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Interfacing Intellectual Property Rights and Open Innovation

Nari Lee

HANKEN School of Economics

Soili Nystén-Haarala

University of Eastern Finland

Laura Huhtilainen

University of Eastern Finland

August 20, 2010

Lappeenranta University of Technology, Department of Industrial Management Research Report No. 225

As the paradigm of innovation becomes more user oriented and collaborative, to benefit from this changing paradigm, firms need to adjust their intellectual property rights management strategy and devise tools to manage openness. Crucially, firms need to resolve is how to interface the “closed innovation” paradigm required to acquire intellectual property rights in law and to introduce openness in the process of innovation and decentralised innovation process. While the topic of open innovation has produced numerous works especially in the area of business administration and organizational studies, literature on interfacing open innovation with intellectual property law is rare or rather focused on specific subject matters of IP. For example, legal research on open innovation focus on computer, open source software or user generated contents types. This leaves out vast areas of technology uncovered and under researched. Based on literature review and qualitative case studies on a group of Finnish firms, this paper aims to identify tools that are required to manage openness, in response to legal context, and examine to what degree the protection of intellectual property, in particular patent, can be adapted or interfaced with open innovation paradigm.

The paper finds that (1) open innovation is dynamic, (2) all commercial open innovation is always managed or controlled, and that (3) actors and modalities of exchanges are heterogeneous and dynamic. Multiple claim holders – as contributors, investors, co-inventors, collaborator call for a governance structure over how their claims can be prioritised. This paper argues that intellectual property law do regulate the question of co-inventor, co-creator, and co-owner but do not regulate how these rights may be coordinated or managed, in what hierarchy. Thus, we argue that to prevent disputes, proactive private ordering is necessary. Furthermore, while open innovation benefits from open exchange in communication, in the absence of clear and certain rules on how such exchange lead to loss of right, “open” communication may not occur. In other words, unless openness is managed implicitly or explicitly, communications that are crucial in open innovation will not occur. Thus we find that openness in innovation is always managed either formally (through formal governance means i.e. contract, explicit firm policy) or informally (through community norms, trust and implicit corporate culture).

The paper argues that governance means are best provided by the firms either as a contracts, or general policy over information exchanges, in other words a broader form of contract (Private ordering). As a secondary option, a certain proposals to the patent law revision can also be made through introduction of limitation and exception to the right. This paper has two practical implications. First, in the absence of proper legal safeguard for own collaborative input, the paper advocates contract based governance approach. Reflecting this, open and collaborative innovation requires firms to more actively and strategically involve in the governance of intellectual property. Secondly, as a proposal for patent law reform, the paper may enlighten law and policy makers to explores for a creation of particular defence against the claims of infringement in patent law.

Number of Pages in PDF File: 11

Keywords: Patent, Open Innovation, Intellectual Property Rights, Governance, Coordination

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Date posted: September 11, 2010 ; Last revised: May 1, 2013

Suggested Citation

Lee, Nari and Nystén-Haarala, Soili and Huhtilainen, Laura, Interfacing Intellectual Property Rights and Open Innovation (August 20, 2010). Lappeenranta University of Technology, Department of Industrial Management Research Report No. 225. Available at SSRN: http://ssrn.com/abstract=1674365 or http://dx.doi.org/10.2139/ssrn.1674365

Contact Information

Nari Lee (Contact Author)
HANKEN School of Economics ( email )
P.O. Box 479
FI-00101 Helsinki, 00101
Soili Nystén-Haarala
University of Eastern Finland ( email )
PO Box 111
Joensuu, 80100

Laura Huhtilainen
University of Eastern Finland ( email )
PO Box 111
Joensuu, 80100

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