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The intellectual property of crowdsourcing

10.07.2013
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Whenever you invite outside sources into your innovation process it is inevitable that you will attract many more unsuccessful ideas than successful ones.  Dell Idea Storm for instance are said to convert around 3% of ideas into actionable improvements, with the Starbucks ideas platform Starbucks Ideas converting just 0.5%.

The issue of intellectual property therefore raises its head, and merits consideration before you even set foot on the path to open innovation.  How exactly will you handle the ideas submitted to you?  How indeed will this handling differ, if at all, between the ideas you select and the ideas you don’t?

There are a number of methods for ensuring that both you as the sponsor and the participants have appropriate IP protection.  Before we go into those however, it hopefully goes without saying that both parties need to be fully aware of the IP terms before entering into the process.

Licensing

This is arguably the most common approach, and is the one used by Proctor & Gamble with their Connect & Develop process.  It typically involves the individual having intellectual control over their solution, which is then licensed to the sponsoring company.

Partnerships

The partnership approach typically sees a revenue sharing model used.  For instance, a company could solicit ideas under the expectation that any revenue generated from those ideas is split between the inventor and the sponsor.

Ownership

There are various approaches to the ownership model of crowdsourcing.  For instance, Innocentive operate some of their competitions under the proviso that any idea submitted to the competition will instantly be thus owned by the sponsoring company.  The inventors therefore receive nothing but a cash reward for their idea if it is chosen, with even losing suggestions handed over for free.

A slightly more equitable model sees ideas remaining the intellectual property of the inventors unless they are chosen as a winner, at which time they are handed over legally to the sponsoring company in return for the prize money.

Investment

The final approach is arguably the most ethical for both parties and sees the sponsoring organisation invest, or sometimes buy, the company submitting their idea.  The nice thing about this approach is that ensures that the people coming up with the ideas stick around to help with implementing them.  That is often as valuable as the idea itself.

Suffice to say that the best approach will vary depending on the kind of crowdsourcing you’re doing, and the kind of people you’re looking to attract.  If ideas are coming from individuals then a licensing arrangement may work best, whilst larger competitions that attract companies may work best under the investment model.  Hopefully this post will give you some insight into the various models out there though and you can get your open innovation off on the right foot.

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