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Open innovation and intellectual property rights: a can of worms or a valuable tool?

Open innovation and intellectual property rights: a can of worms or a valuable tool?
Open innovation and IP

Innovation is a key element to survival and success for many organisations and it can take many forms. It can be disruptive, transformative, radical, breakthrough or incremental in nature.

Innovation generally begins with organisations considering things differently and can involve asking difficult questions, conducting experiments, improving knowledge and changing behaviour.

Most importantly, innovation often requires patience and perseverance, together with a desire or hunger for risk, a willingness to question and an open mind to look at things without a pre-determined conception. The need to innovate can be driven by intense competition, changing policy or the impact of disruptive technology, and the output of innovation activities can have significant impact on products, services, processes and business models.

The innovation process

As a starting point, raw creative ideas are needed to facilitate innovation and while you may not and do not need to be the source for the creative ideas, given potential management responsibilities, you do need to understand the process. The creative thought process is not always logical and requires some degree of freedom and openness, coupled with a non-judgmental environment. The innovation process within many organisations is there to foster innovation by capturing, evaluating, and developing these creative ideas to achieve strategic goals, drive growth and profitability, and increase competitiveness.

Competitive advantage

Many organisations find themselves operating in challenging environments, often where continuous step improvements are needed just to stay in the race, and radical innovation is required to hold a position of leadership as incremental innovation is no longer a viable source for competitive advantage. One of the secrets of innovation success is combining transformational changes in offerings (products and services etc) and operations.

“Not all of the smart people work for us”

Traditionally, internal innovation was the paradigm under which most organisations and businesses operated, with many innovative organisations keeping their discoveries highly secret and making little or no attempt made 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 a move to a global knowledge-based economy, which has facilitated the diffusion of information.

Organisations have also begun to realise that “not all the smart people work for us” and that they need to work with smart people inside and outside of the organisation”.

Open innovation is considered by many to represent new “information age” thinking which truly recognises the value and “additionality” that is created via real collaboration in the context of increasingly complexity and interconnected ways of creating, making and delivering new products and services.

In this context, a means of managing access to external ideas and routes to market are a critical success factor for many organisations and businesses.

A fundamental shift is taking place

Many organisations will argue that they are already well versed in “open innovation” and in working with others. However, we are seeing a fundamental shift taking place. In the past, organisations and companies have indeed worked with others such as suppliers, distributors and sub-contractors to conduct their normal business.

We are now seeing them increasingly recognising the need to collaborate and cooperate with external parties to a greater and more significant extent in areas such as research and innovation, encompassing core activities where past sensitivities, around confidentiality, sharing data, access to key staff, and concerns about impact on competitiveness have served as real barriers to openness.

It should be noted that external innovation can take many forms, from working with universities, cooperating closely with key suppliers and vendors, collaborating with application developers, content providers, technology and design houses, plus working with ‘open’ communities (e.g. innovation networks, standardisation bodies), as well as customers and end-users. It can also involve working with start-ups, SMEs and venture capital funded entities, as some of the smallest companies can achieve great things with limited funding.

Easy to talk about, not so easy to do…

Cooperation and collaboration between two or more parties is often not easy and just getting the 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 and how are the parties actually going to work together in practice? What is each party going to contribute, what sort of framework will govern the work conducted and what do all parties ultimately wish to get out of the collaboration? Finally, how should success be measured? These are all basic questions which will need to be answered in a way which satisfies all parties involved before any collaboration can get underway.

Academia is a potential example for new practice in terms of easing the process of open innovation. There are a number of model collaboration frameworks that have become starting points for academic institutions in collaborating with businesses, other academic institutions and other 3rd parties (such as research intensive or government agencies).

Models such as the Lambert Toolkit and Brunswick Agreements have become widely accepted as initial contractual frameworks on which to sensibly start a discussion with third parties on the many detailed aspects of establishing and managing collaborations.

It should be noted that real cooperation and collaboration between two or more parties often involves interacting with others in ways that are friendly, courteous and tactful and that demonstrate respect for others’ ideas, opinions and contributions. It means seeking input from others in order to understand their actions and reactions, offering clear input on one’s own interests and attitudes so others can understand your actions and reactions and trying to adjust one’s own actions to take into account the needs of others and the task to be accomplished.

However, in reality it means much more than this. It demands an understanding of the complex components of cooperation necessary to complete a task, such as balancing the participation of the various diverse entities involved, managing interdependence and balancing individual motivations with the common goals for cooperating and ultimately relying on the other entities to achieve results. It also involves the synthesis of multiple opinions, mediation of disagreements in order to achieve group consensus and applying prior experience with cooperative work to the current task.

The role of intellectual property (IP) in open innovation

It may not be immediately obvious, but IP law and especially established frameworks of legal rights that govern confidentiality, know-how, trade-secrets, copyrights, designs and patents can help underpin and support innovation processes and help organisations put suitable controls and create clear areas of understating between parties to address collaboration challenges and practicalities.

Collaborative open innovation is reliant on some form of management and control, to manage expectations, contributions and deliver successful outcomes.

IP should be viewed as one of the available tools for managing open innovation, and it provides a clear and well-established means of managing knowledge-based collaborations, as knowledge and technology can be managed as definable assets prior-to, during and after any collaboration.

These assets may be valuable in themselves or be essential elements of the new products, services or processes which result from collaboration.

IP in this regard can be seen as a means to objectify valuable knowledge so that it can be properly managed. Without an understanding of the nature and potential role of intellectual property, successful and efficient collaboration – via open innovation approaches – can become more difficult and the chances of success more uncertain.

This article was written by Peter McLeod and Donal O’Connell.

Peter McLeod is the Services Director of ProspectIP and works with universities and other research intensive organisations to help them to manage and commercialise their valuable IP assets.

Donal O’Connell is an IP Director at ProspectIP. He is an experienced senior R&D, innovation and intellectual property manager with extensive experience in the delivery of services to clients across a broad range of industries and technologies.