Reflections on Open Innovation and Intellectual Property

Intellectual property rights (IPR) used to be the key topic at open innovation conferences a few years back. Although still an important topic, this is no longer the case as companies mature on open innovation and find ways to solve these issues.

This development led me to downplay the significance of IPR when it comes to open innovation. Maybe I went a bit too far on this. I am reflecting on this after a session in my Danish network group in which we had a great visit by Jørn Vestergaard-Jensen, a Danish lawyer with good insights on IPR issues for open innovation.

Here I share some of the insights gained and reflections made by myself and the other participants.

Business Before Legal

I was glad to hear that Vestergaard-Jensen had a business mindset. One of his key points was that the business case should take lead over legal issues, not the other way around. He also said that in his world – the lawyer community – good/skilled people have this mindset implicating that less skilled people might focus on reducing risks rather than seeing opportunities in open innovation. I suspect we could agree that there are less good/skilled people than the opposite…

Don’t Be Too Naive

We had an interesting discussion on how “naïve” you can afford to be in open innovation partnerships. Many people in the Nordic region (myself included) take pride in our fairly open and trusting approach in which we believe in the best of people and do not always see reasons to be suspicious and thus protect yourself legally. Some cultures – probably led by the US – have a different mindset on this.

I still believe that the open minded approach is the best in the long run as innovation is moving from a more transactional to a relationship-based approach, but the discussion did prompt several of the participants to consider whether their approach to legal protection should be adjusted.

Protect the Core – Stay Flexible on the Layers

Another topic was the fast pace of change and how this results in smaller windows of opportunity – and thus less time to make money on successful innovation. This requires innovation units to be fast and flexible, but they also need to protect their ideas and assets. A way to do this could be to develop strong platforms for the core of the company – technology, business models, processes or other corporate strengths. These platforms must be protected to a high degree while allowing for more flexibility and less protection in the outer layers of the products and services being developed.

Risk and Consequences

Vestergaard-Jensen listed some potential risks and consequences on open innovation having the perspective of a lawyer:

• loss of patenting opportunities
• loss of trademark secrets / confidential information
• design/copyright risks
• new competitors can be created based on the sharing of information
• loss of freedom to operate (sharing too much can hinder own actions)
• outright theft

Three Characteristics for B2B Agreements

According to Vestergaard-Jensen, a B2B agreement on open innovation should be divided into three key characteristics:

1. Main business aspects (business goals, definitions of development work, each party’s obligations, deliverables, project management, etc.)
2. IP / Results
3. Boiler Plate Clauses (force majeure, notices, entire agreement, severability, etc)

Vestergaard-Jensen also advises companies to pay attention to IPR issues in three phases: before, during and after. Although a bit mundane, it is still very important to emphasize that the key challenge is to strike the right balance on how much to share and when to share it.

More Secrets in an Open World

It was also interesting to hear the participants agree that the world is getting secretive and closed in many ways. Companies in the Nordic region – and probably also many others – will experience that the current culture in which almost anything is shared with everyone will change as there will be a higher need to protect what you know in a world that is otherwise opening up in a seemingly faster and faster pace. This might sound counter-intuitive, but the challenge will be to know when to open up and when to protect your knowledge. Some will succeed at this better than others.

Entrepreneurs, Small Companies and Inventors Get Pinched

As an overall reflection, I feel sorry for entrepreneurs, small companies and inventors who get involved with open innovation efforts with bigger or even multi-national companies. The latter companies are building an arsenal of legal “weapons” and the former just don’t have the bandwidth, understanding and financial resources to counter this. Let’s hope the big companies will try to build open innovation platforms that strive for win-win situations. This will bring out the best innovation for the benefit of all. Unfortunately, I am quite sure this will not always be the case.

Balance is Key

My closing remark is that – as it often is – striking the right balance is key. Let me know what you think of this and please feel free to share your own insights and reflections on this topic.

You can also get more information and inspiration in this blog post: Open Innovation and Intellectual Property Rights – check the links at the bottom of this post.

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Stefan Lindegaard is a speaker, network facilitator and strategic advisor who focus on the topics of open innovation, intrapreneurship and how to identify and develop the people who drive innovation