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Open Innovation and Intellectual Property: The Relationship and Its Challenges



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Open Innovation And Intellectual Property: The Relationship And Its Challenges
Saleh Al-Sharieh & Anne-Laure Mention
CRP Henri Tudor
Author Note
Saleh Al-Sharieh
CRP Henri Tudor, 29, Avenue John F. Kennedy, L-1855, Kirchberg, Luxembourg
Tel: +35 2 42 59 91 2925.
Dr. Anne-Laure Mention
CRP Henri Tudor, 29, Avenue John F. Kennedy, L-1855 Luxembourg - Kirchberg
Tel: +352 42 59 91 6 821; Fax: + 352 42 59 91 2 777.
Correspondence should be addressed to Saleh Al-Sharieh.
The legal implications that may result from incautious intellectual property strategies that firms
may adopt to manage their intellectual property associated with their in-bound innovation and
out-bound innovation could be serious. Licensing out, licensing in, and cross-licensing strategies
as well as the strategy of intellectual property acquisition are based on a complicated legal
framework the understanding of which by intellectual property managers in open innovation
firms is essential to prevent any negative implications on firms’ ability to protect their
intellectual property and/ or to avoid intellectual property based liability. This chapter identifies
and analyses the intellectual property law challenges that are associated with some aspects of
inbound and outbound open innovation, specifically IP assignment/acquisition and intellectual
property licensing.
Keywords: open innovation, intellectual property, licensing, intellectual property acquisition
Open Innovation And Intellectual Property: The Relationship And Its Challenges
The Oslo Manual (2005, p. 46) broadly defines innovation as “the implementation of a
new or significantly improved product (good or service), or process, a new marketing method, or
a new organisational method in business practices, workplace organisation or external relations.”
Accordingly, innovation may take a number of forms, namely product and service innovation,
process innovation, marketing innovation, and organizational innovation (OECD, 2007). Firms
innovate to serve two main purposes: to better serve the needs of their customers and to win a
competitive advantage over their business rivals. The definition of innovation, its forms and the
purposes it aims to achieve are relevant to intellectual property (IP), defined by the World
Intellectual Property Organization (WIPO, n.d.) as “creations of the mind: inventions, literary
and artistic works, and symbols, names, images, and designs used in commerce.” IP can be
categorised, according to the subject matter it covers, into two main categories: industrial
property, which includes inventions, industrial designs, integrated circuit topographies, trade-
marks, and geographical indications; and copyright, which includes literary, dramatic and artistic
works. IP-based innovation covers a wide spectrum of innovations, including drugs, machines,
processes, business methods, software, maps, designs, computer chips, etc.
IP is a public good (Posner, 2005). That is, it is non-rivalrous, non-exhaustible and non-
excludable. One’s use of IP does not (and cannot) prevent another from using it concurrently,
and one’s use of it does not deteriorate the quality of its use by another. These traits render it
susceptible to “free riding” (Lemley, 2005), a circumstance that leads to “market failure”
(Dutfield & Suthersanen, 2008). To overcome this dilemma, since many centuries ago, national
legislators have developed IP laws that could provide IP with artificial scarcity through granting
its owners a bundle of temporary exclusion rights that are enforced by law, namely IPRs (IPRs)
(Sherman & Bently, 1999). The importance of IP and its protection increased over the time, and
states realized the importance of protecting their citizens’ IP not only within their territories but
also abroad. As a result, states established multilateral IP law agreements by which a floor of IP
protection became, to some extent, internationally harmonised, and by which the citizens of the
member states of these agreements received the same level of IP protection that each state
granted to its own citizens, provided such levels did not fall below the minimum standards
required by international IP law (Dinwoodie, Hennessey & Perlmutter, 2008).
With the advent of the digital revolution in the last decade of the twentieth century, the
knowledge economy resulted in more attention to IPRs. Therefore, the protection and
enforcement of IP was one of the main topics negotiated in the Uruguay Round, which reformed
the international trading system and resulted in the creation of the WTO along with a number of
international trade agreements, including the Agreement on Trade Related Aspects of Intellectual
Property Rights (TRIPS, 1994). TRIPS effectively globalized IP protection. All WTO member
states are obliged to implement its minimum levels of IP protection and enforcement (TRIPS,
1994, art. 1.1). And any incompliant member state would be subject to serious international trade
sanctions through the WTO dispute settlement procedures (Understanding on Rules and
Procedures Governing the Settlement of Disputes, 1994; TRIPS, 1994, art. 64 (1)-(2)).
The special importance given to the national and international protection of IP was based
on the premise that IP protection is an important stimulus of innovation which, since the seminal
work of Schumpeter (1934), has been widely acknowledged as a key driver of competitiveness,
economic growth and welfare. This conclusion is strongly supported by empirical evidence (e.g.
Crépon et al., 1998; Griffith et al., 2006; Lööf & Heshmati, 2002). However, soon after the
advent of the “open innovation” concept, coined by Chesbrough and defined by him as “a
paradigm that assumes that firms can and should use external ideas as well as internal ideas, and
internal and external paths to market, as the firms look to advance their technology,”
(Chesbrough, 2003a, p. xxiv), commentators started examining whether or not the monopolistic
nature of IPRs fits open innovation environments, and if it does, how IP should be managed.
This chapter contributes to the to the ongoing discussion of these issues by identifying
and analysing the IP law challenges that could be associated with some aspects of inbound and
outbound open innovation, specifically IP assignment/acquisition and IP licensing.
For this purpose, the chapter is divided into five parts. Following this part, the second
part discusses the relationship between IP law protection and innovation in general; the third part
discusses the relationship between IP law protection and open innovation; and the fourth part
analyses IP assignment/acquisition and licensing as the main channels for inbound and outbound
innovation and highlights their legal challenges, which need to be carefully considered by
decision makers in open innovation firms. Finally, the fifth part concludes the chapter with a
summary and recommendations.
IP Law Protection and Innovation
The issue of justifying IPRs has engaged legislators, courts, and philosophers for
centuries (Drahos, 1996; Hughes, 1988). The first category of arguments justifying IPRs is based
on natural law, which mainly originates from the thoughts of John Lock, Georg Wilhelm
Friedrich Hegel and Immanuel Kant. When applied to IP, the Lockean argument mainly provides
that creators of intellectual works are entitled to ownership rights over the outcome resulting
from mixing one’s labor (intellectual labor) with an un-owned or held in common object
(knowledge in general) (Hughes, 1988). Labor is the cornerstone of all the interpretations given
to Lock’s theory of property when applied on IPRs (Hughes, 1988). Some scholars view IPRs as
a reward to this labor while others think of them as a stimulus of labor (Hughes, 1988). On the
other hand, the natural law justification based on Hegel’s and Kant’s thoughts provides that
protecting IP is important since intellectual works are embodiments of one’s personality
(Hughes, 1988).
While the natural law argument has influenced some forms of IP, namely copyright–
specifically in the domain of moral rights– the utilitarian argument is more resonant. According
to the Utilitarian theory of IPRs, IP protection plays a positive role in stimulating innovation.
The drafters of the Constitution of the United Stated recognised the utilitarian role of IP
protection in the Copyright and Patent Clause, which gives the Congress the power “[t]o promote
the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors
the exclusive Right to their respective Writings and Discoveries” (U.S. Const., art. I, § 8, cl. 8.).
Without IP protection, innovators may not have any motive to invest money and/or effort to
produce (or improve) inventions; and if they did, they would be inclined to keep their innovation
in a box of secrecy to protect it against imitation. IP protection, thus, protects both innovators
and the public. It protects innovators by giving them a bundle of exclusive rights, such as the
exclusive right to make, sell, and export their innovation for a temporary period (for example, for
20 years in the case of patented innovation). And, at the same time, it protects the public by
ensuring that the results of intelligence and creativity are disclosed and ultimately falling in the
public domain once the term of protection expires (Posner, 2005). As Mr. Justice Binnie
explained in Apotex Inc. v. Wellcome Foundation Ltd (2002) in the context of patent law:
[a] patent, as has been said many times, is not intended as an accolade or civic award for
ingenuity. It is a method by which inventive solutions to practical problems are coaxed into
the public domain by the promise of a limited monopoly for a limited time. Disclosure is
the quid pro quo for valuable proprietary rights to exclusivity which are entirely the
statutory creature of the Patent Act […].( para.37)
The role of IP protection in stimulating innovation was generally recognized not only by
legislators, courts and scholars of IP law but also by scholars in other intellectual domains, such
as in economics. Arrow (1962) contends that since research and development (R&D) is an
inherently risky activity and because appropriating its results is limited, it is expected that the
free market economy will underinvest in R&D. The argument continues that patents, as a tool
against imitation and a mechanism for appropriation, can be one of the means by which the state
can overcome the problem of underinvesting in research activities (Kanwar & Evenson, 2003;
Arrow, 1962). Patents can thus represent a mechanism that allows reaching a balance between
knowledge diffusion and knowledge appropriation. Other economists (Takalo, 2001; Nordhaus,
1969) argue that the increase of the patent life leads to an increase in innovation activities.
Furthermore, it has been argued that without patenting further innovation will be inhibited since
the results of any innovation will remain secret to avoid imitation (Friedman, Landes, & Posner,
1991). This echoes the vision of Jefferson (1807), according to whom ideas should move freely
between people, and their originators should receive some reward which did not jeopardize the
rights of those who wish to improve on them (cited by Dodgson, Gann & Salter 2008). In his
“prospect theory” for the patent system, Kitch (1977) argues that the patent regime “increase[s]
the output from resources used for technological innovation” (Kitch 1977, p. 265).
The argument that patents stimulate innovation is backed up by empirical evidence.
Carpentier & Kultti (2006) illustrate that in industries relying on the cumulative innovation
model, such as the software industry, a patent system stimulates further innovation. Ginarte &
Park (1997) examine the index of patents in 110 countries for the period 1960-1990 to determine
the factors influencing the level of patent protection that a given economy provides; they find
evidence that the impact of patents on innovation is one of the factors that influences the
policymaker’s choice with regard to the level of patent protection it provides and that patent
protection stimulates innovation. In a report produced by the Organisation for Economic Co-
operation and Development (OECD) (2004), it was found that patenting fosters innovation and
economic performance generally and encourages innovation in the biotechnology sector
specifically. Another study conducted by the Office of Industries of the U.S. International Trade
Commission (2008) found that patenting in the field of biotechnology has facilitated innovation
in this sector. Other empirical research (Etro, 2007) has found that patents are a key for
promoting innovation in the information and communication technology sector and the stronger
they are the more innovation they induce. The positive influence of patents on pharmaceuticals
has also been empirically evidenced (Mansfield, 1986). More recently, recent study on the
economics of copyright in the United Kingdom, (PwC, 2011, p.27) concluded that “free riding
(consuming goods without paying) may threaten the sustainability of copyright dependent
industries without some form of framework in place to maintain incentives to produce creative
The positive impact of IP protection on service innovation has also been highlighted.
Some scholars noticed that allowing patenting in a certain domain of inventions, such as business
methods, has resulted in a large number of patents granted (Lerner, 2002; Gallini, 2002; Hall,
2009). Lerner (2006, p. 228) acknowledges that some theoretical research has argued that even
without patents banks will have enough incentives to develop new financial innovation, but
argues that the absence of patent protection “would shape the incentives to innovate”. Kumar and
Turnbull (2008) argue that patenting is not optimal for all forms of financial innovation, but
identify three categories of financial innovation for which patenting is optimal. Under these
categories a business method may be relevant to the performance of some administrative tasks of
a financial firm, may be intended to facilitate some of the services provided to the financial
firm’s customers, or may resemble an improvement of an existing process to perform a certain
function. The rationality of patenting here is that these forms of innovation may be vulnerable to
imitation by competitors (Kumar & Turnbull, 2008). On the other hand, they argue that some
forms of financial innovation do not need patenting; this includes forms of financial innovation
that need the help of market makers to develop their market (Kumar & Turnbull, 2008). The
rational for not patenting here is the claim that patents will hinder the involvement of market
makers (Kumar & Turnbull, 2008).
The argument in favour of IP protection generally or patents specifically and their role in
innovation is opposed by another stream of thought, backed by some empirical evidence. For
example, Jaffe & Lerner (2004) argue that patenting stifle innovation. Bessen & Maskin (2000)
show that in dynamic industries, such as software and computer chips industries in which
innovation is both sequential and complementary, patenting could decrease innovation. Merges
and Nelson (1990) argued that patenting stifled innovation in a number of industrial sectors, such
as the automobile and airplane manufacturing industries. Moser (2005) found no evidence that
patents stimulate more innovation but illustrated that without patent protection innovation seems
to be concentrated in industrial sectors where knowledge can be kept secret, such as industries
relying on secret process (e.g. chemical sector) and disappear in industrial sectors where
knowledge cannot be kept secret, such as in machine manufacturing sectors. Moreover, Arrow
(1962) acknowledges that the enforcement of patent rights will ultimately decrease the amount of
appropriable information available to others and, thus, the “incentive” to carry out R&D may
decrease. Hall (2009) notes that little empirical research has been conducted on the impact of
patenting on financial innovation, but believes that since financial innovation is of incremental
nature, it is unlikely that patenting is beneficial. Other scholars (Lanjouw, Pakes, & Putnam
1998; Gallini, 2002) contended that the number of patents in a given sector does not accurately
indicate the impact of patenting on innovation in that sector. Hunt (2010) is also not optimistic
about the impact of patenting on financial innovation; he argues that since the financial sector
heavily relies on information and telecommunication technologies, such as software and
networks, the impact of patents on financial innovation could be analogous to the impact of
patenting on the ICT sector. Specifically, it will be both complex and tend to involve litigations
(Hunt, 2010).
Despite the extensive debate on the impact of IP law on innovation generally, IP law is
here to stay and while the debate on its impact on innovation will certainly shape its future
reform, it will never abolish it. IP protection is good for stimulating innovation, but when the
rights of producers of innovation and the rights of the economy and the public at large to benefit
from the spell over effect of innovation. As explained by Landes & Posner (2003, p.74):
Some copyright protection is necessary to generate incentives to incur the costs of creating
easily copied works. But too much protection can raise the costs of creation to a point at
which current authors cannot cover their costs even though they have complete copyright
protection for their own originality.
It is important to note although there is strong overlap between the subject matter of
innovation and the subject matter of IP, not every form of innovation will automatically receive
IP protection. Copyright law protects literary and artistic innovation, such as maps and software.
Patent law protects new, useful and non-obvious inventions, such as drugs and machines. Trade-
secrets law protects secret industrial formulas and process, and industrial design law protects the
original design of a useful article. Trade-marks law has also protected the marks or logos of
innovation businesses used to distinguish the goods and services of one business from the goods
and services of another. The advancement of technological innovation has further required IP
law to provide new types of IP protection, such as the protection provided to digital databases or
computer chips. A form of innovation, therefore, needs to satisfy the protection requirements
under the relevant IP law. For example, a form of innovation seeking copyright protection needs
to satisfy the requirement of being a copyrighted subject matter, for example not merely an idea;
needs to be original; and in most of the cases needs to be fixed in material format. Further, a
form of innovation seeking patent protection needs to be new, useful and nonobvious patentable
subject matter. Notably, the level of originality of creativity required under patent law is much
higher than its counterpart under copyright law. With regard to trade-marks law, it has a number
of requirements that a given logo or word needs to satisfy in order to receive protection.
Generally the logo, sign, symbol or word needs to satisfy the definition of a “mark” for the
purpose of trade-marks law, needs to be distinctive and needs to satisfy the “use” requirement.
Furthermore, some categories of IP protection are easier to get than other protection
categories due to the difference in their protection requirements. For example, copyright in most
jurisdictions is automatic; that is, the creator of the copyrighted work is entitled to protection
regardless of whether the copyright work has been registered with the national IP office or not.
On the other hand, patent protection is not automatic since it involves complex procedures
involving, among other procedures, an application, examination, publication and registration.
IP law mainly protects knowledge-based innovation through monopolies by which the
owners of IP are entitled to a bundle of exclusive rights over their IP-based innovation, such as
the exclusive right to copy, to use, to make, to market, etc., for a specific period of time
prescribed by the relevant law. Trade-secrets, however, remain protected as long as they stay
“secret,” and the protection of trade-marks can last indefinitely upon satisfying certain conditions
provided by the relevant law, such as the payment of maintenance fees.
Traditionally, IP law has played the key role of protecting innovation in the era of “closed
innovation,” a framework under which firms rely on their own resources to develop and market
innovation (Huizingh, 2011). In recent years, however, a new concept has emerged, “open
innovation” (Chesbrough, 2003a) to refer to “the use of purposive inflows and out flows of
knowledge to accelerate internal innovation and to expand the markets for external use of
innovation, respectively” (Chesbrough et al., 2006, p. 1).
Over time, the innovation process has increasingly been depicted as interactive, non-
linear, incorporating feedback processes both within and between firms and is now usually
categorized info five generations (Rothwell, 1992).
The innovation literature originally conceptualized the innovation process in a linear and
sequential manner, starting with a scientific discovery and ending with the introduction of a new
product into the market. Accordingly, the model was known as research-push. The demand-pull
model or second generation model emerged in the mid-1960s and reflected the growing
awareness granted to customers and their perceived needs. Integrating both research-push and
demand pull, the coupling model introduced the concept of feedback loops and the interactive
nature of the innovation process. The fourth generation stressed the role of external linkages and
alliances, whereas the fifth generation innovation process further emphasizes the strategic and
technological integration with customers, suppliers, communities and networks, which is
facilitated by information technologies (Rothwell, 1992). Innovation has thus long been depicted
as a “multi-player game” (Bessant & Tidd, 2011, p.339). After being coined by Chesbrough in
2003, the concept of Open innovation drastically gained in popularity. Besides stressing the fact
that firms do not innovate in isolation, it suggests that understanding and profiting from
innovation requires “a more externally focused perspective, involving the actions of multiple
actors in a far more distributed environment” (Chesbrough, Vanhaverbeke and West, 2006,
p.11). The “open innovation” approach offers several distinctive features, which distinguishes it
from the traditional closed innovation model, and are listed in Chesbrough (2003). First, many
talented people who would provide valuable inputs into the innovation process work outside the
firm. Second, external R&D can create value from which the firm can benefit, provided that it
keeps an acceptable level of internal R&D so as to be able to absorb this externally generated
knowledge (Cohen & Levinthal, 1990). Third, the firm does not need to originate research
internally in order to profit from it, provided that it has the proper connections. Fourth, first-
mover advantage is not the only option. Elaborating a business model centred on the exploitation
of external ideas can turn out to be more effective. Finally, open innovators not only use IP as a
control mechanism to protect their valuable knowledge and ideas but also exploit others’ IP to
advance their business objectives. All these features converge towards the idea that the locus of
knowledge generation can be decoupled from both the locus of innovation and the locus of
commercialization (Gassmann & Enkel, 2004). Accordingly, three open innovation approaches
can be defined: outside-in, inside-out and coupled. Firms may seek knowledge outside its
boundaries, so as to enrich its own knowledge base and innovate internally. This approach relates
to the outside-in or inbound open innovation and has been widely investigated in innovation
literature, thanks amongst other sources, to the harmonized innovation surveys based on the Oslo
Manual, which gather information on information sourcing and co-operation practices of
innovative firms. Latest figures for EU-27 confirm the role of co-operation with a variety of
partners for innovation, as more than a third of innovative firms rely on co-operative agreements
for their technological innovations (Community Innovation Survey 2008, Eurostat).
Firms may choose to let other firms commercially disseminate and exploit the knowledge
and ideas they have developed. In doing so, they use external channels to commercialize their IP.
This approach is referred to as inside-out or outbound open innovation (Gassmann & Enkel,
2004). A final option is the coupled process which links inside-out and outside-in processes, and
requires the setting up of cooperative arrangements so as to allow firms to benefit from each
other’s complementarities. Unfortunately, current harmonized surveys neglect these two
perspectives of open innovation, as they concentrate on innovation occurring inside the focal
firm, i.e. the firm responding to the survey.
Co-operation is considered as an innovation stimulus and is expected to bring benefits
such as achieving economies of scale and of scope, reducing uncertainty, gaining access to new
markets or accessing complementary knowledge (Miotti & Sachwald, 2003; Becker & Peters,
1998; Hagedoorn, 1993).
The governance of co-operation for innovation relies, to a good extent, on IP, protected
by the so-called formal mechanism of IP protection (Hall, Helmersb, Rogersc, & Senae, 2011),
such as patents, copyrights, trade-secrets, trade-marks. Thus, the following section focuses on the
relationship between the legal protection of IP and open innovation. It evaluates the extent to
which IP law protection will play a role in promoting or discouraging this business model.
The Relationship Between IP Law Protection and Open Innovation
As explained above, the impact of IP protection on innovation generally is controversial.
And, it seems that the best approach to enable IP law to stimulate innovation is to design it in
such a way that strikes the right balance between the interests of innovators against other socio-
economic interests of the public at large, an exercise that has proven to be extremely difficult.
Nonetheless, the impact of IP law on open innovation is more ambiguous. The monopolistic
nature of IPRs entices the internal creation and utilization of innovation. Attracted by the bundle
of exclusive rights that IP laws provide to innovators, a firm could be enticed to direct all its
internal resources to develop innovations that can be protected by IP law and which, as a result,
could give the firm the ability to exclude other firms, to some extent, from competing in the
same domain of innovation. Here it is important to note that different IPRs provide different
levels of exclusion. Consequently, they are different in their level of attracting firms into closed
innovation models.
More specifically, patent protected innovations are more likely to influence the firm’s
decision to adopt closed innovation models. Patent protection is the strongest amongst all the
categories of IP. Patents protect both the idea and its industrial application. Therefore, even if
one firm independently develops a form of innovation that is similar to a patented innovation of
another, this firm will be infringing the rights over the patented innovation of the firm that
received patent protection first. During the term of patent protection, usually 20 years from the
date on which the patent application was filed (TRIPS, 1994, art. 33), the patent holder is entitled
to prevent anyone from making, using, selling, importing, and/or exporting the patented
invention. This high level of control over the patented innovation enables the firm to exclude
competitors and, thus, resort to closed innovation models. Nevertheless, the duration of patent
protection is shorter than the term of protection provided to other categories of IP, such as
copyright or industrial designs. This is not surprising given the difference in the scope of
protection (control) given to patent holders compared to the rights given under other IP
categories. The clearest example of innovations that receive patent protection and which are
usually exploited through closed innovation models is pharmaceutical products.
The second category of IP which provides rights holders with a high level of control over
their innovation is trade-marks. This form of IP enables the right holders to exclude others from
using their trade-marks in association with their goods or services. The purpose of trade-marks is
twofold: first, they protect the economic interests of the right holders of the mark by preventing
others from exploiting the business benefits of the right holders’ reputation as associated with
their trade-marks; second, it protects the public by indicating to them the source of the goods and
services they are receiving, which is the key factor for deciding the quality of these goods and
services (Qualitex Co. v. Jacobson Products Co., 1995; Mattel, Inc. v. 3894207 Canada Inc.,
2006). One of the main strengths of trade-marks is their ability to be renewed indefinitely;
therefore, receiving a trade-mark over a given form of innovation could guarantee a long lasting
market advantage. It should be noted that trade-marks are not limited to words, logos or
distinguishing guises, but sometimes extend to cover unconventional marks, such as smell,
sound, or touch marks. For example, trade-marks have been sought and received over certain
smells and sounds. This shows the amount of control that a firm producing perfumes, for
instance, can have over its new innovations (fragrance).
As to copyright, it provides rights holders with control over their literary, artistic and
dramatic works. This form of protection is of a high importance for information technology
innovations. Computer programs per se are excluded from patent protection in most jurisdictions
and, at the same time, they are copyrighted subject matter. Copyright provides a long duration of
protection that should not go below the life of the author of the copyrighted works plus 50 years
after her/his death (TRIPS, 1994, art.12). This term of protection is the minimum that countries
could provide to be compliant with international copyright law, but in practice many jurisdictions
provide longer durations, such as in the United States and Europe where the term of protection is
the life of the author plus 70 years. Despite the long duration of copyright protection, copyright
protects expressions and does not cover ideas. Therefore, it is possible that two firms
independently develop an identical piece of software without infringing each other’s copyright.
In other words, the ambit of protection under copyright law is narrower than it is under patent
The fourth category of IP protection is the protection provided to industrial designs,
which is the protection provided to the original and aesthetic features added to a useful article.
Famous examples of industrial designs include Apple’s iPod and iPhone. For example, a firm
producing an industrial design can register it and, as a result, exclude others from making similar
articles having the same design throughout the term of protection. Accordingly, phone producers
are not allowed, for instance, to produce phones that have the exact design of Apple’s iPhone
during the term of protection. The duration of protection for industrial designs is usually shorter
than the duration of patent, trade-marks or copyright protection; industrial designs are usually
protected for a term ranging between 5–25 years, depending on the jurisdiction.
Notably, the protection of an industrial design covers only the aesthetic features of a
useful article and does not extend to cover the function of the article.
Trade-secrets are the only form of IP that requires strictly closed innovation environment
to enjoy legal protection. The duration of protection of trade-secrets lasts so long as the
innovation remains secret. A famous example of this type of innovation is the secret formula of
Coca Cola. Trade-secrets can lose their protection when they become known. They also don’t
provide protection against independent creation or reverse engineering.
In short, IP protection provides an incentive to firms to follow a closed innovation model.
However, the level of enticement varies depending on the category of IP protecting the firms’
innovation. While trade-secrets and patents play the highest role of influencing firms’ choice to
follow a closed rather than open innovation model, copyright, trade-marks and industrial designs
provide less incentive to do so.
Although some research has already noted the negative impact that strong IP protection
may have on open innovation (Vallat, 2009; West, 2006), IP protection, in spite of its
monopolistic nature, is capable of playing its traditional role of rewarding and stimulating
innovation even in an open innovation environment (West, 2009; Gallini, 2002). Open
innovation is new as a label but is well-old as a notion (Huizingh, 2011; Christensen, 2005) and
IP has always functioned in innovation environments where external knowledge was utilized to
sustain internal research and development and where internal knowledge was sought to be
externally marketed (West, 2009). Put differently, IP is a fellow not a rival to open innovation,
albeit under different disguises.
The starting point of illustrating the value of IP protection for open innovation is to
imagine the situation where IP protection is not provided to innovation. In this situation, it is
likely that firms will resort to, inter alia, absolute secrecy to avoid free ridings. On the other
hand, a firm that has patent rights over its innovation, for example a machine, will be more open
toward licensing this innovation to other firms, because this firm is sure that any uses of the
innovation that go beyond the uses allowed under the license will be infringing under patent law.
Licensing IP, in other words, solves the tension between knowledge protection and knowledge
sharing (Bogers, 2011). After surveying over 154 industrial firms, Lichtenthaler (2010)
concluded that the size of the firm’s IP portfolio plays an important role in encouraging the firm
to move toward the open innovation paradigm.
Looking at the issue from the side of the firms that are users, not creators, of innovation,
IP protection can be seen as an incentive to engaging in open innovation. A firm that is able to
copy other firms’ innovations will have no motive to acquire or license in IP. It is true that closed
innovation is still the more prevailing model for creating and exploiting IP and that managing IP
in open innovation paradigms is not an easy task (Luoma, Paasi & Valkokari, 2010), but it is
equally true that firms are gradually shifting into the open innovation paradigm (Lee, Nystén-
Haarala, & Huhtilainen, 2010). For example, IBM, one of the largest holders of IPRs in the
world, has noticeably become an active actor in open innovation. In 2006, it launched Open
Collaborative Research (OCR), a program designed to foster the collaboration between IBM and
universities in the domain of open source software (IBM, 2006). Furthermore, Horacio Gutierrez,
Microsoft Vice President and Deputy General Counsel for IP and Licensing, describes IP as a
“bridge” that has enabled Microsoft to collaborate with other firms (Gutierrez, 2008). For
Philips Research, open innovation is a key for success; they state: “[t]hrough “outside-in”
innovation, we draw on the capacities of individuals, organizations, and even small start-ups
from around the globe. By providing a broader window on the world of health and well-being,
these strategic partners help us gain new insights and access to new technologies” (Philips
Research, (n.d.)).
The management of IP in open innovation is a key for its success (Alexy, Criscuolo, &
Salter, 2009; Bogers, Bekkers, & Granstrand, 2011; Chesbrough, 2003b), and it usually utilizes
specific tools, namely IP acquisition/assignment and IP licensing. The easier these tools to use,
the more successful is open innovation (Gallini & Scotchmer, 2002). The following sections
explain these tools and illustrate the IP law challenges associated with them.
IP Assignment/Acquisition and Licensing as the Main Channels for Inbound and
Outbound Innovation
Utilizing IP in open innovation environments can mainly take the form of IP
assignment/acquisition and IP licensing. Both forms are legal activities that, if not practiced
carefully, may have negative implications for the legal protection of the IP of the firms engaged
in open innovation.
IP Assignment and Acquisition
Firms may not be able to produce IP, because creating IP usually requires strong
investment in Research and Development (R&D). And even when this is available, the results of
this R&D may fail to attract IP law protection. For example, a pharmaceutical company may
invest for years in developing a certain drug, but a publication of a research paper on this drug by
a research lab renders whatever outcome of the pharmaceutical company’s research obvious and,
therefore, not patentable. Furthermore, a firm may already has a form of innovation that is
missing some technological components to be ready for the market; in this instance, waiting for
the R&D team to develop this technology may take some time during which the firm may lose
the first mover advantage.
As a result, some firms resort to acquiring IP, through IP assignment, instead of
producing IP. An assignment of IP is the transfer of the bundle, or some, of the exclusive rights
of the owner of the IP (the assignor) to another person (the assignee). Rights holders of IP,
whether legal or natural persons, can transfer wholly or partially their IPRs over inventions,
copyrighted works, trade-marks or other categories of IP based innovations. For example, a
publishing house can assign all the copyright it has over one of its publications, or it can assign
only the translation right over this publication. Further, the assignment of IPRs can be limited to
one or more geographical areas. An American pharmaceutical company may assign its patent
rights over one of its drugs patented in Japan while continue enjoying its patent rights over the
same drugs in other jurisdictions where it has received protection. It should be noted that in most
jurisdictions the assignment of IPRs needs to satisfy some formalities, such as the writing and
registration requirements, prescribed by the relevant legislation.
A firm may assign its IP to another firm to generate income (Bogers, Bekkers, &
Granstrand, 2011) by which it can strengthen its downstream capabilities to exploit other IP it
has in producing and marketing products. When the assignment of IPRs is looked at from the
side of the firm receiving the assignment, it is viewed as IP acquisition. In other words, for a firm
involving in open innovation, its outbound innovation may take the form of assignments of IPRs
and its inbound innovation may take the form of IP acquisition. Most of the time, an open
innovation firm is involved in both IP assignment and IP acquisition.
IP acquisition is important for innovation firms since it creates a wall around the firm’s
field of innovation which ultimately prevents the entry of other competitors (Bogers, Bekkers, &
Granstrand, 2011; Yoffie & Freier, 2005). This importance is practically illustrated in the many
recent IP acquisition deals. For example, many giant companies were in a fierce competition to
acquire the IP of Nortel, Canadian telecommunication giant, which filed for bankruptcy in 2009.
A consortium of Apple, EMC, Ericsson, Microsoft, Research In Motion (RIM), and Sony
managed to outbid Google and purchase almost 6000 patents of Nortel for $ 4.5 billion. On the
other hand, only one month after, Google acquired Motorola Mobility for $12.5 billion to make
its patent portfolio stronger and, consequently, protect its operating system, Android, from the
fierce competition it is facing from Apple and Microsoft. Larry Page (2011), Google’s CEO,
explained that the acquisition “will increase competition by strengthening Google’s patent
portfolio, which will enable [Google] to better protect Android from anticompetitive threats from
Microsoft, Apple and other companies.”
Acquiring IP is not limited to organizations specialized in information and
communications technology, but it is important for other industrial sectors. In 2008 many big
pharmaceutical companies merged to, inter alia, strengthen their patent portfolios. The sum of
the deals reached that year amounted to $ 70 billion (Big Pharma, 2008).
In addition to IP acquisition deals focusing on copyright and patent rights, trade-marks
are also an important IP asset that has been subject to a number of IP acquisition deals. Firms
buy reputable trade-marks to capture the market reputation associated with products or services
sold or provided in association with these trade-marks. For example, recently Acella
Pharmaceuticals has announced its acquisition of the trade-mark PRENATE®, a family of trade-
marks, from Avion Pharmaceuticals to benefit from the reputation of this family of trade-marks
associated with pregnancy and prenatal vitamins (Acella Pharmaceuticals, 2012). Failing to
produce or acquire IP may open the door for competitors to arrive into the innovation domain in
which the firm is specialized. For example, Eastman Chemical did not obtain enough patents
over “polyethylene terephthalate,” a polyester material used in producing, among other things,
plastic bottles. As a result, Dow Chemical managed to capture IPRs that facilitated its entry into
the business sector of soft-drink bottles (Yoffie & Freier, 2005; Rivette & Kline, 2000).
IP Licensing
A licence of IP is a permission given by the right holder (licensor) to another person
(licensee) by which the licensee can exercise some or all of the rights of the licensor in exchange
for an agreed payment. For instance, a firm that owns a patented machine can license another
firm the right to sell the machine, which is only one right, the right to sell, of the bundle of the
exclusive rights given to the patentee. Also, the firm can license more of its patent rights or all of
them, such as the right to make, to use and to export, etc. An IP license can be limited to one or
more geographical areas. In the aforementioned example, the firm may only license its right to
sell the patented machine in only one geographical area while maintaining its right to sell, and
other rights, in other geographical areas.
IP licensing can be divided into three categories. The first category is exclusive licensing
under which the licensee will exclusively practice the rights licensed under the exclusive license;
neither the licensor nor anybody else can practice any of the rights licensed during the term of
the exclusive license. Usually, the licensing of patented pharmaceuticals takes the form of
exclusive licensing. The second category is non-exclusive licensing under which the licensor can
practice the same rights licensed and can grant other non-exclusive licenses to other licensees
during the term of the non-exclusive license. And the third category is sole licensing under which
both the licensor and licensee can practice the same rights licensed under the sole license during
its term; however, the licensor will not be able to licence the same rights to other licensees.
Licensing is an important open innovation activity that contributes to firms’
competitiveness. A firm that has no capabilities of developing its IP into goods and then
marketing them can license out this IP to generate enough income (Lichtenthaler & Ernst, 2007;
Lichtenthaler, 2005) to become capable of developing its IP into marketable products. Licensing
out is also a source of important income for firms specialized in R&D. Further, licensing out
activities could help firms create de facto standards in the industry. For example, the reluctance
of Apple to license out its Mac operating system made it miss the opportunity to make this
operating system a prevalent standard in the industry (Yoffie & Freier, 2005). On the other hand,
Microsoft was more flexible with regard to licensing out its windows operating system, a fact
that made it dominate the market of PCs. Moreover, a firm that licenses in IP will have faster
entry to the market, especially when the firm does not have the capacity for developing its own
IP. For example, Procter & Gamble’s “SpinBrush” is an innovative product that relied on
licensing in IP from four other firms (Yoffie & Freier, 2005).
It should be noted that firms may be reluctant to license out their IP when licensing out
would generate competition costs that outweighs the royalties gained from licensing (Yoffie &
Freier, 2005). Further, firms usually license out IP which may not be directly beneficial for their
main business activities (Yoffie & Freier, 2005).
Cross-licensing is another form of licensing that happens when firms agree to cross-
license IPRs to each other. One of the famous cross licensing deals was struck between Dell and
IBM. The value of the deal was $ 16 billion. Cross-licensing, and licensing in general, especially
with regard to patents saves firms from engaging in patent litigations (Bogers, Bekkers, &
Granstrand, 2011; Granstrand, 2004), which may ultimately lead to invalidating some of the
patents of each firm. Cross-licensing also helps firms use each other's knowledge to produce
collaborative innovation in a more effective, simple and inexpensive manner (Bogers, Bekkers,
& Granstrand, 2011).
A very relevant concept to cross-licensing is “patent pools,” where two or more firms
agree to cross-license their patents to each other. It should be noted that patent pools play a major
role in the development of innovation since patent litigations suppress incremental innovation to
a large extent. Further, patent pools specifically and IP pooling in general serve both consumers
and producers of innovation, because they facilitates interoperable innovation (Bogers, Bekkers,
& Granstrand, 2011). For example, in 2005, a consortium of 20 companies agreed to establish a
patent pool of their patents relating to Radio Frequency Identification (RFID) (Michael
Blakeney, 2009). Without such a consortium, much of the innovation relating to RFID would
have been hindered by IP infringement litigations.
The Challenges Facing IP Assignment/Acquisition and Licensing in Open Innovation
IP acquisition is complex and involves a number of challenges that the firm acquiring IP
needs to be mindful of. Foremost, the purchasing firm should ensure that the IP it is purchasing
is enjoying sustainable legal protection by one of the IP categories recognized by law. This
requires the firm to carefully study the legal validity of the patent, copyright or trade-mark
protecting the IP it is about to purchase. In patent law some subject matter, such as business
methods, is inherently weak to attract patent protection and even when it receives protection, it
usually a result of lengthy and costly litigations. For example, while managed to
receive patent protection for its famous one-click purchasing system in the US in the late 1990s,
it has not obtained protection in Canada and Europe so far. This type of subject matter, when
patented, is vulnerable to invalidity in the future, especially when new case law questions its
patentability. For example, upon a request from an interested party in 2006, the United States
Patent and Trademark Office (USPTO) ordered a re-examination of the “One-Click” patent and
invalidated some of its claims, which required to revise its patent claims. The
revised patent was later confirmed by the USPTO.
In this regard also, the U.S Supreme Court’s rejection (Bilski v. Kappos, 2010) of the test
for patenting business methods originally developed in State Street Bank & Trust Co. v.
Signature Financial Group (1998) has shed some doubts on the validity of the a large number of
patents granted under the old test. In trade-marks law some marks are also inherently weak, such
as the “common words” in contrast to the “invented words” (Fox, 1972).
The importance of ensuring the validity of the copyright, patent, and/or trade-mark
protecting the IP which the firm is purchasing lies in the fact that when the firm wants to enforce
its IPRs against a claimed infringer (defendant), the latter will usually attack the validity of the
IP right asserted as a defence. This is always the case in patent and trade-mark infringement
cases. It is used also in copyright infringement cases, but it is used to a smaller extent since the
validity conditions for copyright protection are generally less stringent than patent and trade-
mark protection.
Secondly, a company acquiring another company’s patent, copyright and trade-mark
portfolio needs to be aware of the strength of this portfolio by considering other important
factors, such as the remaining term of patent and copyright protection and the broadness of the
claims of each patent since the scope of the patent claims determines the scope of its monopoly
power. With regard to trade-marks, the firm needs to carefully examine the scope of the
categories of goods and/or services with which the trade-mark is associated as well as the overall
reputation of the trade-mark. When the trade-mark is registered in association with a large
number of goods and services, the firm will be able to enjoy the reputation associated with the
trade-mark in more business sectors and/or benefit from licensing this trade-mark to businesses
interested in using this trade-mark in such sectors. For example, the trade-mark “Jaguar” is
registered in association with a wide variety of goods and services, such as clothing, watches,
shoes, hand-bags in addition, of course, to cars. As a result, the owner of the “Jaguar” trade-mark
can license it to a company interested in making bags, if the owner itself is not interested in
making bags.
Thirdly, a firm that acquires the copyright of another company over computer software
needs to ensure that this software is free from open source software if the firm wishes to exploit
it as proprietary software. Otherwise, the company needs to be aware that its further distribution
of the software will have to be compliant with the open source software license. The
enforceability of an open-source license has been confirmed by an American court in Robert
Jacobsen v. Matthew Katzer (2008).
In this case, Robert Jacobsen, the plaintiff, was a software developer of model railroad
software and the administrator of Java Model Railroad Interface, an open source project.
Jacobsen claimed that Matthew Katzer, a developer of proprietary software, had incorporated
some of Jacobsen’s code in his software without including a proper notice indicating the origin
of the software and the part of which that had been modified. The notice was required by the
terms of the open source license. Therefore, Jacobsen argued that Katzer had infringed his
copyright and therefore sought both damages and an injunction preventing Katzer from
distributing the software. The district court held that Katzer did not infringe the copyright of
Jacobsen; however, the United States Court of Appeals for the Federal Circuit reversed the
decision holding that Jacobsen has enforceable copyright and since Katzer did not abide by the
terms of the open-source license agreement, the latter was a copyright infringer. It further
confirmed that “[o]pen source licensing has become a widely used method of creative
collaboration that serves to advance the arts and sciences in a manner and at a pace that few
could have imagined just a few decades ago” (Robert Jacobsen v. Matthew Katzer, 2008).
The United States Court of Appeals for the Federal Circuit returned the case to the
district court for re-examination, but the case was finally settled out of court in 2010.
Nonetheless, this case remains as a leading case for the enforceability of open-source licenses.
In 2003 Cisco Systems acquired Linksys, a company that was producing networking
products. Some of the products that Linksys produced incorporated open source software
licensed under open source licenses by the Free Software Foundation (FSF). Later on, Cisco
Systems started distributing some of its Linksys products without disclosing the source code
associated with the software incorporated in these products as required by the terms of the open
source licenses. The Free Software Foundation sued Cisco Systems for copyright infringement
and sought both an injunction preventing Cisco from further distributing products that includes
firmware incorporating opens source software and recovery of profits that had already resulted
from previous distribution. Courts did not decide Free Software Foundation v. Cisco, because
Cisco systems agreed to make the source code of the software at issue available on its website, to
donate an undisclosed amount to the FSF and to appoint a person responsible for ensuring that
Linksys products are compliant with the FSF’s license (Smith, 2009).
Fourthly, a firm buying a trade-mark should also make sure that the trade-mark is not
about to lose its distinctive character. In trade-marks law, “distinctiveness” is the ability of the
trade-mark to distinguish the goods and services of one business from the goods and services of
another business. The distinctiveness character of the mark is a condition that a mark needs to
satisfy in order to registrable, and this character has to continue as remain present as a condition
for the mark to continue receiving protection (Gervais and Judge, 2011). Once distinctiveness is
lost, the mark will become “generic” or “descriptive” since it will be perceived by the public as a
word that refers to a given good or service rather than a word that differentiates the goods and
services of one business from those of another. An example of a mark that lost its distinctiveness
and has become generic or descriptive is “Vaseline” (Shpetner, 1998). This word is generally
perceived as a petroleum jelly used as a lubricant and moisture rather than a mark distinguishing
the petroleum jelly of one producer from that of another.
In addition to the IP law challenges associated with IP assignment/acquisitions, licensing
activities may raise some IP law challenges for firms involved in these activities. For examples, a
firm licensing its trade-mark to another firm needs to make sure that the licensee will use the
trade-mark in association with goods and services that have the same level of quality of the
goods and services with which the trade-marks is usually associated. Otherwise, the trade-mark
will lose its distinctiveness and thus could be vulnerable to expungement (Gervais and Judge,
2011). As explained earlier, customers always develop a link between a given trade-mark and the
quality of the goods and services with which it is associated; therefore, when a trade-mark
becomes associated with goods or services of a lower quality, the public interest requires the
expungement of this trade-mark (Gervais and Judge, 2011).
In Heintzman v. 751056 Ontario Ltd (1990), the trade-mark owner was a producer of
high quality pianos, but it decided to sell its business along with its trade-marks. The purchasing
business outsourced the production of the pianos to another company which produced pianos of
lower quality. The Court found that the trade-mark lost its distinctiveness because the public was
not informed about the change of the source of the goods with which the public associated the
trade-mark. In this case, the fact that the quality of the pianos after the trade-mark assignment
was lower was important to find that the trade-mark lost its distinctiveness.
Licensing a trade-mark may also pose a threat on the protection of the trade-mark if the
licensor does not practice direct or indirect control over the quality or nature of the goods or
services of the licensee with which the trade-mark is associated (Gervais and Judge, 2011). In
most jurisdictions, the “use” of the trade-mark is one of the most essential requirements for
maintaining the registration of the trade-mark. Thus, when the trade-mark is not used for a period
of time prescribed by law, the registration of the trade-mark could be expunged upon the request
of an interested party. Where the licensor is no longer using the trade-mark, the use of it by the
licensee will not satisfy the requirement of “use” under trade-marks law unless the licensor
continues maintaining a direct or indirect control over the quality or nature of the goods and
services associated with the trade-mark (Gervais and Judge, 2011).
For centuries, the relationship between intellectual property and innovation has been
prominent and this relationship will continue in the era of open innovation. While strong levels
of IP protection do stifle open innovation, the absence of this protection may lead firms to resort
to secrecy to protect their innovation, a situation which not only hinders open innovation but
abolishes it. IP law provides innovators, whether firms or individuals, with the ability to control
their innovation; however, IP law leaves it to the innovators themselves to decide how much of
this control they actually want to exercise. It is also up to innovators to decide how to exercise
this control; they could follow closed innovation models or they could opt for open innovation
paradigms, which require clear and detailed IP management strategies. The legal implications
that may result from incautious IP strategies that firms may adopt to manage their IP associated
with their in-bound innovation and out-bound innovation could be serious. Licensing out,
licensing in, and cross-licensing strategies as well as the strategy of IP acquisition are based on a
complicated IP law framework the understanding of which by open innovation firms is essential
to prevent any negative implications on their ability to protect their IP and/ or to avoid IP
Further, the decision to engage in an open innovation process should be driven not only
by the strategic objectives of the firms, but also by their current situation in terms of IP. Listing
their portfolio of assets and assessing their value are critical steps that firms should undertake to
evaluate the complementarities and expected benefits of an open innovation strategy. At a more
tactical level, managers should also consider the organizational readiness towards open
innovation, and the ability of its innovators to overcome the “not invented here” and “not sold
here” syndromes. Adopting an open innovation approach also requires the development of
proper competences, which have been described as absorptive, multiplicative and relational by
Gassmann & Enkel (2004). Nurturing these competences may obviously be costly; therefore,
managers should also consider the coordination and transactions costs that are associated with an
open innovation strategy. In line with the debate on the concept of absorptive capacity, firms
should also maintain a suitable level of R&D and innovation capabilities and avoid becoming
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Biographical Note:
Saleh Al-Sharieh, (LL.B; M.A.; LL.M. Law &Technology; LL.D. (Cand.), is a law and
technology researcher at the CRP Henri Tudor. His research focuses on intellectual property law.
Saleh’s peer-reviewed research has appeared in the Journal of World Intellectual Property, the
International Journal of Intellectual Property Management, and Alberta Law Review. At the CRP
Henri Tudor, Saleh gives advice on the management of the Centre’s intellectual property and its
licensing relations with its business partners. Before joining the CRP Henri Tudor, he taught
intellectual property law and worked as an intellectual property consultant in Canada.
Anne-Laure Mention holds a Master’s degree in Electrical Engineering (Major in
Telecommunications, with high honors), a specialized master’s degree in Management (Major in
Finance, with highest honors), and a PhD in Economics and Management from HEC-Université
de Liège. She is currently leading a research unit focusing on innovation economics and
management within the Public Research Centre Henri Tudor (Luxembourg). In 2011, she
received an IBM Faculty award for the project entitled “Towards accrued transparency of
operations in the fund industry.” She is also a founding member of World Intellectual Capital
Initiative (WICI) and an Advisory Board Member and Scientific Board Member of ISPIM.
... Therefore, it is necessary to establish clear and detailed rules for intellectual property management strategy, as the lack of caution and violation of these principles can have profound legal implications. First of all, the acquiring company should ensure that the purchased intellectual property enjoys balanced legal protection under one of the categories of intellectual property rights recognized by law (Mention, Al-Sharieh, 2013). ...
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The article aims to present customer participation in value co-creation based on the demand-side approach to innovation. We present the rationale and principles of the demand-side approach to innovation based on user participation. Further, we discuss the forms of customer engagement in customer-company cooperation, customer motivations, and perceived benefits. This article also identifies the open innovation model’s factors and provides practitioners with implementation guidance regarding the demand approach to innovation. Further, this article shows the influence of the customer’s active role and the demand-side approach to innovation on the enterprise, the economy, and society. Finally, we identify possible risks associated with using this approach and their impact on the environment.
... Hence they should not represent insurmountable hurdles to implementing a more effective innovation strategy (KPMG, 2007). Moreover Al-Sharieh and Mention (2013) established that intellectual property rights can indeed reward and stimulate innovation in an innovation environment in the banking industry. In addition to highlighting the continued importance of open innovation, this review suggests that open innovation in itself is not a perfect solution which guarantees success (Fasnacht, 2009). ...
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Open Innovation: A Multifaceted Perspective unveils research on open innovation from multidisciplinary perspectives and with practical insights from leaders and policy-makers. The first section addresses the links between open innovation and various disciplines, methods, concepts and policy instruments. The second section reviews selectively the literature, focusing essentially on open service innovation and innovation in financial services industries. It also explores different forms and types of practices reflecting the adoption and implementation of open innovation. The third section focuses on the management of open innovation, paying specific attention to the individual, intra- and inter-organizational levels. Contents:Part I:Unfolding Fifty Shades of Open Innovation: Stimulating Insights & Foresights (Anne-Laure Mention and Marko Torkkeli)Open Questions about Open Innovations (Leonid Chechurin)Open Data For Open Science: Aspirations, Realities, Challenges and Opportunities (Vera Lipton)Open Innovation or Innovation in the Open? An Exploration of the Strategy–Innovation Link in Five Scale-Intensive Services (Karl Joachim Breunig, Tor Helge Aas and Katja Maria Hydle)Sustainable Innovation: Solving Wicked Problems Through Innovation (Antti Hautamäki and Kaisa Oksanen)Futures of Innovation Systems and Innovation Management: Open Innovation Paradigm Analysed from Futures Perspectives (Jari Kaivo-oja and Teemu Santonen)Leveraging Design Thinking to Innovate (Denis Dennehy, Frederic Adam and Fergal Carton)Open Innovation Adoption Practices and Evaluation Methods in the Global Process Industry (Jarkko Pellikka, Miika Kajanus and Marko Seppänen)Open Innovation Networks: Exploring Actor Roles and Network Orchestration in Living Lab (Dimitri Schuurman, Bram Lievens, Carina Veeckman, Lieven De Marez and Pieter Ballon)Open Innovation and Territory (Marcin Baron)Living Labs and Open Innovation in European Context (Bror Salmelin)Part II:The Feasibility of Open Service Innovation (Tor Helge Aas and Per Egil Pedersen)Financial Services and Open Innovation (Patrick Schueffel and Iustin Vadana)How to Motivate and Reward Customers in an Online Co-Creation Process? (Maria Antikainen and Marketta Niemelä)Customer Involvement in Innovation in Service Sector (Jaakko Paasi)Can Crowdsourcing Platforms Be Used in B2B Innovation? (Hannu Kärkkäinen, Jari Jussila, Jani Multasuo and Nina Helander)Crowdsourcing for Value Creation in Lean Start-Ups (Pia Erkinheimo, Hannu Kärkkäinen and Jari Jussila)Open Innovation in University–Industry Collaboration: Communities of Practice (Päivi Iskanius)Characteristics of Open Innovation Cultures in Different Regional Contexts (Peter Prud''homme van Reine)Ambidextrous Organisational and Individual Competencies in OI: The Dawn of a New Research Agenda (Joachim Hafkesbrink and Markus Schroll)Understanding Open Service Innovation and the Role of Intermediaries (Wil Janssen, Timber Haaker and Harry Bouwman)Intra-Organisational Knowledge Flows: A Coopetition Perspective on Post-Acquisition and -Merger Activities (Audrey Depeige and Stavros Sindakis)Management of Diversity in Open Innovation Processes (Teemu Santonen)
... Hence they should not represent insurmountable hurdles to implementing a more effective innovation strategy (KPMG, 2007). Moreover Al-Sharieh and Mention (2013) established that intellectual property rights can indeed reward and stimulate innovation in an innovation environment in the banking industry. In addition to highlighting the continued importance of open innovation, this review suggests that open innovation in itself is not a perfect solution which guarantees success (Fasnacht, 2009). ...
Full-text available
Despite the fact that it could help to overcome the current global financial crisis, the concept of open innovation is only very scarcely applied in the financial services sector. This international literature review covering the past decade provides an overview of the relevant body of literature on this topic. Two questions represent the starting point of this work: (1) Why is open innovation so scarcely applied in the banking, wealth management and insurance industries? and (2) Should the financial services sector use open innovation more widely? Our findings show that various organizational factors as well as monetary reasons prevent financial services companies from applying open innovation processes. Yet, by taking into account the potential benefits that the concept of open innovation may yield, this approach should indeed be applied more widely in the financial services industry.
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By the end of this chapter you will develop an understanding of: • what 'innovation' and 'entrepreneurship' mean – and how they are essential for survival and growth • innovation as a process rather than a single fl ash of inspiration • the diffi culties in managing what is an uncertain and risky process • the key themes in thinking about how to manage this process effectively. LEARNING OBJECTIVES Innovation Matters You don't have to look far before you bump into the innovation imperative. It leaps out at you from a thousand mission statements and strategy documents, each stressing how important innovation is to 'our customers/our shareholders/our business/our future' and, most often, 'our survival and growth'. Innovation shouts at you from advertisements for products ranging from hairspray to hospital care. It nestles deep in the heart of our history books, pointing out how far and for how long it has shaped our lives. And it is on the lips of every politician, recognizing that our lifestyles are constantly shaped and reshaped by the process of innovation.
Professor Straus' pioneering work on patenting and biotechnological innovation has informed patent policy in the World Intellectual Property Organization and in developing countries since the 1980s. This paper examines the phenomenon of patenting as a strategy not so much to protect innovations but as a means of securing bargaining chips for access to others' proprietary technologies. It traces the consequential development of patent thickets and patent pools and notes their impact as obstacles to innovation and the associated response of competition law. Biotechno-logical patenting is taken as a case study of these developments. The conventional wisdom is that one of the principal justifications for patent protection is that such protection is required as an incentive to innovation, investment and technology transfer. This wisdom is reflected in Article 7 of the TRIPS Agreement, which states that: The protection and enforcement of intellectual property rights should contribute to the promotion of technological innovation and to the transfer and dissemination of technology, to the mutual advantage of producers and users of technological knowledge …
ASTM International continually faces new challenges, such as the protection of intellectual property in today's digital age. This paper briefly describes some of the issues currently faced by ASTM in protecting its IP, as well as steps ASTM has been or will be implementing in the near future to address these issues.
This paper addresses how the Open Innovation concept, as recently coined by Henry Chesbrough, can be analyzed from an industrial dynamics perspective. The main proposition of the paper is that the specific modes in which different companies manage Open Innovation in regard to an emerging technology reflect their differential position within the innovation system in question, the nature and stage of maturity of the technological regime, and the particular value proposition pursued by companies. The proposition is analyzed through an in-depth study of the current transformation of sound amplification from linear solid state technology to switched or digital technology within the consumer electronics system of innovation. The analysis especially addresses the complex interplay between technology entrepreneurs and incumbents, and demonstrates that Open Innovation sometimes has to be conducted under conditions of high transaction costs.
The appearance of a new intellectual property text-robust discussion of the theoretical undercurrents of book in Canada, from the point of view of an academic, Canadian intellectual property law, and, more impor-is most certainly a welcome event. When the textbook tantly, how these undercurrents might be changing appears in both English and French in Canada, as does before our very eyes. It is my view that an understanding Intellectual Property: The Law in Canada, 1 then this is of ''The Law in Canada'' requires a profound under-all the better. standing of what each area of intellectual property is about, and how changes in what one might call the This particular text is welcome not only because of ''rhetoric'' of intellectual property affect the nature of the what one might call its ''newness'', but also because of its various rights themselves. style and substantive choices. Rather than attempting to write what might be called a more classical doctrinal reference work, with exhaustive headings and sub-head-The Rhetoric of Copyright ings, 2 the authors have structured the work thematically The best examples of such discursive shifts are per-for each of the main areas of intellectual property: copy-haps those present in the area of copyright. Copyright is right, patent, industrial designs, trademarks, confidential said to be of purely statutory origins, contrary to the information, plant varieties, and integrated circuit topog-natural rights of the civilian droit d'auteur tradition, with raphies, in addition to useful chapters on international the words of Justice Estey in the Compo case cited in intellectual property and intellectual property overlaps. support. 4 Supreme Court decisions, and particularly In terms of methodology, each section proceeds with recent judgments such as T eberge, 5 have repeated this extensive discussion and commentary, and is particularly point. The premise is indeed the starting point of the case-oriented with long extracts from leading cases. Each Gervais and Judge text (and others). But this view is most discussion gives a thorough canvassing of current issues certainly in transition, though perhaps slowly and almost in Canadian intellectual property law, identifying the imperceptibly, as the underlying discourse of copyright statutory provisions and case law. It is clear that such a changes. To understand this shift, one needs to consider style is less conducive to its use a quick reference guide; more profoundly the state of copyright theory. however, the increased depth of the analysis for the chosen subject-matter more than compensates. The Contemporary copyright theory has tended to focus work is clearly pedagogical; it could be well-employed as on the various kinds of possible justifications for a teaching text, if it were to track a particular course affording protection. Using a discourse borrowed mainly syllabus. From a teaching perspective, the book contains from property theory, these arguments have served to useful review questions and problems. While such a text justify intellectual property protection generally, and will no doubt be in need of continual updating, 3 it copyright in particular. As such, leading texts will com-remains a serious option for teaching and a credible monly list arguments in a relatively brief introductory starting point for any sustained research endeavour. section. 6 Less often, more specific justifications are The appearance of the book — its general orienta-applied to understanding the nature and parameters of tion and in particular its title — are an invitation to specific copyright norms or questions. 7 However, little or reflect upon the state of the law of intellectual property no attention has been paid to the evolution of the funda-in Canada. Indeed, it is perhaps the case that such a mental underlying bases of copyright and how it might discussion illustrates what is missing from this work: a affect the (claimed) statutory basis of copyright law.