperation and collaboration may not have been on IP matters, such as inventions and patents, as the key contacts between the cooperating entities may not have properly considered IP matters in the negotiation stage. The level of understanding and appreciation of IP matters may be low with one or more of the parties involved, with no real thought given on how to deal with inventors and their inventions. One or more parties involved may not be fully geared up to work with external inventors and it may be that their not invented here attitude is still in existence. However, if handled properly and professionally, IP can help collaborative innovation succeed. Patents promote and protect inventiveness, which is an important subset of innovation. In order for an innovative idea to be patentable, the invention must be new or novel, involve an inventive step and be industrially applicable, or be operable and capable of satisfying some function or benefit to humanity. Patents are published typically 18 months after the first filing date so that we can all learn about the technology and the associated information is easily searchable and freely available online. Patents give clear proof of ownership, with a patent being similar to a land certificate when you own a house. Patents also support the interoperability standardisation process as well as technology transfer and technology exchanges. Legal and IP text books typically describe a patent in somewhat negative terms. A patent is not a right to practise or use the invention. Rather, it provides the right to exclude others from making, using, selling, offering for sale, or importing the patented invention for the term of the patent, which is usually 20 years from the filing date. A patent is, in effect, a limited property right that the government offers to inventors in exchange for their agreement to share the details of their inventions with the public. However, a more enlightened view describes IP, and patents in particular, as a means to collaboratively build innovation as opposed to blocking innovation. Collaborative innovation is reliant on some form of management and control, and IP is the means to manage these knowledge-based and technology-based collaborations. Knowledge and technology should be seen as transactions of objects in the development stages and these need to be managed, as these objects may prove to be as valuable or even more valuable than the resulting products and services. Patents in this regard can be seen as a means to objectify knowledge so that it can be properly managed. Without IP and patents, collaboration in technology development becomes prohibitively difficult. This is a fresher way of viewing patents, namely as a management system for knowledgebased business instead of a legal right to exclude others. So patents both promote and protect innovation and thus play an extremely important role when it comes to supporting external innovation, where there are two or more entities working together and innovating together.

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Copyrighted Material

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A More Enlightened View of Intellectual Property

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Harvesting External Innovation Copyrighted Material

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Copyrighted Material

Engineering Automotive Software, Proceedings of the IEEE, by M. Broy, I.H. Kruger, A. Pretschner, C. Salzmann, February 2007. Open Innovation: The New Imperative for Creating and Profiting from Technology, by Henry Chesbrough, 2003.

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References

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The focus of the book from this point forward will begin to concentrate on the role that IP, and patents in particular, play in external innovation. In practical terms, this means dealing properly and professionally with external inventors and the handling of their inventions, patent applications and granted patents in an efficient and effective manner, and resolving any potential challenges in this area. Dealing with an external inventor is always more complex compared to dealing with an internal inventor. In the perfect world, you would wish to pay as little as possible for another persons idea, whilst also obtaining the best indemnification possible, full ownership of the patent and a broad and free licence for any background-related IP. The external inventor would get very little or possibly nothing! However, in the real world, it does not work like that and there has to be a win-win solution which satisfies all parties involved. The forms of collaboration are always subject to change and the importance of collaboration is likely to increase over time. This makes it a very interesting and challenging environment for any business and it is certain that the success of a company in the coming years will very much be determined by its ability to partner and collaborate. This should be what drives a company to think positively about developing their collaboration process into an area of excellence.

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