Universities Spin-out Open Innovators

September 20, 2010 By Amrat

Contrary to common perception the ideas of open innovation have been around for a very long time. These open innovation efforts however were not institutionalized. The first institutions to nurture open innovation are the universities. As compared to many commercial open innovators they have been eager ‘open innovators’ for decades. The traditional technological exploitation vehicle employed by universities is the spin-out company. A spin-out company will generally be a separate legal entity created to own and exploit an intellectual property resource. These created companies are therefore legally independent from the university.

However the universities organize funds for these open innovators. Therefore the universities always have a certain amount of control over these spinouts. This entitles them to a direct or indirect stake in the fortunes of these companies as well. The separate legal identity of the company ensures that the university is not liable to any litigation or other risks. In case of bankruptcy the university is safeguarded against any financial burden. Mostly these small spin-outs are engaged in licensing activities. They keep their business process focused on licensing technological solutions rather than more complex manufacturing activities. These solutions are created in collaboration with other companies, mostly to satisfy needs of those companies. These open innovators would primarily benefit from patents or suite of patents covering processes in the physical or life sciences.

These spin-outs have been open innovators for many different private projects. The universities by making separate legal entities work as trailblazers in the field of open innovation. This is because they exploit and contain the technological innovation of these spin-outs. The recent increase in demand for external solutions in commercial organizations has increased the market for university fuelled open innovators. The question remains that should the universities contain and exploit technological innovations? Is that not against the very essence of open innovation itself?

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