Open Innovation vs Intellectual Property : Can they co-exist?


Imagine a contest with two competitors, on one side you have Intellectual Property Rights (IPR) and on the other, you have Open Innovation (OI). In recent times the conversation has turned into which is better and who will come out on top when it’s all set and done. If this approach is to be taken, it would result in a ‘winner’; and in the business world we can all agree on ONE thing, there is no ONE way of getting the job done.


Before we get into the discussions regarding which is better, let’s start by determining what is IP? And what is OI?


IP and OI can be very difficult to understand, here we offer a brief and not technical insight about them. If you are already familiar with the concepts, skip directly to “Common Ground” and “How to exploit your IP using OI”.


What Is IP?

Intellectual property is essentially ideas and innovations generated by individuals. These ideas are generally categorised into 4 i.e. design rights, copyright, patents, and trademarks. Through these four protection frameworks, you can legally protect your ideas for monetisation opportunities, either independently or via strategic partnerships in the form of licensing. You can also protect your ideas from those who wish to free ride on them for their own financial gain without any consideration for remunerating your cost of expression. More than that, you can use that very protection as the spearhead to your business strategy, by using the legal cover afforded by your rights to confidently commercialise and expand the reach of your products and services as well as attract funding. In that sense, the overarching characteristic of IP is that it is closed off and keeps everyone outside of ownership at arm’s length.


What is OI?

Open innovation, on the other hand, is almost the opposite when looking at the overarching characteristic. The clue is in the name, as the main principle with OI is to embrace contribution from multiple sources, while at the same time allowing your own processes and ideas to be used freely by others. OI is very much a community-based method of developing processes and products, with the mindset being that it would be for the greater good to work together as opposed to working alone. The strength in this is that, where the effort is collaborative, there would be no need to ‘protect’ the product or service that came as a result of the collaboration, as it is the creation of a community and not of a sole individual. Furthermore to attempt to exclude people from the benefit of the creation would be to go against the main principle, which is to be open.


Common Ground

On the face of it, it would seem that OI and IP could in no way be compatible. That the need for there to be one winner must be true. In many ways, this is altogether the wrong approach to have, especially when we make a key distinction between the two i.e. OI is a principle and a way of doing of things, IP is a legal right. It would be fair to say that IP can also be categorised as a principle in terms of some of its overarching characteristic, but in its truest form IP is clearly a right; and it would be somewhat flawed to try and compare which is better, a legal right versus a way of doing things.

With that said when we take a closer look, we find that there is, in fact, a common ground between the two, and if anything IP and OI could both be implemented when executing your business strategy.

Admittedly there are certain industries such as customer oriented software, where OI play a more pivotal role in the developing stages, however:

“It is important to recognise that many ostensibly open sourced firms do not always make the critical Application Programming Interfaces (APIs) needed for value capture publicly available. Although not usually patented, the intellectual property of APIs is almost always kept as a trade secret and immune from tinkering by other developers.” (Michael Locascio, Fortune Global 500 chemical company)

Other real-world examples include, where a business owner follows the principle of OI as their main ethos, but still uses IP to bring structure and accountability in terms who have contributed and in what way they have done so. A great example of this is songwriting, where a group of songwriters are present and contribute to creating a song (OI) and, in return, they get the recognition in the form of having part ownership of the copyrights as well as royalties.


How to exploit your IP using OI

Where a business owner uses IP as the spearhead for their business strategy the same assumption can be held, in that OI can still be utilised by that owner to create a product. Examples of this can be found all over the place, whether it be in the tech world where Leica collaborated with Huawei to create a mobile phone focused on taking the best possible pictures; or in the fashion world where Supreme and Louis Vuitton collaborated to create a line of clothing and accessories showing both their logos. It is obvious that they both maintain their IP rights, however, the use of OI leads to both parties creating more revenue and growth as they are exposed to each other’s customers.

Before starting a partnership, IP agreements are needed to attribute pre-existing IP to each party to avoid ownership claims and legal disputes; Therefore, an IP strategy is essential even in OI environment.

Licensing your technology/product to third parties or to a pool of experts in an Open Innovation way can also be a strategic and marketing move. The company can exploit their IPs using Open Innovation to create a better branding and know-how (an essential IP of a company), to create a marketing campaign and to create a larger pool of customers and adopter. To do so the product/service has to be properly protected, therefore IP strategies and agreements have to be planned.

By choosing what to disclose and not to disclose in an Open Innovation project, companies can continue to protect their products/services avoiding ownership claims and legal disputes. A company can also decide to disclose a side product they have, further diminishing the collateral risk of disclosure.

To keep it simple, the introduction of IP in OI communities creates a solid base to build as opposed to inhibiting progress and innovation; and the introduction of OI in business allows for expedient progress in developing something worth protecting with IP.

At  Fractional IP we believe that there is no one way of getting the job done, IP and OI can work hand in hand to achieve commercial success; where OI is how you work, IP is how you protect the result of that work.

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