Friday 9 January 2009

Open innovation in the business world

Here's a guest feature, penned by Jordan S. Hatcher. Jordan is the Head of Research at IP strategy consultancy ipVA. A frequent author and speaker on open licensing topics. Jordan co-authored the Open Data Commons PDDL and has worked extensively on open licensing through work with Creative Commons, on JISC-funded projects, and with the Open Knowledge Foundation. You can read more of his thoughts on all things open on his blog, 

"Can you tell your open source from your open innovation? Open content from open APIs?

There’s quite a bit of talk about open innovation in the business world – it’s something of a buzzword ever since Henry Chesbrough's first book on the topic in 2003. The short summary of open innovation:
 Many businesses traditionally looked only within their own companies and R&D departments for new technologies and strictly limited how they transferred their tech outside of the company.
 Open innovation means looking outside of the company for new technologies and for new opportunities to transfer out internal innovation.

It's simple from a strategy perspective: don't only look within your company as part of your innovation/business strategy. From the lawyer perspective (who get to implement this strategy), how innovation goes in and out of the companies can of course vary widely. Consider the differences between:
 Buying patents;
 Licensing in know-how;
 User generated content;
 Consortia agreements; and
 Using, and contributing to, GPL-licensed Free/Open Source software.

In each of these cases, how “open” the underlying innovation in relation to use by others varies widely, but they all come within the scope of “open innovation” as used by the business community. 
The list above flows generally from the most “closed” of open innovation practices to some of the most open:

 Buying a patent for example means a wholesale transfer of ownership, and the new owner solely determines use of the patent;
 Consortia agreements may allow innovation and information to flow only within the consortia and strictly limit members (even with relatively large memberships);
 Open source software under the GPL however allows practically anyone to use and change the underlying code providing they comply with a relatively unburdensome set of terms.

So to the IP lawyer, open innovation means transactional IP – buying, selling, licensing in, and licensing out. How these transactions get done (and under what “open” label) is where the fun starts.

Open innovation versus open licensing

The legal differences between the various flavours of open innovation, as mentioned, vary greatly, but one area in particular deserves further discussion: open licensing. Without going into great detail, open licences as often described allow for:
 Use, reuse, and redistribution; and
 Both practical and legal access to anyone willing to comply with the licence terms.

Open licensing examples include:
FOSS licences such as the GPL and BSD licences;
 Creative Commons licences (though only 2 out of the 6 main CC licences are “open” as discussed below); and
 Open data licences such as the Open Data Commons Public Domain Dedication and Licence.

As a result, within the broader category of open innovation exists a subset of uses that may be done under open licences, but an open innovation strategy doesn’t automatically mean open licences. Nokia doesn’t get access to Motorola patents simply because they purchase a patent under an “open innovation” business strategy.

Openness even within “open licences”

It may perhaps surprise those readers not familiar with the Free Software/Open Source Software (FOSS) world how much effort has gone into defining “open” or “free” in terms of practical legal rights (typically granted by licence). One of the great accomplishments of the Open Source Initiative has been both the Open Source Definition and their list of compliant licences (as of the time of writing, 72 with the EU Public Licence pending).

As the ideas behind FOSS have moved into other areas, so too have more definitions and guides been created, such as:

 Open Standards Requirement (OSI)
 Free Cultural Works
 The Open Definition

These all try to further flesh out and define their respective terms in order to achieve some standardisation around meaning because of use on so many different types of projects. Standardisation ensures that one piece of “open” material can be combined with another piece of “open” material.

Further defining open

The above two bullet points defining open licences still have a mushy feel. That’s why I always recommend consulting the OKF’s Open Definition (perhaps also because I’m on the advisory board). It adds that access must be non-discriminatory, including (like the OSI’s definition on which it’s based) for those wanting to make commercial use. This important distinction excludes those Creative Commons licences with a non-commercial use clause that often get referred to as “open licences”. (Please consult the definition yourself for all the details.)

A tale of two maps: Google Maps and Open Street Map

Online maps are one of those services that, once used regularly, it is hard to imagine life without. Google Maps and Open Street Map are both services available free over the internet that make use of the internet to collaboratively produce material (though what varies between the two). Their IP arrangements however differ greatly:
 Use of Google Maps comes under the Google Maps Terms and Conditions, Google's Terms of Service, and the Google Maps/Google Earth APIs Terms of Service. These terms do not meet the Open Definition, noted above, particularly because they limit commercial use and limit the ability to make adaptations of the map content.
 Use of Open Street Map is under their current licence, Creative Commons Attribution Share Alike. This licence does meet the Open Definition.

One practical example: SatNav systems. If you wanted to create a device with turn-by-turn navigation using Google Maps data through their API, Clause 10.9 (a) explicitly prohibits you from doing so. With Open Street Map under the CC licence, no such prohibition exists provided you properly attribute and share any changes you make to the map database.

Open innovation and collaboration

The variety and depth of mass collaboration and distribution made possible by the internet and digital technology has revolutionised many aspects of business and society. But the legal relationships between all the collaborators, prosumers, amateur professionals, and Web 2.0 businesses are far from standard: they range from the relatively mundane patent assignments to the more esoteric and cutting edge areas of open licensing. The job of the IP lawyer is, as always, to sort and structure the various flavours of open so that they work as intended".
If you've any comments on open source and open innovation as IP business models, please post them below -- we'd love to hear from you.


Marcus Malek said...

Very interesting read - the always interesting openness debate. Anyhow, you asked for thoughts so I 'll give it a shot.

Firstly, the mere word open is as intriguing and promising as it is hard to define. Unfortunately it means that we run the risk of it loosings its power, should companies start claimin open innovation strategies left and right just because they start ecquiring IP or setting up some licensing schemes. There is a great report on the subject written by Daniel Sarefjord (available at LinkedIn), which I unfortunately must ask you to contact him for. He discusses different levels of openness through a visual model which, at least I believe, cathes the complexity in a good way.

Secondly I believe that the internet with the open source initiative spured this whole concept in a great way - however the best is yet to come, and will hopefully come in the "real" world. Interestingly consumer goods is where it has happened the most, with P&G's Connect and develop program (well described in an HBR article) and their new rivals Reckitt Benckisers' IdeaLink. Both benefit from in/out licensing but also from moving to a positive attitute towards "not invented here". The question is when other industries will catch on, more than just through patent pools, standards and consortia. Some new platforms have started to pop-up in the perhaps most research heavy industry of them all, biotech. A friend of mine, Tobias Thornblad, covers this in a blog we both contribute to (

Thirdly, I think a big issue is how background, foreground and also sideground IP are handled in collaborations. A while back I looked for good references on how these issues are taken care of by large corporations or TTO's - however the results were not that promising. This seems to be either unchartered waters or an area where it is all about keeping your strategies secret. In order for collaborations/platforms/open innovation to really catch on - I believe that this issue must be more transparent so that engaged parties can feel sure about what their doing. Instead of not wanting to ever take the risk of someone "getting their hands on something proprietary". I personally think that people not wanting to take risks are the major argument against open innovation platforms - especially in non virtual settings.

Anonymous said...

Thanks for the comment. I very much agree that aversion to risk is the major argument against open innovation -- change is always hard. But hopefully after reading a bit more about what open innovation actually is (not that different from a legal point of view) that some of this in-built FUD around open innovation will dissipate.