Open Innovation The future without NDA?

Legal protection of open innovation

From a purely legal point of view, it is advantageous for the protection of innovations, inventions, ideas, know-how etc. to either create intellectual property rights (e.g. apply for a patent or utility model) or to keep the know-how secret as far as possible. Secrecy is particularly important if no special legal protection (e.g. via a patent, utility model or copyright) is possible.

However, legal protection is irrelevant if there is no innovation to protect. It therefore makes sense to open up the innovation process to the extent necessary for research and development. In the most extreme form of open innovation, any legal protection can be dispensed with. If an economic orientation is nevertheless required, this can take the form of services in connection with the introduction and implementation of the innovation in question, for example.

An example of an open innovation may be the operating system kernel "Linux", which is completely publicly accessible in source code and has led to the worldwide success of the overall system through countless contributions by third parties. However, even in this example, it should be noted that Linux - although open source and free to use - is subject to considerable legal protection. The General Public License (GPL), i.e. the terms of use applicable to Linux, should be mentioned here in particular. These stipulate that dependent works must be published. There is therefore a certain obligation to continue open innovation. However, this is only possible thanks to the legal protection provided by the GPL. If the GPL were missing, Linux would not be allowed to be used generally because - in the European legal area - adaptations, reproductions and distributions would automatically be prohibited by copyright law. The GPL therefore permits further innovations based on the source code and at the same time obliges new innovations to be made generally accessible.

If open innovation is seriously desired, this should be legally protected. Otherwise, one party makes its entire knowledge available and third parties may use this unilaterally to their advantage.

Gradations of open innovation

Open innovation does not necessarily mean that all legal safeguards are dispensed with. Open innovation can also mean being more open to joint developments. This can be expressed, for example, in the way you present yourself to potential innovation partners. As a first step, a balanced mutual - or universal - non-disclosure agreement can be proposed instead of a "one-sided gagging" non-disclosure agreement. In addition, contractual penalties can be waived or a more symbolic amount can be chosen. Such an approach may already be sufficient to avoid disrupting the open innovation process in the area of research and development, while at the same time ensuring sufficient legal protection.

In some cases, foregoing any legal protection may also be legally prohibited. For example, particularly innovative companies that rely on investors and venture capitalists will have contractual obligations to safeguard the innovations developed so that the investments made can later "pay off" economically for the investors and venture capitalists. In such situations, "giving away" know-how free of charge may constitute a breach of contract by the managing director.

It should also be noted that trade and business secrets can be legally protected even if they are not eligible for special legal protection (e.g. as a patent, utility model or copyright). However, a central prerequisite for this is that the secret is secret. This is not the case if the secret is disclosed to third parties without a non-disclosure agreement. For this reason alone, at least a minimal non-disclosure agreement should be concluded. Otherwise, a departing employee or other third party with access to the innovation could, for example, continue to use it for their own purposes without involving the previous participants.

Disclosures without confidentiality agreements can also undermine a joint application for intellectual property rights that the innovation partners later wish to file. For example, the novelty of the invention is required to apply for a patent. If an invention has only been made by two or three parties, but the corresponding discourse was conducted publicly (i.e. without confidentiality among the innovation partners), there may be a lack of novelty for a patent application later on and thus a lack of the basis for joint exploitation desired by all innovation partners.

Property rights as open innovation

It should be noted that numerous intellectual property rights have always been designed for balanced, open innovation. For example, the aim of a patent is to disclose the invention to the global public in full detail via the patent register, while at the same time assigning the inventor(s) the sole right to remuneration for a limited period of time - if desired - so that the costs of the innovation can be offset.

Some companies therefore sometimes apply for patents with the sole aim of subsequently licensing them free of charge. This prevents a less prudent third party from registering the invention in its own name and only granting patent licenses in return for high remuneration.

Conclusion

If an open innovation is to be pursued seriously, it must be legally protected. Otherwise, there is a risk that a single party will "lock up" the innovation to the detriment of all. Open innovation is also possible in various degrees. In the majority of cases, sufficiently open innovation will be possible, although "friendly" non-disclosure agreements and cooperation agreements are concluded to safeguard the innovation in the interests of all parties involved. Completely open innovation in the sense of disclosing all ideas to the public may be in breach of contract, particularly in the case of the involvement of investors and venture capitalists.

Image above by: Gerd Altmann from Pixabay