closed innovation and open innovation

8/12/2019 Closed Innovation and Open Innovation

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Business Models of Innovation

Closed Innovation and Open

Innovation (Topic 7 (c))

Belgrade, June 21 and 22, 2011

NATIONAL WORKSHOP ON INNOVATION PROMOTION AND

TECHNOLOGY TRANSFER


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What is Open Innovation?

Open innovation is a paradigm thatassumes that firms can and shoulduse external ideas as well as internalideas, and internal and external pathsto market, as the firms look to advancetheir technology.

Henry Chesbrough

Image - Henry Chesbroughpresentation on the OECD Conferenceon New Business Strategies for R&D


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What is the Difference - Practical Approach

Rules of the sandpit

The toys must be sharedYou cant have it all your way

You must behave yourself

Closed Innovation Open Innovation

Benefits of the sandpit

You dont have to pay for all the toys

You can use the toys others dont want

You can negotiate to play with other toys

You can play alone or together

Source: Alexander Damvelt, Philips3


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Models of Innovation and Intellectual

Property (IP)Closed Innovation

Exclusive use of internal R&D

Technology invented, protected, developed,

brought to the market and distributed by thesame company

Full internal control of the innovation fromR to D to C

Technology exploited only through internalbusiness model

IP generators of new technologies mainly

companiesIP barrier to entry not source of revenue

Huge IP non-performing portfolios

Companies usually selling but not buyingIPRs (advantage no confusion about IPownership)

IP valuation method Discounted Cash

Flow Net Present Value of thetechnology

Lack of IP market .

Open innovation

Use of internal and external R&D and inventions corresponding to the particular business models

Openness to external business models

Variety of IP generators and collaborators othercompanies, public universities and R&D institutions,users, customers, suppliers

Active IP asset management of the companies IPportfolio matching technologies with innovative(inside or external) business models to add value toIP

More proactive assertion of IP policy

Development of Intermediate IP Markets

semiconductors, biotechnology, chemicals andconsumer products and Innovation Intermediaries(facilitators)

Use of more complex IP valuation methods suchas Real Option imposed by very intensive anddiversified IP commercialization models reassignment of the IP to different partners duringits legal life, selling/buying, licensing (to companiesor start ups)

IP - an asset which can (and should) be managedthrough an adequate business model in order toincrease value and become a reliable source ofrevenue.


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Intellectual Property and

Open InnovationHow Intellectual Property influences Open InnovationStrategic IP asset management is the essence of the Open Innovation Business Model

Protection of inventions and other creations of the human mind and IP ownership are thenecessary preconditions for technology transfer and IP commercialization (we can manage onlythose assets which are owned by us or those to which we have the consent/license of the IPowner to use them).

Transfer of technology in business transactions is transfer of knowledge and IP rights registered (patents, trademarks, industrial design, copyright) and unregistered ( know-how, tradesecret).

One of the biggest advantages of the Open Innovation business model is access to the know-how of the other party.

The intangible nature of IP and the ability to be the subject-matter of business relations with manypartners, often at the same time, corresponds to the basic idea of Open Innovation the ultimateuse of inventions as solutions for multiple needs, incentives for innovation, maximum creationand extraction of the value of the IP asset through the application of different business model.

The potentially most frequent source of collaboration conflicts in Open Innovation lies inundefined IP ownership relations Who is going to own the IP in the jointly-developedtechnology? Joint ownership who and under what conditions is going to use the joint IP(different legislations impose different legal conditions with or without consent of the otherparty)? It is necessary to clarify this at the beginning of the collaboration.

Open Innovation collaboration without territorial limits in conflict with the territorial nature of theIPR (valid only in countries where protection is granted).

Dispute resolution in the Open Innovation multiple collaborations particularly complex becauseof the IP involved Who is the owner of the final product developed through multiplecollaborations? The potential risk of infringement is high. Litigation what would be theapplicable jurisdiction? Particular problem lack of efficient enforcement systems in manycountries, scarcity of IP skilled judges, etc. Professional Mediation and Arbitration can be a wayout.


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Intellectual Property and Open Innovation

How Open Innovation Influences IP

More dynamic and interactive use

of IP companies are not onlyselling but also buyingtechnologies

New ways of building upcompanies IP portfolio throughbuying patents (Nortel, Alcatel)

Creation of Intermediary IPMarkets in different sectors(graphics on the right Intermediary market in the IThardware industry source Henry

Chesbrough Open BusinessModel How to Thrive in the NewInnovation Landscape.


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Intellectual Property and Open Innovation

Innovation Intermediaries forsearching and evaluating newtechnologies

The field of use of thetechnology is increasing

Increases total value of thetechnology incentive forinnovation

Innovation more productive more users

Benefit for society moresolutions for different needs,

job creation, diminishing ofbrain drain effect..

New and More Efficient FinancialInstruments for fundingbusinesses based on technologies(IP) VC funds, loans based onIP as collateral necessaryprecondition for fostering localcreation and innovation

Introduction of new actors intoinnovation processes companies, universities, R&D,users, suppliers even

governments and regionalorganizations (EU) are taking amore active role in order to createa supportive environment for thecreation and transfer of technology

Open innovation permits new

global partnerships with actorssuch as universities, R&D andstart-ups from developing andcountries in transition, whichencourages the local creation of IPin these countries

IP is recognized and used as avaluable source of revenue andnot only as a mean of exclusion.


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Intellectual Property and Open Innovation: New Partners from Emerging,

Developing and Countries in Transition

Emerging, developing and countries intransition do have significant researchresults and know how to develop efficienttechnologies in the specific areas of theircompetitive advantage.

Major IP Generators - universities andR&D institutions.

Small percentage of businesses have theirown R&D only in particular areas of astate economy such as the oil industry inBrazil (Petrobrais) or Malaysia(Petronas) have their own R&D.

Small and medium size enterprises (SMEs), which represent a great majority ofbusinesses rarely base their businessmodels on innovation developed inside oroutside of the SME.

In most of the cases there is little or nocollaboration between the public and theprivate sector in the domain of technology

transfer.Businesses either do not have confidencein locally developed IP solutions or do nothave the ability to absorb newtechnologies.

What is Lacking ?

Necessary Basic Preconditions forEfficient Technology Transfer System

Adequate Legal Framework(national and institutional

level)Organizational Infrastructure(technology managementorganizations and units)

Funding (government andventure capital)

Skilled professionals

(scientists, technologymanagers, IP professionals,etc.)

Education to providesustainable flow of skilledpeople

Supportive IP System

There is a lack a market economyexperience and a developed privatebusiness community.


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Intellectual Property and Open Innovation: Potential

Benefits for Partners from Emerging, Developing andCountries in Transition

New openings for technologydevelopment and IPcommercialization throughinnovative business models of , inparticular for universities and R&D

institutions (local businesses arenot interested or do not have thecapacity)

Great learning opportunity fromthe technology and businessmanagement point of view

Development of the necessarymarket experience with moreexperienced partners.

Solution to one of the greatest

challenges how to find an

adequate market and partners

intermediaries can help them

Potential entry to new markets

Access to Venture Capital

instruments and managementservices that VC offers .


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Intellectual Property and Open Innovation: Potential

Challenges for Partners from Developing Countries

Lack of IP asset management knowledgeand practice, a market economy culture andskilled professionals necessary for

complex transactions.Scarcity of an adequate legal framework andguidelines how to negotiate - no clearinstitutional policies and strategies setting upa framework for technology managementnegotiations.

Consequently, they can be potential victimsof more experienced intermediaries orpartners, in particular regarding thevaluation of their technologies, IP ownershipissues and disclosure of confidentialinformation

Lack of compatibility with standards andplatforms in certain areas IT

Existing perceptions about the quality ofR&D results created and technologiesdeveloped in developing and countries intransition.

Protection of their IP ownership interestsand rights in the case of the use ofunregistered IP know-how and in the

multiple collaboration agreements background IP and grant backs of futureimprovements of the technology, areimportant issues for R&D institutions

Imposition of already defined and writtencontracts

Lack of access to more sophisticated data

bases can make them a target of trolls, evenon the basis of false claims

Imposition of dispute resolution mechanismsand jurisdictions some countries are well-know for very costly litigations and differentIP jurisdiction rules which may have adecisive influence on the decision toenforce or not or to place un informed party

in a very difficult legal and financial situation.


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Thank you [email protected]

closed innovation and open innovation

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