Innovators: Make Sure Your Company Owns the Fruits of Your Open Innovation Projects

Let’s illustrate this concept with an example. Assume you are a Director of Innovation at Acme Gizmo. Your innovation team decides that Acme Gizmo can improve its innovation pipeline by going outside the company for new product ideas. You select Dr. Smart, an independent product development consultant, to work with your Acme Gizmo team to develop a new product. The results of this collaboration are excellent: your consumer testing shows that the product your team jointly developed with Dr. Smart will likely be a blockbuster new product. Since Dr. Smart’s job is done, you and she part ways. Your innovation and product development teams proceed to introduce the new product to the mariket and, as predicted, the product is a hit.

Since your testing showed that product would likely be a valuable differentiated product for your company, you correctly decided that Acme Gizmo should file for patent protection. However, you find out that because that Dr. Smart participated with your team in the invention of your new product, Dr. Smart is as much an owner of the patent on the product as is Acme Gizmo. As a joint owner, Dr. Smart holds the same interest in the invention as Acme, and Dr. Smart can use or license the patented invention in any way she wishes. This means that she can freely license her patent rights to Acme Gizmo’s biggest competitor.

Significantly, Dr. Smart’s interest as joint inventor exists by law. This means that your company’s patent attorneys are legally required to name her as an inventor even if it is not in the best interests of Acme Gizmo. If they do not and the patent ends up in court, the judge will either make Acme Gizmo name Dr. Smart as a joint inventor or the court will invalidate the patent. Either way, Acme Gizmo does not exclusively own rights to your blockbuster new product.

As an innovation professional you understand that it is unacceptable for Acme Gizmo to not be able to wholly own the rights to the fruits of your Open Innovation projects. How can you go forward with valuable Open Innovation projects but still avoid outside collaborators such as Dr. Smart from obtaining joint rights? It’s actually rather easy: prior to engaging in any collaborative activity, you must obtain a written agreement from your outside collaborator will relinquish to your company any inventions resulting from the collaboration. Note that this agreement must be completed before any inventions result. As of the moment the invention exists, Dr. Smart’s rights come into existence. This actually means that the agreement should be in place before any collaboration actually occurs, because one never knows when collaboration will result in an invention.