Academic journal article Research-Technology Management

Better Practices for Managing Intellectual Assets in Collaborations: Integrating the Practices Identified in This Study into Your Firm's Fabric Will Help to Maximize the Value of Its External Innovation

Academic journal article Research-Technology Management

Better Practices for Managing Intellectual Assets in Collaborations: Integrating the Practices Identified in This Study into Your Firm's Fabric Will Help to Maximize the Value of Its External Innovation

Article excerpt

The R&D world changed forever when the "not invented here" syndrome was replaced with the "invented anywhere" approach. Industrial Research Institute (IRI) member organizations are rapidly moving to a model in which they complement their internal innovation efforts with innovation from external sources. This is not a straightforward process. The complexities of integrating decision-making structures, developing financial models that share both risk and rewards, and adapting the firm's processes and systems to work across organizational boundaries make this a daunting task.

The creation and use of intellectual property is a critical aspect of collaborative relationships. In recent years, the IRI has devoted significant resources to protecting intellectual property in open innovation. Its working groups have explored protecting know-how and trade secrets in collaborative research agreements (1), allocating patent rights in collaborative research agreements (2), building university relationships in China (3), sourcing external technology for innovation (4), and protecting intellectual property during collaboration (5). This article builds upon that work and explores the topic of Intellectual Asset (IA) issues in open innovation.

To understand how firms successfully deal with IA issues in collaborative relationships, we assembled, processed and analyzed learnings from activities of the IRI's Research on Research subcommittee conducted in 2007-2008 (see "How the Study Was Conducted," next page). We call our findings "better practices" rather than "best practices" because a best practice in one organization may not be best in another due to differences in organizational culture, structure or strategy. We use a broad definition of IP that includes patents, trademarks, know-how, show-how, and marketing assets including pricing algorithms, customer lists and marketing strategies. We use the term IA to describe this broad definition; we use the term Intellectual Property (IP) to describe patents.

The activities and deliverables of the relationship change over the life cycle of the collaboration. These efforts are governed by a series of agreements that include provisions for protecting the IA of each firm and allocating rights to newly created IA between the parties.

To describe this progression of activity, and the agreements that guide them, we arbitrarily divided collaborative relationships into three phases: Exploration, Joint Development and Commercialization (see Figure 1). While the issues in each phase will be described independently, the experienced reader understands that they are interdependent. Indeed, the IA positions a firm takes in early agreements may have important impacts on the positions that will govern later agreements. This fact argues strongly for the need for both firms to understand their long-term strategic intent and the strategic intent of the partner. Absent this understanding, the firms may take positions that will limit the long-term value of the relationship.

Exploration Phase

The intellectual asset issues in the Exploration phase have their genesis in the collaborative act. If the firm can achieve its marketplace intent without a collaboration and is willing to assume all of the risk, then these issues are avoided. Therefore, the first step in dealing with IA issues is determining whether or not the firm needs to collaborate. As a simple rule of thumb, if the firm can achieve its marketplace objectives with internal resources, or with a combination of internal resources and assets purchased through normal procurement channels, the firm typically should not enter a collaborative effort.

Hard work is required to make the decision whether to collaborate or to enter the market alone. The firm must clearly define its long-term strategic intent, assess the intellectual property landscape for freedom to operate and ability to exclude others, define an IA strategy that links to the business strategy, determine zones of protection, and present the management team with an assessment of the firm's ability to develop the necessary IA internally. …

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