New technology and market development through licences

Application and benefits

Open innovation provides organisations with the opportunity to use external expertise or to find options to use their own expertise outside the organisation.

Whether a research institute provides technological developments to an organisation or whether product versions are developed by a user or design community and then used by companies, intellectual property is transferred in all of these cases.

In particular, high-cost technical enhancements require adequate protection of intellectual property to enable the innovative organisation to maintain exclusive market positioning with regard to the competition.

Open innovation and property rights (patents, brands, designs or copyrights) are often seen as contradictory. However, with open innovation, it must be clarified which property rights exist. Even if you want to give something away, you need to own it. Property rights enable innovations to be traded.

Successful open innovation organisations are increasingly finding that the professional management of property rights is the only basis for ensuring orderly and commercially successful knowledge transfer with minimum risk.

Safeguard intellectual property

The sharing of information necessary in open innovation processes can easily result in the unintentional sharing of intellectual property.

Property rights, such as, for example, patents or designs (industrial designs), provide protection against unauthorised usage to both the originator or innovator (for example, the external inventor or designer or the external development organisation) and the organisation implementing the innovation.

Overview of registered property rights (source: aws own table)

Registered rights specify an exclusive right that provides a clear framework on how the intellectual property may be used. They are the pre-requisite for licence agreements, in which usage rights are granted in return for a fee.

When drafting licence agreements, a number of questions need to be clarified, such as the subject of the licence (patents, brands, designs, trade secrets), whether licences are granted exclusively or for which regions and for what purpose they are granted.

Types of licence agreement (source: https://www.gruenderlexikon.de/; modified)

The scope of rights granted range from non-exclusive usage approval for the licensee, in which other organisations may also receive authorisation, to exclusive usage approval, where exclusive rights are granted solely to the licensee. In exclusive licence agreements, the granting of sub licences must also be agreed.

Details and suggestions on how to create licence agreements can be found, for example, in the “Intellectual Property Agreement Guide IPAG” (https://www.ipag.at/).

Financing property rights is also a key issue, particularly for small and medium-sized enterprises. Funding agencies, such as Austria Wirtschaftsservice (https://www.aws.at/) or the Austrian Research Promotion Agency (FFG) (https://www.ffg.at/),  provide the relevant support on these matters.

Tips for fairness

Regardless of which open innovation tool is used, it is essential to plan the process well and to obtain prior clarification regarding the following questions:

  • What rights are required for implementation?
    What kind of a licence is needed (exclusive/non-exclusive, which markets, etc.)?
  • To whom does the established intellectual property belong?
     All parties must be clear about which rights are granted to whom and how and when they may be used.
  • Who is moderating or organising the process?
    Ongoing communication and agreement with participants is required.
  • Which tasks are assigned to which people?
    Experience shows that establishing roles and tasks in advance and continuously reviewing their distribution is beneficial to project progress and success.
  • How should the innovation contribution be acknowledged?
    Is the intention for contributors to participate in the success?
    Is there a need to think about risk-sharing?

For subsequent use of the technical innovation, an assignment of shares in the innovation potential is advised, from a legal perspective. This avoids costly disputes that could pose a risk to the innovation.

Further reading and sources