Open Innovation and Intellectual Property Protection: 5 Tips to Success

Open innovation is a method used by progressive businesses seeking new, more effective ways to solving complex problems—anything from product conception to final delivery.

More popularly known as “crowdsourcing”, open innovation basically refers to the widespread sharing of information to infuse fresh ideas into business solutions. Unfortunately, entrusting sensitive materials to such a vast network of external sources can raise security concerns about intellectual property.

The dawn of open innovation

Compared to other practices in today’s business world, open innovation is still relatively young, though its driving principles aren’t anything new.

The rising popularity of open innovation in recent years can largely be attributed to it being naturally conducive to the growth of online industries and platforms. Though, to best highlight the advantages of this rapidly growing practice, let’s compare old and new methods of business innovation.

Innovation then

Not too long ago, businesses developed innovations almost entirely from information that was vetted and patented solely for them. The driving fear was that any proprietary knowledge was inherently valuable, therefore it was imperative to keep information locked behind closed doors.

To bring an innovation to life, businesses needed to invest substantial research into every foundational concept, confirm financial viability, and run painstaking logistical calculations before they could even begin production—all the while hoping that rival companies weren’t already one or several steps ahead.

Additionally, when an opposing company did manage to reach completion first, patents on intellectual properties were levied judiciously to block the progress of competitors.

Innovation now

With the emergence of digital sharing, knowledge is exponentially more accessible than it was just a couple decades ago. Despite exhaustive attempts to maintain ownership of IPs by individuals and corporations, information has proven difficult to keep restricted for long.

One such example is in the numerous copyright disputes within the music industry, and the constant (often fruitless) attempts to suppress the free sharing of songs and videos.

Rather than fight the spread of information, open innovation embraces this inevitability by supporting the integration of external contributions to modify, improve, and/or transform the final product.

This approach can infuse fresh perspective and energy into stagnating projects, leading to innovative breakthroughs that can potentially save time and money, and in some cases, mitigate risk.

Progressive businesses are beginning to take notice -- open innovation is becoming a more acceptable and frequently occurring practiceevery day.

Open innovation and intellectual property concerns

While crowdsourcing has shown promising potential for businesses willing to explore non-conventional approaches, there remains hesitation on the matter of protecting intellectual properties.

Given the number of highly publicized legal disputes over IP violations -- such as the endless battles between mobile phone companies-- businesses must be cautious in order to prevent unintended fallout from entrusting sensitive information to outside resources.

Fortunately, there are several strategies vigilant companies can follow to best utilize open innovation while also protecting their intellectual property.

How to utilize open innovation and defend intellectual property

1. Stay anonymous when initiating discussions

There is inherent risk that comes with inviting third-party professionals within your industry to examine your problem. This is especially true when you are a recognizable brand and your competitors actively keep a lookout for opportunities to exploit your patents.

By opening discussions anonymously, all parties involved can negotiate in a neutral environment before agreeing to any cooperative working arrangements. This approach offers a strategic counter to widely held concerns over whether a technical challenge can be used against a company once presented.

Thankfully, there are a number of available open innovation platformsfor global corporations to collaborate anonymously and solve technical problems.

2. Refrain from divulging critical information until an agreement is reached

While anonymous avenues for discussion about potential open innovation agreements do exist, diligence and caution are still very much advised.

Keeping project specifications divided and limited to only relevant features is the optimal method to ensuring intellectual property. Large proposals can be broken down into smaller, independent projects devoid of sensitive information and distributed across a number of innovators, rather than entrusting the entirety of the project to a single entity.

Once you are assured that the selected individual or group is best equipped to carry out the proposal, a legal confidentiality agreement mustbe drawn by an accredited professional. This will legally ensure both parties agree to the project parameters and can proceed without fear of theft.

3. Seek exclusive usage rights for intellectual property applications to combat copycat products

The majority of products businesses want to manufacture require the use of existing, and protected, technology. This fact helps exemplify why open innovation is great for fast-tracking new and improved products to the marketplace.

In the event your project may require an already patented technology, you must first contact the patent owner and acquire the rights to utilize the necessary component, process, or machinery. Furthermore, to protect the rights of your future product, exclusive licensing should be pursued whenever possible.

Alone, these usage rights may not be sufficient to guard against all potential copycats, but by maintaining transparency with the intellectual property provider, you increase your likelihood of legally protecting your product in lawsuits. As an added bonus, by fostering a positive relationship with the original patent owner, it becomes substantially easier to prosecute copycat competitors infringing on your unique application of borrowed technologies.

4. Document every step within your innovative process

Even after obtaining appropriate licensing rights and fostering positive working relationships, dangers still exist. If unfriendly complications arise and your partnership turns sour, it helps to have a handwritten, well-documented record of your innovative process .

Businesses should ensure their teams maintain a running log of what ideas are acted on, and what progress is completed. Time stamps and physical copies of key developments can aid in proving possessionover business ideas -- if it comes to it.

Also, thorough documentation will help reinforce your legal stance if copycats do attempt to steal your intellectual property outright.

5. Maintain confidentiality when patents and licenses aren’t available

If the product or service you are developing isn’t technically patentable but contains a unique element (e.g. Colonel Sander’s famous spice blend), then take precaution to ensure it remains under lock and key.

This “secret sauce” mentality is a common practice in competitive markets, one that’s even celebrated for embellishing secrecy. Though, if you are taking this route with your open innovation arrangement, make sure to have all parties sign non-disclosure agreements and take other appropriate steps.

Omit sensitive information from any documentation where it’s not necessary and review parameters with your team to ensure there is unilateral understanding about what can and cannot be disclosed throughout the process.

Do you have any additional tips to contribute to our list? Any positive (or not so positive) experiences engaging in crowdsourcing to solve a company problem?

Let us know in the comments below!

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