Cooperation vs Competition in IPR
In recent years, the area of research and development (R&D) has witnessed a quantum jump in complexity, and as a result the number of IP rights within products and services has increased dramatically. The outcome of this is that companies are becoming increasingly reliant on third party IP rights to innovate, and regularly cooperate with other R&D development performers in order to produce innovative solutions. In the age of the internet, it is becoming increasingly apparent that any single company cannot depend on its own assets and innovations constructed from company in-house research alone and must turn to external sources in order to advance to innovation progress. In regard to IPR, striking the right balance between a cooperative strategy and protection against competition is key to building innovation without giving away vital assets. However, this is not without challenges, as making the change from more ‘closed’ strategies to open innovation demands significant organisational changes. Legal IQ spoke exclusively to Peter Ericsson Nestler, Director of IPR Defensive Strategies, Ericsson about why more organisations are choosing to adopt more open development strategies, as well as the best mechanisms for cooperation around IPRs, and benefits and drawbacks of open innovation.
Why choose cooperation?
Evidence suggests that companies are increasingly recognising the benefits of participating in IP collaborations. Adopting a more open framework for innovation provides the opportunity for companies to access a more diverse pool of ideas, “the ideal collaboration is where you share information, problems, questions and solutions, in a way where all the parties benefit” says Ericsson Nestler. One way to successfully overcome many R&D and marketplace challenges is by sourcing new ideas, technologies and skills from outside one’s own organisation. Ericsson Nestler also comments that a cooperative strategy is the best approach to development “when the cooperation adds more to the value than what could be created internally”. It is important to ensure that IPRs are respected when working under a cooperative strategy, “you have to have a proper agreement in place to make sure that everything is managed in the way you want” says Ericsson Nestler. Establishing this agreement needs to happen early on in the development process and in order to have a proper cooperation agreement, organisations must pin down who owns which areas and how IPRs can be used in the cooperation. “We start by having a non-disclosure agreement in place to share information and discuss in general” explains Ericsson Nestler. When building a cooperative strategy it is also important to identify key areas where cooperation would most strongly benefit development. “You must also consider different types of cooperation” says Ericsson Nestler, noting that in the telecoms industry there is a considerable amount of standardisation due to the fact that having a non-discriminatory policy makes companies more likely to invest.
Building an open development strategy
Open innovation (OI) has been defined as “the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.” (Open Innovation: The New Imperative for Creating and Profiting from Technology, Henry Chesbrough, 2003). Reducing the time it takes to bring products to market, increasing the availability of new technologies and gaining greater access to competencies are just some of the benefits that come with a more open approach to innovation, “open innovation benefits the ecosystem because no company can do everything” says Ericsson Nestler. Through open innovation, organisations develop channels and tools that can improve the successful commercialisation of ideas. Industries that have traditionally been more ‘closed’ in their approach to innovation will undoubtedly notice the flexibility and liberation that comes with a more ‘open’ approach. It is important to note that larger organisations cannot generally be defined as ‘closed’ or ‘open’ in regard to innovation, as some parts will naturally be more open than others. “There are a lot of different players and different niches, these need to come together to build everything for the future” explains Ericsson Nestler. He went on to say that “by working in selected areas with other parties you can see both the questions and answers” meaning that a more strategic approach to open innovation can be hugely beneficial in solving development issues.
Drawbacks of Cooperation
Adopting open innovation shouldn’t be seen as a panacea and does have clear limits depending on the industry involved. Open development isn’t suited to all industries, in pharmaceuticals for example, a medical product doesn’t necessarily have to interface with an ecosystem, whereas in industries such as IT and telecoms, interaction is essential between different platforms and devices. In areas where interaction is necessary to the function of a product, open innovation can lead to risks that “competitors will gain access to knowledge or competencies” says Ericsson Nestler, he does however note that cooperation is still beneficial in this scenario, despite the risks.
The role of IPR departments
In large organisations such as Ericsson there are a number of different players involved in the innovation strategy, “IPR departments are there to support this process and make sure organisations have a preferred way of using and allocating intellectual property” say Ericsson Nestler. IPR departments are also responsible for setting up roles on how to use IPRs in the future, dependent on specific collaborations. “An important thing is agreeing on how to allocate IPRs between the different parties” says Ericsson-Nestler, adding “one thing that is often discussed is how to handle jointly created inventions”. Collaboration and sharing of information doesn’t necessarily led itself to complete mutual creation of IP. In this scenario, each party should own the elements that they have created, “this is a typical discussion related to the set up of IPR” says Ericsson Nestler.
Overall, it could be concluded that companies who more readily adopt cooperative strategies have access to a much wider platform for knowledge and innovation, and the risks that come with open innovation are now demonstrably overshadowed by the data sharing possibilities. However, it is impossible to make the assumption that there is a one-size-fits-all strategy for a whole industry and IPR managers must make a judgement in each scenario what strategy is most beneficial. “For us, an open strategy doesn’t have to mean free, it means the freedom to speak, freedom to use, but you still might have to pay for it” concludes Ericsson Nestler.