Innovation

How to avoid legal pitfalls in open innovation projects

How to avoid legal pitfalls in open innovation projects

Imagine this: You‰’ve poured your resources into a co-creation project, collected many great ideas from consumers, and selected a winner. Perhaps you‰’ve even awarded prizes. But then when you went to legal, they told you that you couldn‰’t use the winning idea‰ – or any of the ideas you collected, for that matter‰ – to develop a new offering.

This scenario demonstrates the importance of answering a critical question before proceeding in a co-creation project: How do I ensure that I can use the ideas generated from the project?

If you want to reach outside your own four walls in search of next-generation product and services, you need to sort out the ownership of ideas or concepts that you‰’ll get from the project. Co-creation and other types of open innovation projects are relatively new practices, so you should be prepared to do your own research. In some countries, legislation about open innovation practices is fuzzy at best‰ – which is why it‰’s important to engage your legal team early in the process so they can investigate what is or isn‰’t allowed.

For countries that have clear guidelines on co-creation and other open innovation methods, your first step is to figure out what you want to do with the ideas generated by the community. In particular, answering the following questions is important:

  1. Do we want or need exclusive rights to all ideas submitted? Depending on the nature of the innovation challenge, it could be that your company actually doesn‰’t need all the rights to every idea submitted.
  2. Do I envision using all ideas submitted, a sub-segment or only the winning idea? Realistically, you might just use the top ideas or the winning concept. Or it could be that your team wants to see and consider all ideas from the community.
  3. Does it matter if the creator submits their idea to other co-creation platforms? Some of your community members might be eager to join other company‰’s innovation communities. Should they be able to submit the same idea to other communities if you don‰’t use it?

Bear in mind that even if your co-creation project is well within the law, it may violate the policies of industry associations you may not wish to cross. For example, if you want to co-create your next logo, that may be legally allowed, but national graphic design associations may disapprove of it.

Based on your answers to the questions above, you can then decide which type of offer is appropriate for your community. Typical co-creation communities usually fall under one of two categories:

  1. The creator keeps all the rights to the ideas they submitted unless the company pays them a reward.
  2. The company has exclusive rights to all ideas submitted (with no need to pay the idea creators). Community members are notified of this in the terms and conditions, where they agree to give away the rights to any ideas they bring to the table. Most co-creation communities‰ fall under this umbrella.

Finally, work with your vendor to ensure that the legal infrastructure of the co-creation platform you choose supports your requirements.

Collaborating with your customers is a good thing‰ – that‰’s why global brands are already embarking on various co-creation projects. Just be cognizant of the various rules and regulations applicable to your country and your industry when working with consumers in generating the next big idea for your brand.



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