Open innovation is clearly taking root in just about every industry, as organizations strive to create openness in their innovation and business processes. We see companies increasing their ability to leverage internal and external solutions yet struggle with building the right processes and tools to extract maximum value from the new solutions. (See NineSigma’s new OI Scorecard Survey Report  for more information). Among the factors that can make or break an open innovation program is intellectual property. We have come to realize in working with our clients and solution providers, collaborators can  enjoy all of the benefits that open innovation has to offer only if they understand the issues associated with intellectual property (IP).

First things first: how do we define intellectual property and confidentiality in the framework of an open innovation strategy?

Intellectual property is how our legal system attaches value to ideas and concepts. Most intellectual property is protected by a patent, but that’s not always the case. Sometimes IP can be in the form of trade secrets, which can be anything from a product formula to test data.

Confidentiality is defined less vaguely. The concept often involves a confidentiality agreement (CDA) or non-disclosure agreement (NDA) in order to create a safe space in which two parties can exchange information without worrying that they’ll lose control over their trade secrets. In general, parties will limit the agreement scope specifically to what will be the most valuable to what they are working on.

In addition to understanding what IP is, it is important to understand the nuance between protecting IP and managing it. Protecting IP implies that your interests are at risk of being threatened and that pre-emptive action is needed. Managing IP, on the other hand, embraces the more nuanced perspective that the processes, documents and relationships in a collaborative environment should increase value for all parties. In understanding the role IP plays, it becomes easier to see how culture can be positively impacted by the collaborative innovation process. A more open approach to solving problems, even if they are core to the business, doesn’t need to be a daunting proposition. In the next part of this series of posts, we’ll discuss what happens once the IP issues are hurdled and you are ready to consider the preparation and discovery phases of your open innovation program.

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