Open Innovation

And
Intellectual
Property Rights
Contradictions and complementation*
 Open Innovation and Intellectual
Property Rights management have
long been presented as
contradictory conceptions of
innovation.
We discuss here the apparent
contradiction but show that IPRs,
well managed, allow to conduct the
most effective Open Innovation
projects.

* Complementation refers to two organisms having muted on different genes but

showing the same caracteristics.
Why there is an apparent contradiction in the definitions ?

Between Intellectual property Rights and Open Open Innovation on its side defines as follows: a
Innovation the contradiction starts with the definitions. paradigm that assumes that firms can and should use
Lets have a look at what the likes of Wikipedia say. external ideas as well as internal ideas, and internal and
external paths to market.

Problems happen when #IP transforms from a means of capturing the value of
#innovation to an end in itself http://ow.ly/AOZKJ @idexlab

Intellectual property rights (patents, designs,
copyrights) as defined by the WIPO are the rights given
to persons over the creations of their minds. They
usually give the creator an exclusive right over the use
of his/her creation for a certain period of time.
As one can read, the exclusivity term is of essence
here. B.Hall in her study [1] states that: IPRs are
generally designed to exclude others from using a
firms ideas and inventions.
Alternatively, it is about innovating with partners by
sharing risk and sharing reward. [Wikipedia, citing
Chesbrough]. Here the emphasis obviously is on
sharing.
Although sharing doesn't mean giving away, a major rift
still lies between exclusive versus sharing, doesn't it ?
And the contradiction seems to worsen when one looks
at the actual practices in both camps.
 The growing economical weight of IPRs
While sharing IPRs happens to be true inside some
groups having common economical interests or
interoperability constraints (e.g. patent pools on video
or telecommunications technologies), the general rule
remains that IPRs and particularly
patents are considered as weapons
for protection or attack in industrial
conflicts.
Actually the role of IPRs has become
paramount as we have entered into
the knowledge economy. In a material
economy one can protect his assets
in a safe whereas in a knowledge The patents promises
economy the only protections are
secrets or IPR titles.
As an exemple of this growth we can mention the
amount of patents payment that rose from $50B in
1994 to $200B in 2008 (source WIPO and
Athreye/Yang in [8]), this does not account for
acquisitions like Motorola Mobility by Google
($12B) and Nokia by Microsoft ($7B)
which both aimed at filling up their
patents portfolio.
We also know from the news some
famous war facts such as: Apple suing
Samsung and blocking the Galaxy
phone sales in the US in 2012. Blogs
on the topic flourish of exemple of
nonsensical situations in particular
related to software or gene patents
(see Commodor/XOR patent ).
Invention protection can indeed turn into
excessive and questionable practices.
 Lets discuss
a partnership !

An MIT Sloan article summarizes this nicely and

says that problems happen when IP is
transformed from a means of capturing the
value of innovation to an end in itself.

When it comes to building new partnerships, this

uptight position on IPRs implies strigent rules that
put a heavy armor on the shoulders of employees
and slows down all projects. Some companies will
require an NDA before any discussion can take
place, most will want to have a comprehensive
contractual agreement before a project can start
and some will simply not talk to others if they dont
own patents.Large companies as IBM and P&G
however have realized that business agility required
a shift in their IP policies and did so in the late
2000s, see [1].
The agility provided by Open Innovation raises new questions
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 unnecessary 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
thinnest protection of a click on a web page.
With such a contradiction one can legitimately ask
questions.
The seeking companys questions usually are:
1. What will happen to my technical challenge?
Cant competitors use it against me ?
2. How can I protect my products against copycats
if I dont fully own the IPs ?
The technology providers 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 we 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 the competition. Indeed no one wants
tothers to know the details of their problems, not only
in business.
This one is easy to answer, firstly Open Innovation
Platforms allow to post questions and challenges
anonymously (examples here). At ideXlab 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
Open Innovation
Platforms allow to post
questions and challenges
anonymously ....
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.
 however a good laywer will have added a

In many cases, being first commitment by the IPR owner to assist you and
prosecute companies who will infrige your exclusive

makes such a difference that licence. If you want the maximum security, the
patent acquisition is the right option.

the risk of being copied one If the technology was not protected by the provider
then it is probably too late to do so and your

year after has little to no agreement will include an exclusive licence on the
know-how and secrecy will be the rule regarding this

importance. unique technology addition !

But before putting a complex legal framework in
place shall one consider the actual premium paid to
the company getting first on the market for this
product or feature ?

The answer to the second question is slightly more Of course these factors varies significantly
technical. Lets assume that you have found a depending on the market and the products lifecycle.
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,
The third question (provider protection) is one asked
very often. On Open Innovation Platforms, solution
providers have to disclose some level of information IP licencing is a natural
to tease the seeking company without taking too much
risk of having the ideas stolen. practice in a global world. It
Again, we have two situations here. If the invention is provides new revenue streams
protected then it can be disclosed and the rights on it
can be promoted. If it is not, then information on one side and an improved
exchange shall be conducted with caution. Lawyers
and OI intermediaries are used to this tightrope walker time to market on the other.
exercise and can support you. At ideXlab 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 anonymised 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 licencees
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.
 IPRs and Open Innovation can become the 2 sides
of the same coin
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.
The exact answers to the parties
concerns depend on: the nature
of i) the Open Innovation project,
ii) the situation of the seeking
company on IPRs, iii) the nature of
the end product and market, and
iv) on the technology providers situation
So the seeking company shall ask itself the following
questions :
- Am I looking for a product core technology,
an improvement or a 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 ?
Depending on the answers to these
questions there is one Intellectual
Property framework that will help put
all pieces together, as depicted above.
This article is one in our series related
to the Open Innovation Practice, we
hope you enjoyed it.
For more visit
http://www.idexlab.com/blog/
References
[1] Open Innovation and Intellectual Property Rights The Two-edged Sword
http://eml.berkeley.edu/~bhhall/papers/BHH09_IPR_openinnovation.pdf

[2] Does IP Strategy Have to Cripple Open Innovation? http://sloanreview.mit.edu/article/does-ip-strategy-have-to-

cripple-open-innovation/

[3] Scenarios for the Future

http://www.marcasepatentes.pt/files/collections/pt_PT/1/178/EPO%20Scenarios%20For%20The%20Future.pdf

[4] How intellectual property enables and protects Open Innovation

http://www.forbes.com/sites/benkerschberg/2012/04/23/how-intellectual-property-ip-enables-and-protects-open-
innovation-platforms/

[5] A practical guide to managing intellectual property rights in an open innovation context http://six6.region-
stuttgart.de/sixcms/media.php/1181/Opinet_IPR_Guide.pdf

[6] XOR patent case https://www.google.fr/search?q=CadTrack+xor+patent

[7] Athreye and Yang 2011, Desambodied knowledge flow in the world economy
http://www.wipo.int/export/sites/www/econ_stat/en/economics/pdf/wp3.pdf
About the Authour
Pierre Bonnard is the co-founder and CTO of
ideXlab.
He has a professional background in the fields
of IT and telecommunications where he had
research, R&D and management roles.
About ideXlab
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