A quick guide to open innovation

Abstract

The second major type of external-internal gap arises from the risks of contaminating internal IP with external secrets and knowledge of third-party IP. The growing use of OI raises the issue of IP hygiene: ensuring that the company does not incur excessive risks from the intermingling of external and internal IP. IP hygiene becomes especially challenging with dirty environments such as online innovation contests and crowdsourced OI, like Ciscos I-Prize and Cloroxs CloroxConnects community. Companies want to avoid contamination of pre-existing internal IP, disputes over IP ownership and the potential for misunderstandings between the company and diverse OI participants. Due diligence plays a major role in handling both the expectations gap and the hygiene gap. To deal with this expectations gap, crane-and-food-service company Manitowoc looks at the technical and business experience of the inventor when deciding whether and how to craft a deal (eg, patent assignment, acquisition, or joint venture) with the inventor. The company evaluates potential OIs on five dimensions: the current level of development of the idea; the status of IP; the potential for competitor workarounds of the idea; the degree of technical competitiveness offered by the innovation; and the expected business impact. Public OI contests bring significantly more hygiene challenges due to less control of who submits ideas and a greater diversity of ideas. Whereas more targeted solution-research OI projects can rely on pre-qualified external partners, publicly open idea-submission platforms attract submitters with a much broader range of IP of uncertain provenance. Both Cisco and P&G perform due diligence on incoming IP from OI efforts. In the context of open contests, Cisco vets the winning ideas for ownership issues. Although submitters to Ciscos contests must affirm that they own the idea, Cisco doesnt want to take any chances and it independently assesses potential winning ideas for ownership issues. Similarly at P&G, due diligence efforts focus on delineating foreground vs background IP. P&G has noticed that OI participants are often smaller companies or independent inventors who have neither the resources nor the intention of doing IP-related research. P&G performs this work to ensure that it knows what its getting and to minimize the chance of infringement of patents that are not cited. Public idea-submission sites also run the risk of overlap with a companys secret skunk-works project.