Innovating with Unused IP

September 7, 2011 By Aminda

Yesterday’s post discussed how companies are benefiting from IP deemed unusable internally. Companies can profit either by selling a portfolio of patents or by developing a spin-out venture. Other companies can profit by buying these discarded patents or lending expertise to the new venture. As innovation lawyer Jackie Hutter has pointed out, there are several reasons a company may have discarded perfected usable patents. The organization’s strategy may have changed or the IP is no longer relevant after a merger. Hutter outlines several advantages to acquiring outside patents to help organizations weigh any risks involved.

Earlier this year, innovation consultant Stefan Lindegaard observed that organizations seemed to be getting more comfortable with such a free flow of IP, when not too long ago it was the biggest concern faced when ramping up open innovation strategies and practices. 

Now, he says, legal departments are more on the offense rather than the defense, saying “yes, there will be challenges on this case, but there are also opportunities. Let’s find a way to work around the challenges.” Companies have also become more nimble by developing simpler legal documents for engaging with potential innovation partners. This allows the initial focus to be on potential opportunities and more quickly determine whether there is an alignment by the parties before more complex legal issues are discussed.

This type of document should clearly and concisely address how the partnership will deal with both IP generated by ongoing work as well as existing IP that is integrated into the relationship. It should also address the outcome in the event of success or if the work is not successful. This is recommended as a particularly good strategy for small companies to implement when working with larger organizations. A full contract will be needed eventually but money can be saved if documents are kept simple in the getting-to-know-you phase.

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