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Intellectual Property with Open Innovation

Open innovation empowers new product development and has been the driving force of sustainable innovation for several companies over the decades. While it accelerates innovation and reduces time to market, open innovation poses a few challenges when it comes to managing intellectual property (IP).

However, to succeed in a collaborative open innovation environment, companies need to make strategic choices with regard to use of patents and embrace a different approach to managing IP issues.  Xerox’ ethernet technology is a fine example of a licensed technology that helped collaborative innovation in the context of networking. It laid the foundation of the Internet as we know it today.

Handling the impact of IP issues

In today’s age of collaborative technology development, the concept of managing IP rather than protecting it works wonders. The moment you adopt a protective approach, it creates a barrier to the open environment required for successful innovation. The IP approach should be managed in such a way so as to be mutually beneficial for all parties involved, whether it is the innovation seeker or provider.

Companies like IBM and Procter & Gamble have adopted strategies like IP sharing so as to facilitate the process of open innovation and make it work better for them. Adopting a collaborative model of IP sharing can help overcome the usage restrictions normally associated with IP, and foster organic growth. This in turn helps create an ecosystem of innovation, enabling widespread adoption of that innovation, leading to increased business growth.

Being over-protective of IP rights will slow down the value creation and tends to damage relationships with the collaborators. Your firm’s IP and open innovation strategies need to be aligned so as to build a more profitable ecosystem for new product development. Companies can maximize their ROI by making the IP available to others through licensing, joint-ownership or cooperation. For example, IBM made 500 patents available to the open-source community in 2005 with a hope to boost innovation.

IP Sharing Models

Based on the kind of industry you operate in and the knowledge distribution amongst the collaborators involved, you can adopt an IP sharing model. For example, if the technology development in your industry domain is slow and the external knowledge is limited to a few participants, then acquiring or licensing the technology will help you leverage the benefits of open innovation.

On the other hand, if your industry has immense competition and technical advancements with the knowledge available in the hands of many, then granting free access to IP makes better sense. In 2001, IBM released the source code of its Eclipse project to the public to attract innovators. This helped the company compete with giants like Microsoft Corp., making Eclipse one of the most popular software development tools, which is supported by players across the industry.

There are many IP sharing strategies based on licensing, joint-ownership, cooperation and smart patenting. Choosing the right one for your business needs a careful evaluation of your open innovation needs.

IP Ownership

While IP should be treated as a means to enrich open innovation, one should also keep in mind that IP ownership is essential for a sustainable collaborative model. Companies operating in highly competitive industries often run open-research programs but also possess the rights to purchase or license IPs that are a product of such projects.

For example, GlaxoSmithKline’s R&D center sets up collaborations with biotechnology companies to conduct drug discovery research up to certain point, thereafter which the company takes over. From providing early-stage assistance to help during the drug trials, it provides all help to ensure that the research is successful but retains the exclusive rights to license the drug.

With the importance of open innovation growing rapidly, companies  need to adopt a balanced IP strategy. There is no hard and fast rule to finding this balance. Companies must learn to use IP as an innovation enabler instead of making it a barrier to new product development. It’s all about finding the right IP sharing model for your open innovation process that truly creates value for your organization.

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