A Currency for Collaboration
The pace of technology development today is driven by many things. But one major factor is the embracing of “open innovation” – the sharing knowledge and insights between organisations to create something new. Open innovation is not new, but in the interconnected world we live in, opportunities to collaborate have never been more abundant.
Believe it or not, intellectual property rights, particularly patents, are a critical enabler of open innovation. Joint ventures are built upon the licencing of complementary IP rights owned by the parties. Corporate partners sponsor PhD positions at academic institutions on the understanding that they will get first dibs on the resulting IP. Start-ups feel comfortable working with larger, better resourced companies because they have filed patents to the background IP.
The so-called “patent bargain” is fairly well known - tell the world about an invention, in the hope of securing a monopoly right capable of preventing others using it. In this bargain, the disclosure of the invention is generally regarded as the valuable bit for innovation. But this is too simplistic a view.
Actually, in a world of open innovation, the value to innovation is arguably provided less by the disclosure and more by the reduction of risk that the patent right itself provides. In a collaboration, exchange of technical information is inevitable, regardless of whether it has or has not been disclosed in a patent. However, trusting a third party with your valuable intellectual property inherently comes with risks. In this context, patents can clarify the background IP that each party brings to the table and provide additional security over the exchange of IP between parties. And entitlement to future patents in the IP generated from the collaboration ensures that the parties have control over the output too. In this way, IP rights de-risk IP transactions, which increases the ease with which collaborations can be formed and new innovations can be developed.
As for the monopoly – generally seen as the down side of the patent bargain for innovation - that is usually not as stifling for innovation as one might assume. Only a tiny fraction of a percent of patents are ever enforced in court. In reality, the existence of competing and overlapping patent rights, more often than not, result in a complex stalemate between rights holders settled in a board room. This might result in collaboration, licencing, or a design-around – all leading to more innovation. Patents are not a blunt legal instrument, they are a nuanced business tool.
If you are not at the coalface, it does seem counter-intuitive that a monopoly right is a driver for innovation. But once you understand how patents are actually used in today’s business context, you can begin to understand how important they are to successful collaboration. As a business, would you start a joint venture, sponsor an academic research project, or enter into a partnership if there was a risk of losing control over your existing IP or new, arising IP?
In a way, patent rights can be seen as a currency for collaboration, and for innovation.