Gerritsen R.W.a., 2013, Profiting From Open Innovation Via IP - Web

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Profiting from Open Innovation via Intellectual Properties
drs.ing. Roy W.A. Gerritsen
Almere, October 2013
Master thesis Marketing Strategy 2012-2013
AOG School of Management – Rijksuniversiteit Groningen, The Netherlands
Mentor: dr. J.A. (Liane) Voerman

Master thesis: Profiting from Open Innovation via Intellectual Properties
Executive Summary
One of the key challenges for companies today is to remain profitable in an increasingly global and competitive
economy. Profiting from innovation is one of the key enablers for this challenge. To innovate more efficiently,
at the lowest cost and risk possible, a new form of innovation has gained momentum, namely
Open Innovation (OI). OI is defined as the use of purposive inflows and outflows of knowledge to accelerate
internal innovation and to expand the markets for external use of innovation, respectively. Central to OI is the
sharing of proprietary knowledge or intellectual properties (IP) for mutual benefits or, as stated by Bernard
Munos of Eli Lilly (Hughes, 2009):
“IP rights are the currency that fuels open innovation”
To profit from innovation, knowledge should not be spilled and risk for imitation needs to be limited via
protective measures. As such, the combination of OI and profiting from innovations seems to be a contradiction
and challenging when external parties collaborate.
In this study, the evolution of innovation towards OI is described. Next, profiting from innovation as well as IP
protection is introduced. Via academic literature research a theoretical framework has been compiled that
describes the pre-requisites for successful OI collaborations required for profiting from OI. Via explorative
research based around the critical incident technique (CIT) the model has been validated and extended.
Among the most important pre-requisites identified are contracts, partner relationships, OI incentives and OI
management.
It is concluded that to profit and to maximize returns from OI a lot of precautions need to be considered.
Contracts are a must-have in OI however are guided by common sense. Despite the difficulties that the
compilation of OI contracts might give rise to, it forms an essential and integral part of the OI process.
Contracts give the OI consortium the assurance that no knowledge will be spilled and new IP can be obtained
and protected which is needed to cover costs and generate profits. But, it has to be said that OI contracts do
close the boundaries of collaboration during the OI project while the OI paradigm suggests they are open.
Next, OI hardly fails due to disputes, as long as the mutual potential incentive is big enough. The motivation to
address issues during the collaboration will be bigger than to allow escalation into a critical fail factor.
Roy Gerritsen, Copyrights 2013 Page 0 of 54

Contents
EXECUTIVE SUMMARY.................................................................................................................................................... 0
1. INTRODUCTION ......................................................................................................................................................... 2
1.1 BACKGROUND ......................................................................................................................................................... 2
1.2 INNOVATION AND ITS EVOLUTION .................................................................................................................. 2
1.3 BENEFITS OF OPEN INNOVATION (OI) ............................................................................................................ 3
1.4 VALUE CAPTURING ............................................................................................................................................... 6
1.5 PROTECTION OF INTELLECTUAL PROPERTIES (IP) .................................................................................... 7
1.6 PROBLEM STATEMENT AND RESEARCH QUESTIONS ............................................................................... 10
1.7 RELEVANCE OF THE STUDY ............................................................................................................................. 10
1.8 SET UP OF THE STUDY ....................................................................................................................................... 11
2. THEORETICAL AND CONCEPTUAL FRAMEWORK ...................................................................................... 12
2.1 OI CONTRACTS TO PROTECT IP ....................................................................................................................... 12
2.2 OTHER OI PRE-REQUISITES.............................................................................................................................. 17
2.2.1 WHO AS OI PARTNER .......................................................................................................................................... 17
2.2.2 OI INCENTIVES ..................................................................................................................................................... 18
2.2.3 OI MANAGEMENT ................................................................................................................................................ 20
2.3 PROFITING FROM OI .......................................................................................................................................... 20
2.4 SUMMARY OF THE THEORETICAL FRAMEWORK ....................................................................................... 21
3. EMPIRICAL RESEARCH ........................................................................................................................................ 23
3.1 RESEARCH METHOD ........................................................................................................................................... 23
3.2 POPULATION ......................................................................................................................................................... 24
3.3 INTERVIEW SET-UP ............................................................................................................................................. 25
3.4 INTERVIEW ANALYSIS PLAN ............................................................................................................................ 26
3.5 INTERVIEW EXPERIENCES ............................................................................................................................... 26
4. INTERVIEW RESULTS ............................................................................................................................................ 27
4.1 CIT SUCCESS AND FAIL FACTORS FOR PROFITING FROM OPEN INNOVATION ................................ 27
4.2 PROFITING FROM OPEN INNOVATION .......................................................................................................... 28
4.3 IP AND IP PROTECTION ...................................................................................................................................... 28
4.4 OI PRE-REQUISITES ............................................................................................................................................ 29
5. CONCLUSIONS.......................................................................................................................................................... 33
5.1 CONCLUSIONS REGARDING THE PREREQUISITES FOR SUCCESSFUL OI COLLABORATIONS ....... 33
5.2 CONCLUSIONS HOW PARTNER FIRMS DO SHARE AND PROTECT THEIR INPUT IP WITHIN OI ..... 33
5.3 CONCLUSIONS HOW PARTNERS SHARE AND PROTECT THEIR EVOLVING OUTPUT IP ................... 33
5.4 CONCLUSIONS HOW TO PROFIT FROM OI .................................................................................................... 33
6. LIMITATIONS OF THE STUDY AND RECOMMENDATION FOR FURTHER RESEARCH ..................... 35
6.1 LIMITATIONS OF THE STUDY ........................................................................................................................... 35
6.2 RECOMMENDATIONS FOR FURTHER RESEARCH ...................................................................................... 36
6.3 REFLECTION ......................................................................................................................................................... 36
7. LITERATURE ............................................................................................................................................................ 38
APPENDIX 1: ACRONYMS AND ABBREVIATIONS................................................................................................... 42
APPENDIX 2: INTERVIEW TOPIC LIST ........................................................................................................................ 43
APPENDIX 3: INTERVIEW TOOLS................................................................................................................................. 44

1. Introduction
The first chapter presents the background and objective of this thesis. Before addressing the objective, the
subject is introduced in more detail. At the end of this chapter an outline of all chapters can be found to provide
the reader with an overview of the thesis. The research questions are presented as well as the used limitations.
1.1 Background
Innovation plays a central role for most companies’ superior financial performance and long-term health
(Drucker, 1988). But innovation also presents dilemmas for companies and its managers. On the one hand,
innovation serves as an elixir for growth, profitability and competitive advantage. On the other hand, there are
no guarantees that innovators will be rewarded for their efforts. Business history is littered with examples of
innovators who failed to transfer their innovations into economic advantage (e.g. Teece, 1986). In other words,
innovation is neither an easy nor a straightforward process.
Last years, a new form of innovation namely “open innovation (OI)” has rapidly become one the hottest topics
in innovation management (Giannopoulou et al., 2010; Huizingh, 2011). Open innovation stems from a greater
specialization of firms since companies are no longer able to fully innovate in-house. As one can read on
Philips’ website, “the days of innovation in isolation are over. No one company can be expected to know all the
answers” (Hall, 2010).
1.2 Innovation and its evolution
The innovation process on its own is subject of innovation as well. At the beginning of the 1990’s Rothwell
(1992 & 1994) claimed that there were five generations (G5) of innovation processes (see table 1).
Innovation here is defined as all those scientific, technical, commercial and financial steps necessary for the
successful development and marketing of new or improved manufactured products, the commercial use of new
or improved processes or equipment or the introduction of a new approach to a social service (OECD, 1995).
All the steps together form the innovation process. Next, innovation management is defined as the active and
conscious organization, control and execution of innovation process (Hansen and Birkinshaw, 2007).
Generation Period Innovations process characteristics

First & Second ‘50 to 60’s The linear models – need-pull and technology push (R&D as ivory tower and as business)
Third mid 1970s to mid The coupling model - Interaction between different elements and feedback loops among
80’s them. (R&D as portfolio)
Fourth early 1980’s to mid The parallel lines model, integration with the firm, upstream with key suppliers and
90’s downstream with demanding and active customers, emphasis on linkages and alliances.
(R&D as integrated activity)
Fifth mid 1990s and Systems integration and extensive networking, flexible and customized response,
onward continuous. (Separating R from D)
Sixth 2000 and onward Open innovation, self-learning system.
Table 1, G6 model of innovation process (adapted from Rothwell, 1994; Nobelius, 2004 and Kozioł-Nadolna & Swiadek, 2011)
The generations of innovation processes reflect a descriptive model of how (manufacturing) companies structure
their innovation processes over time (Nobelius, 2004). Each new generation was, in fact, a response to a
significant change in the market such as economic growth, industrial expansion, more intense competition,

inflation, stagflation, economic recovery, unemployment and resource constraints. Koziol-Nadolna and
Swiadek (2011) have added the 6th and last generation (G6), which entails a new paradigm namely an open
innovation model.
Yet, overall, the G5 model is a too simple representation of the complex reality (Giannopoulou et al., 2010).
Processes belonging to distinct generations can occur concurrently. Generations are not mutually exclusive;
causality between the market and the innovation process is ambiguous. But what the more recent generations
have in common is that they are more complex, collaborative and more open practices are adopted.
G6 – Open Innovation
The sixth and last innovation generation is a response to the globalization megatrend (Wit et al., 2007). As
result of the massive use of the internet, the reduced cost of world-wide transport, products becoming more
universal, non-discriminating trade regulations coming into force, the industrial competition has increased
dramatically (Chesbrough, 2003 & Chesbrough et al., 2006). This has resulted in price and margin erosion of
most products sold by industry.
Most industries have addressed this by cutting the costs for long-term activities, like research towards
innovations, to maintain profit levels. Since, attempts have been made to combine short term financial interests
with vital long term innovations requirements. Many of these attempts can be classified under the heading of
Open Innovation (OI) in which external knowledge from around the world is more and more rapidly accessed,
absorbed and integrated in the internal innovation process at the lowest costs and risks possible (Wit et al.,
2007). As such, many innovative firms have shifted from the “closed innovation” paradigm where companies
rely on internal capabilities, i.e. G1 - 5, towards the “open innovation (OI)” paradigm, i.e. G6 (Chesbrough,
2003 & Chesbrough et al., 2006).
1.3 Benefits of Open Innovation (OI)
One of the most often used definitions of OI is: “the use of purposive inflows and outflows of knowledge to
accelerate internal innovation and to expand the markets for external use of innovation, respectively”
(Chesbrough et al. 2006). Knowledge involves here know-how and information. Know-how refers to
accumulated skills and expertise whereas information primarily comprises facts that may be codified
(Lichtenthaler and Lichtenthaler, 2009).
Although in OI various activities take place, two core processes can be distinguished (Enkel et al., 2009):
1) Inbound or outside-in process: enriching the company’s own knowledge base through the integration
of suppliers, customers and external knowledge sourcing.
2) Outbound or inside-out process: refers to earning profits by bringing ideas to market, selling intellectual
properties and multiplying technology by transferring ideas to the outside environment.
In the “coupled process” inbound and outbound happen simultaneously.
To illustrate OI, Chesbrough (2003) modified the existing metaphor for innovation being a horizontal
converging funnel. In closed innovation a funnel is used to illustrate a start with a broad range of inputs,

followed by development of only a selection and further refining to end up with a potential successful solution.
The innovation journey through the funnel is often split in various stages. In the OI paradigm however,
knowledge is exchanged with external partners during the innovation process, which can take place at every
stage of the innovation process. In the OI version of the innovation funnel this is represented by holes in the
funnel walls so that knowledge can pass. Dependent on the level of knowledge exchange or openness in the OI
relationships, the boundaries between OI partners have more or less holes. As such, in the OI version of the
funnel (Mortara 2010), the walls have become permeable and porous (see figure 1).
Figure 1. The open innovation funnel (Mortara, 2010)
One has to realize that what is viewed as inbound by one of the OI partners, will be viewed as outbound by the
other OI partner (Dahlander and Gann, 2010). Next, empirical studies have consistently found that companies
perform more inbound than outbound activities (Bianchi et al., 2011). The different type interactions found in
OI can be categorized in a matrix (see table 2), based on the direction of the knowledge that is transferred and
whether they are pecuniary or non-pecuniary (Dahlander and Gann, 2010: Lee et al. 2010).
Inbound Outbound
Pecuniary: Transaction / Exploitation Acquiring / Buy / Contract Sell / License Out / Contract
In / License In Out
Pecuniary: Co-creation / Access Cross License & Barter, Pool
Non-pecuniary: Co-creation / Exploration Take (formal & informal) / Disclose (formal & informal) /
“Open Source” / Crowd Contribute & Publish / User
Sourcing / User Sourcing Participation Kit
Table 2. The various OI interaction categories (Dahlander and Gann, 2010; Lee at al., 2010)
Another perspective on OI is to distinguishing between the innovation process and the outcome
(Huizingh, 2011). Both the process and the outcome of innovation can be closed or open, leading to a 2 by 2
matrix, see table 3. Closed innovation reflects the situation, where a proprietary innovation is developed in
house (Chesbrough, 2003), both the process and the outcome are closed. In the second category of private open
innovation the outcome is closed (a proprietary innovation) but the process is opened up, either by using the
input of external partners or by externally exploiting an internally developed innovation. According to the
second dimension, the outcome of the innovation process is either proprietary (closed) or available to others

(open). A classic example of the third category or public innovation is standard setting, where the original
innovators do not exclude others to use an innovation in order to reap the benefits of a de facto market standard.
Examples include the introduction of JVC’s VHS videotape in 1976 and the IBM PC in 1981. The final cell is
labeled as open source innovation and refers to instances, where both the innovation process and the outcome
are open. Open source software is the best known example of this category.
Innovation outcome:
Closed (proprietary) Open
Closed 1. Closed innovation 3. Public innovation

Innovation
Process:
Open 2. Private Open Innovation 4. Open Source innovation
Table 3. Various ways of innovation based on the openness of the process as well as the outcome of innovation (Huizingh, 2011).
According to Docherty (2006) one of the most obvious benefits of OI is the much larger base of ideas and
technologies from which to derive internal innovation and growth. Beyond that, companies also recognize open
innovation as a strategic tool to explore new growth opportunities with less risk. Open technology sourcing
offers companies more flexibility and responsiveness without necessarily implying huge costs. Companies are
not only increasing the speed of exploitation and capture economic value through inward licensing or spinning
out unused ideas, they also create a sense of urgency about internally available technologies (use it or lose it)
among internal groups. Overall the main benefits of OI are:
• Ability to leverage R&D developed outside.
• Extended reach and capability for new ideas and technologies.
• Opportunity to refocus some internal resources on finding, screening and managing implementation.
• Improved payback on internal R&D through sales or licensing of otherwise unused intellectual property.
• A greater sense of urgency for internal groups to act on ideas or technology.
• Ability to conduct strategic experiments with less risk and fewer resources in order to extend core
business and create new sources of growth.
• Over time, the opportunity to create a more innovative culture from the “outside in” through continued
exposure and relationships with external innovators.
In general, literature emphasizes a positive relationship between openness and innovation but scholars stress the
importance of more research on the disadvantages of OI (Vanhaverbeke et al., 2008; Dahlander and Gann,
2010). However, the evidence is not entirely positive so far. Knudsen and Mortensen (2011) found negative
effects of openness to new product development results. Nevertheless, the overall performance expectations
around open innovation are undeniably optimistic (Trott and Hartmann, 2009).
In summary, OI brings a lot of potential benefits. But like for closed innovation, also OI has to be profitable in
a business environment. In following section the profiting or value capturing from the innovation paradigm as
well as risks related to OI will be introduced.

1.4 Value Capturing

In the seminal article on “Profiting from innovation (PFI)”, innovation is combined with the field of strategy
(Teece, 1986). In the article it is described why innovating firms often fail to obtain significant economic
returns from an innovation, while customers, imitators and other industry participants benefit. The paper
demonstrates that when imitation is easy, markets don’t work well and the profits from innovation may accrue
to the owners of certain complementary assets (see figure 2), rather than to the developers of the intellectual
property (IP). Or in other words, who gets what share of the profits from an innovation?
Teece argued that the profit share of the innovator depends on the interaction of three groups of factors: the
appropriability regime, the complementary assets and the presence or absence of a dominant design paradigm in
the sector in which firms operate.
The appropriability regime is the efficacy of the legal mechanism to protect the knowledge involved. According
to Teece, appropriability regimes are basically characterized by the nature of the industry and the efficacy of the
available legal mechanisms for protection. The ease of imitation is influenced by the degree of codification of
the relevant knowledge (e.g. patents) and the way the knowledge is transmitted (Veer et al., 2012). In other
words, without appropriate protection of knowledge, the value to capture from innovations efforts can be
seriously limited if there is a serious threat for imitation.
Complementary assets are the assets or capabilities that are required in conjunction with the innovative know-
how for successfully commercialization of the innovation. The concept of complementary assets is a very
relevant one (Lopez, 2009) since it highlights the fact that the successful commercialization of an innovation
requires manufacturing, marketing, distribution and after sales capabilities among others.
Competitive
Manufacturing
Other Distribution
Core
Know-how
in
Innovation
Complementary
Technologies Service
Figure 2. Complementary Assets needed to commercialize an Innovation.
With the design dominance factor, an evolutionary element is being meant which is related to the diffusion of
innovations (Rogers, 2003). Once the market has chosen a winning set of product characteristics (e.g., form
factor, function set), less design heterogeneity is possible and competition becomes more price-based.

In the articles of Teece (1996) as well as in this thesis, value capturing (Pisano, 2006; Pisano and Teece, 2007)
is defined as the potential incentives from innovation for the firms as part of the OI partnership. Imitation here
is defined as the unauthorized usage of IP by another company or organization (Berger et al., 2012).
A survey by The Economic Intelligence Unit (2007) identified IP theft as the most important risk in global
innovation networks (see figure 3). More than 60% of the 300 senior executives questioned IP as the most acute
problem in collaborating on innovation with international partners.
“What do you see as being the most significant risks to developing global innovation networks?”
Percentage of respondents (The Economic Intelligence Unit, 2007)
Figure 3. Risks of global innovation networks
So especially in the OI context, knowledge and IP must be management carefully before, during and after the
collaboration with OI partner (Mehlman et al., 2010: Luoma et al. 2010). In the next section the meaning and
importance of IP and IP rights will be explained. Also the complexity of IP protection when used in a more
open environment will be highlighted.
1.5 Protection of Intellectual Properties (IP)

IP is a legal concept which refers to creations of the mind for which exclusive rights are recognized
(WIPO, 2004). Under IP law, owners are granted certain exclusive rights to a variety of intangible assets, such
as musical, literary and artistic works; discoveries and inventions; and words, phrases, symbols and designs.
Common types of intellectual property rights can be categorized into formal, semi-formal and informal
protection methods (Luoma et al., 2010). See table 4 for an overview.
The objective of and justification for IP protection is to stimulate innovation, as innovation requires
investments. Without returns to innovation, the temptation is for all firms not to invest in internal innovation at
all and to free ride the innovation of others via imitation (Chesbrough, 2006). IP protection hinders imitation. In
other words, the objective of IP protection is to create incentives that maximize the difference between value of
the IP that is created and the social cost of its creation (PRO INNO Europe, 2007).

Formal protection methods Contractual/Semi-formal Informal protection methods

protection methods
—Patent —Prohibition of competition —Secrecy and Trace secrets
—Utility model —Confidentiality —Publishing
—Trademark —Recruitment freeze —Restricted access to information
—Right to a commercial name —Employee invention —Database and network protection
—(Copyright) —Proprietary and access rights —Confidentiality
—Client relationship management
—Most favored nation clauses —Loyalty building among personnel
—First mover advantages —Circulation of staff between tasks
—Division of duties or subcontracting
—Distributed product design
—Fast innovation rhythm
—Documentation
—Complex design
—Membership in professional organization
—etc.
Table 4. IP Protection methods (Luoma et al., 2010 - modified from WIPO, PRO INNO Europe, 2007).
Patents and trade secrets are the main types of formal and informal IP (PRO INNO Europe, 2007). A patent is
defined as a grant made by a government that confers upon the creator of an invention the sole right to make,
use and sell that invention for a set period of time. A trade secret is defined as information that companies keep
secret to give them an advantage over their competitors. For example, the formula for Coca-Cola is the most
famous trade secret. Trade secrets are not protected by IP law and as such are only protected by keeping the
information confidential.
Patents are seen in a different way by lawyers and by business users (Fröhling, 2007). Where lawyers mainly
see exclusion rights, business users see patents more as a business tool. But as both perspectives are important
in setting up OI collaborations both disciplines need to involved (Slowinski and Zerby, 2008). The
characteristics of patents are highlighted in more detail in table 5, which explains why it is important to have
both legal as well as business people is the OI company team from the beginning.
As defined by the Law: A Patent is a negative monopoly or exclusionary right

• which the society grants to the patent holder in return for the disclosure of the invention forming the base for said
monopoly right to the public
• which is limited in time and geographical coverage and
• which gives the patent holder the right to forbid any third party to commercially use the subject matter protected by that
monopoly right
As seen in the business practice: Patents are effective & multi-facetted business tools for setting up an appropriate
business model for the commercial exploitation of an innovation in a specific business environment; they are
• a strong currency to get access to complementary technologies controlled and/or patent protected by third parties (cross
licenses)
• a strong tool to increase the attractiveness of a technology or product concept for third parties
• a strategic asset for co-operations, M&A, JV and strategic alliances
• an efficient tool for securing exclusivity on the market of brand-identifying features or other competitive advantages of
products & services
• an official certificate of the innovator’s technological competence & leadership
• an efficient tool for blocking competitors and controlling suppliers in their activities
• a strategic asset increasing the innovator’s value for shareholders, investors, banks & rating companies
• a strategic tool in connection with international standards
• a prerequisite for an active licensing policy
Table 5. Patent characteristics (Fröhling, 2007)

Certain knowledge can be protected more easily via patents versus secrecy and vice versa. The factors affecting
the patent and secrecy choice have been described by Hall et al. (2013) and are summarized in table 6.
Factors Patents Secrecy / Trade secrets

Disclosure (codifiable knowledge) Yes No
Disclosure (tacit knowledge) No No
Ease of delimiting invention Yes Not clear
Reverse engineering allowed in general No Yes
Subject matter Statutory Broader
Timing After invention Work-in-progress
Process vs Product Both Easier for process
Length 20 years Longer (potentially)
Cost to obtain Higher Nonzero
Enforcement cost Expensive Expensive
Table 6. Factors affecting the patent-secrecy choice (Hall et al., 2013)
The choice is often explained by the inherent trade‐off between the perceived benefits from using patents and its
costs relatively to relying on secrecy. In practice, patents do not always confer perfect protection (Hall et al.,
2013) as:
- They can be invented around, often at modest costs.
- They are especially ineffective at protecting process innovations.
- Legal requirements for upholding their validity or proving their infringement are high.
As such, trade secrets maybe a viable alternative if the product does not reveal the technology (or it cannot be
reverse engineered). This is likely to be true when knowledge is tacit, rather than codified. Tacit knowledge is
by definition hard to articulate and can only be transmitted by demonstration.
To qualify the protection overall, whether done via patent or secrecy, Teece (1986) started referring to the
“appropriability regime” which regime might be regarded as tight or weak dependent how good the protection
is.
Next, even when patent protection is preferred, secrecy is still required up till the day the patent is legally
accepted by one or more patent offices. Any type of disclosure to the public before the patent filing date may
have the effect that no patent protection can be obtained. This counts for closed as well as for open innovations
projects. But as in OI are external partners involved keeping secrecy in OI is much more challenging
(Slowinski and Zerby, 2008).
Next, besides new knowledge, also existing but unique knowledge of each partner is introduced and shared in
the OI collaboration. This also needs to be protected and forms another challenge because OI implies an
innovation ecosystem where ideas and knowledge flows across firm boundaries. In contrast, IP rights are
generally designed to exclude others from using a firm’s ideas and knowledge. Hence, OI and IP protection
seem irreconcilable and a contradiction (Hall, 2010).
In summary, in closed as well as in open innovation, firms can use a wide range of IP protection methods.
Especially in the OI context, knowledge and IP must be management carefully before, during and after the
collaboration with OI partners (Slowinski and Zerby, 2008; Luoma et al. 2010). A complication is that IP
decisions in OI need to be made at an early stage of the collaboration while upfront the outcome of OI is often
not known (Striukova, 2009).
1.6 Problem statement and Research Questions

In academic literature the benefits of OI are well presented. In contrast, the risks and challenges inherent to
collaboration with different OI partners such as knowledge spillover and imitation are neglected.
Knowledge spillover is defined as the unintentional transmission of knowledge to others beyond the intended
boundary. Imitation is defined as the unauthorized usage of IP by another company or organization.
Hence the question: To profit from OI, what precautions should one take to limit these risks through IP
protection?
In order to investigate the problem statement, the following research questions have been formulated to narrow
down the approach:
• How do partner firms share and protect their input IP?
• What are the prerequisites for successful OI collaborations leading to new IP?
• How do partners share and protect the evolving output IP of the collaboration?
Innovations can be done for products, process as well as for services. For the sake of time constraints this study
does focus predominantly on tangible product innovation, also described as New Product Development (NPD),
and private OI as described in table 3. This means closed, public and open source type OI are excluded.
Next, this research will be done in the global chemical products market, a market which is known to have a
typical tight appropriability regime (Teece, 1986; Arora and Fosfuri, 2000). This means innovators in these
markets are stronger positioned to profit from innovations and are less dependent on the complementary assets
required to commercialize the innovations. Hence for profiting this study can focus more on the innovation
part. To profit in weak appropriability regimes, the access to complementary assets needs to be organized
simultaneously as well else the inventor might have to share the profits.
1.7 Relevance of the study
Academic relevance
The importance of IP, the value capturing and its management in OI has been recognized in scientific
publications (Huizingh, 2011; West and Bogers, 2013) but remains rather general. This study intends to extend
the available knowledge on how to use IP efficiently in OI partnerships and how to profit from OI in general.

Telegraaf, voorpagina 24 mei 2013

Social relevance “Duitsers doen het beter”
Kleef/Nijmegen,
OI is even a front page news topic (see figure 4) in a recent edition of the
Telegraaf where our prime minister Rutte stated that Germany is doing
better in current global economic crisis due to a more intense collaboration
between knowledge institutes, business and the government.
So, the Dutch authorities have started to stimulate OI and to invest into OI Figure 3.
collaborations. This study might help to get more return on the tax payers’
money that is invested.
Business relevance Figure 4.
OI is not really new for the many manufacturing industries. Many business examples are reported by scholars
in scientific literature. But the complexity of the innovation subjects and level of openness is increasing. More
research will help to tailor implementation and to ease the best practice selection.
Moreover, the less value that is spilled in OI and the better the invented knowledge and value is appropriate
protected, the higher the potential rewards.
Arizona Chemical relevance
To continue growth at Arizona Chemical, a new global business based on another type of biomass is high on the
agenda. The Biobased economy business plan that is set up by the Dutch authorities, provide many OI
opportunities to facilitate this strategic company initiative. This study may help to utilize this OI opportunities.
1.8 Set up of the study

This is an explorative qualitative research study (Baarda et al. 2005) and aims to answer above mentioned
research questions. The following approach has been followed:
1. Complete literature study to compile theoretical framework describing IP within OI partnerships
(chapter 2).
2. Selection, set up and execution of the empirical research (chapter 3).
3. Analysis of interviews (chapter 4).
4. Use 1 and 3 to derive answers on the research questions and to provide conclusions (chapter 5) and
recommendations.
5. Next research limitations and further research topics will be addressed (chapter 6).

2. Theoretical and conceptual framework

This chapter provides a theoretical framework for profiting from OI, based on academic literature research. A
conceptual framework is presented in order to give the reader a clear definition of the authors’ perception of
profiting from OI.
As described in chapter 1, key to OI collaborations is the mutual interest to share proprietary IP. Or as stated by
Bernard Munos of Eli Lilly (Hughes, 2009): “IP rights are the currency that fuels open innovation”
But to benefit from OI, on one hand, the risks for knowledge spills and imitation needs to be limited. On the
other hand, to maximize the potential for returns on the mutual investments, precautions have to be taken as well
to succeed with the collaboration to obtain new IP.
Next, to profit from open innovation other factors need to be taken into account as well.
Munsch (2009) reported that for successful OI collaborations, contracts, partner choice, incentives and the
management of OI are important aspects. Without one of these, it is doubtful that OI succeeds and new
knowledge might be obtained at all. These aspects are addressed in the following paragraphs from an IP point
of view.
Unfortunately, despite the excessive amount of publications about OI, only a very limited set has been found
that deals with OI, the associated IP and its management.
2.1 OI contracts to protect IP

As described in chapter 1, opening up the boundaries between firms as done in OI does not only bring potential
benefits. It also may lead to an unintended and undesirable knowledge spill and may result into imitation.
Typical, contracts are used to limit these challenges. This study starts with factors related to contracts that can
limit these challenges, such as the:
• OI contracts
• Contract law and OI relationship
• Collaboration without a contract or agreement
• Boundaries of the collaboration
• Knowledge matrix
• Contract negotiations
• IP ownership and inventorship
• Termination of the collaboration

OI contracts
The use of contracts in innovation to limit the risks for knowledge spills as well as imitation is not really new.
For instance, in closed innovation, typical a confidentiality clause in the employee contract protects the
employer for imitation. Next, in closed innovation the organizational culture is also more normative as the
ultimate arbiter is present when needed, namely the CEO (Munsch, 2009). In OI there is no single arbiter.
Typically, the tool in OI to limit these challenges is to use contracts or agreements to formalize the relationship
(Hagedoorn and Ridder, 2012). In OI these series of agreements typically include provisions for protecting the
intellectual assets of each party and allocating rights to newly created IP between the parties. Next, to address
the governance gap, OI contracts typically also contain clauses for control right over contingencies. The
“control right” is the right to “make decisions about issues that cannot be contractually specified” (Lee et al.,
2010).
Via industry based research (Mehlman et al., 2010) “better OI practices” have been identified, which have been
visualized in OI collaboration framework scheme (table 7). The framework describes the activities and
deliverables over the life cycle of typical OI collaborations. This progression and the agreements that guide
them, have been arbitrary divided into three phases: Exploration, Development and Commercialization.
Although each phase in the framework is described separately, they are interdependent, e.g. actual level of use is
also dependent on the level of openness.
Exploration Joint or Co-development Commercialize

Incubation Development
optional optional optional
Initial Contact Detailed Discussion Develop Exploratory Co-development Commercial

relationship co-
development
Contracts
Non-confidential Mutual, 1 or 2 way Material transfer Exploratory Detailed JDA or License, buy or
letter of intent confidentiality agreement research Alliance commercial
agreements agreement agreement supply agreement
Table 7. The OI collaboration framework scheme (Mehlman et al., 2010)
Contracts here are written legal agreements between the parties which specify the expected contribution of each
partner, their benefits, duties and rights. But other aspects, as described below, needs to be taken into account as
well.
Contract law and OI relationship

Lee et al. (2010) view OI contracts as a crucial private ordering device to formalize the OI process but also that
OI seems to result in incomplete and open ended contracts which has to be complimented by external elements
such as cultural and relation aspects (i.e. trust and reputation). This attitude to contracting seems to be
ambiguous. Contracts should be binding and the legal system should sanction breaches of contracts. Innovation
contracts, however, are often incomplete. The contract law protects a complete and well defined contract in
which everything can be anticipated. This is partly because of contract law has been designed for the sale of
tangible goods. Innovation contracts, however, are evolving and flexibility is the rule in cooperation for
innovation.
Poppo and Zenger (2002) have found that relational governance and formal contracts do complement each
other. Mortara (2010) refers to a practical way to establish good relationships by using “softer” terms in the
formal agreements which will leave room for negotiations, flexibility and adaptability in an evolving situation.
For instance, once the conditions (e.g. the value) around technology become clearer as these are hard to define
upfront.
So in summary, it is really the question whether an OI contracts will survive a court case. But this does not
mean one can do OI without a contract or agreement.
Collaboration without a contract or agreement

A collaboration without an agreement can have unintended consequences. Herewith three examples:
1) In a situation in which two firms create a patentable invention absent an agreement, US law defines the
invention as jointly owned. When an invention is jointly owned, either partner can exploit the invention
without the consent of the other joint owner (Slowinski and Sagal, 2006).
2) In absence of an agreement, US law defines ownership of the invention based on inventorship. If only one
party’s researcher(s) are inventors, than only that party solely owns the invention and has the exclusive
right to exploit it (Slowinski and Zerby, 2008).
3) Furthermore, some patent laws outside the US require joint exploitation of joint inventions. Absent
agreement, neither party may be able to exploit the invention in such regions (Slowinski and Sagal, 2006).
Both example 1) and 2) includes licensing or selling their IP interest to anyone they wish, including the partner's
major competitors.

Boundaries of the collaboration

Partners must clearly understand and agree upon the boundaries of the collaboration. Different views of the
scope of the collaborations may lead to conflicts. The overlapping area (orange part of figure 5) that from the
scope of the collaboration must be well defined (Slowinski and Sagal, 2006). This means that Company A has
to make sure that the description of the scope is clear enough so that Company B also knows what knowhow
(yellow part of figure 5) is NOT part of the collaboration. The same counts for the other way around (red part
of figure 5).
Company B
Company A
Overlapping
area that forms
the scope of the
collaboration
Figure 5. Boundaries of the collaboration.
Knowledge matrix
To ease contract negotiations and to clarify the boundaries of the collaboration, Fröhling (2007) recommends to
define five basic forms of knowledge and to set up a knowledge matrix (see figure 6). The term knowledge here
includes IP and other proprietary assets (such as confidential know-how) that the parties need to consider when
planning the collaboration. The first basic form is “foreground” knowledge, generated within a collaboration.
In OI contracts this is often also referring to the scope of the OI collaboration. The second basic form is
“background” knowledge, generated outside the collaboration but necessary to create and exploit the foreground
knowledge. It comes in two forms: 1) generated before the collaboration starts, and 2) generated during the
development phase, but independent of the collaboration. This is sometimes known as “sideground”
knowledge.
Figure 6, Scheme to manage contract and IP during OI collaborations (Fröhling, 2007)

These definitions provide a transparent framework that OI partners can use to describe what each party is
bringing to the collaboration, how the results will be shared and what to do about the supporting knowledge that
is needed to make the collaboration work and the knowledge that it generates. Having defined the types and
sources of knowledge, the way it is shared needs to be agreed in contract(s) with respect to ownership, access
and exploitation rights.
OI contract negotiations
Contrary to what the word “open” in OI may imply, several scholars (Mortara 2010; Munsch 2009) refer the
contract process as being a very difficult, complex and time consuming aspect. Even the most simple OI
contract has tailor made elements in it. One lawyer described is as “the process of divorcing whilst getting
married.”
IP ownership and inventorship

IP is invested by each party into the OI collaboration and (new) IP should be the outcome as well. Slowinski
and Sagal (2006) report that IP ownership and inventorship are vital issues that affect such matters as patent
filing, prosecution and associated costs. If a US patent is jointly owned, both parties must be named as parties
in an infringement suit case. As such one joint owner cannot compel the other to join in an infringement action.
There are other enforcement issues as well: Who pays for the litigation? Which firm will pay to file, maintain
the granted patent and file for foreign equivalents? If the patent is commercially successful, can one party
unilaterally abandon the patent or will one party be obliged to prosecute and/or maintain regardless of their
continued interest?
To bring the new concept or product to the market may require substantial capital investments. To justify these
investments it is essential that the entity making the investments has the IP ownership as well else it might
impossible to justify required investments needed for the commercialization of the invention (Munsch, 2009).
Termination of the OI collaboration

Unfortunately the reality is that not each OI collaboration succeeds. Slowinski and Sagal (2006) identified at
least six reasons a partnership can be terminated.
1. The objectives of the alliance arc successfully achieved and the partners want to proceed in the
marketplace independently.
2. One of the partners changes its strategic direction or decides that other projects have a higher priority.
3. One of the firms identifies a more attractive partner and wants to terminate the current alliance and
create a new collaboration with a new partner.
4. One or both firms decide that the implementation results are less successful than expected and future
prospects are not encouraging.
5. One partner has not performed adequately or has breached the terms of the contract.

6. One partner is acquired or merged with another firm.

While the hope is for a successful OI collaboration, planning for failure as well is the sign of an experienced
and thoughtful manager according Slowinski and Sagal (2006). Firms are advised to negotiate upfront a
distinctly different set of right to use (RTU) rules on termination for all IP present in the collaboration and
for each termination reason.
Summary OI contracts
In summary, OI contracts are essential prerequisites of OI. Basically, in OI the walls of the innovation funnel
have become selectively permeable and porous and in OI, contracts are used to close the walls surrounding the
OI collaboration again. Next, OI contracts need to be flexible as well due to the sometimes fuzzy scope of the
potential outcome at the start of the collaboration. On the one hand, doing OI without contracts cannot really be
justified. On the other hand, having a good OI contract does not guarantee the collaboration does succeed into
new IP. To profit from OI, other requirements, as described in the next section, are necessary as well.
2.2 Other OI pre-requisites

To benefit from OI, the OI collaboration should succeed in its objectives. Munsch (2009) reported that for
successful OI collaborations, besides OI contracts, important aspects are the OI partner choice, the OI incentives
and the OI management. Without one of these, it is doubtful that OI succeeds and new knowledge might be
obtained at all. In that case, no value can be captured.
2.2.1 Who as OI partner

Evaluating and choosing partners in OI is important1). Besides the partner his capabilities and reputation, the
informal relationship is equally important, which is based on social norms and the level of trust that exists
between the parties (Mortara, 2010). A good relationship will create the flexibility needed to overcome any
problems that may arise during transactions and to deal with unforeseen events.
Besides careful evaluation what the partner can bring, also how likely it is that the partner can move into the
own market must be considered (Munsch, 2009). There are plenty of examples in business literature how prior
partners became competitors. Veer et al. (2010) find that all potential OI partner types expose risk of imitation
with the exception of competitors. Last is surprising.
According to Teece (1986) although dependent on the “appropriability regime” it might be more or less
important to have partners that have required complementary assets to commercialize the innovation. In other
1) IP Disclosures during due diligence: After the partner is identified, the firms must assess each other's technology. This is a delicate issue
because the parties are still in the exploratory phase. They may not move to a definitive agreement. If a definitive agreement is not reached,
both sides may be sorry they shared (and/or accepted) proprietary information. As such, Mehlman et al. (2010) recommended to start the
assessment with public available information and exchange of non-proprietary information in meetings. If disclosures are needed than they
should be documented and marked confidential. This as disclosures not identified as confidential are considered public.

words, having partners with complementary assets is never a bad thing when one wants to profit from
innovation.
2.2.2 OI incentives
Incentives do form the essential motivation why parties partner and collaborate. But the incentives might differ
between parties and also might become subject of discussion while the collaboration evolves as not all outcomes
can be foreseen.
Lee et al. (2010) report that OI participants have often heterogeneous interests with different roles in the value
chains. As such the incentives often differ per partner. Mortara (2010) has identified three categories of
incentives or “acquisition currency” which are summarized in table 8 and described in more detail in following
subsections.
Next, in addition, new formal IP such as patents might offer indirect value for the partners as well.
Financial Rights over something Other forms of help

• Lump sum, cash linked to milestones or • Markets, other technologies, • To find customers, to develop other
royalties applications, product parts, technology etc.
• Stable or variable flow (increasing or design etc. • Risk sharing
decreasing) • Priority over others (e.g. in using • Knowledge (e.g. of markets,
• Shares a certain technology) technologies)
• Contracts (e.g. to supply something) • Time (e.g. to do or to use something)
Table 8. The three main incentive categories in OI (Mortara, 2010).
 Financial incentives
A financial payment can take place in various forms as agreed in the OI contracts covering the collaboration
(Mortara, 2010). For example, in some cases a lump sum is agreed between parties whilst in others the financial
returns is offered in the form of royalties from the sale of products using the IP. Payment can also be made in
the form of shares or further contracts.
 Rights to use (RTU) or exploitation rights

Having the right to use the technology in specific areas or ways can form part of the benefits of the transaction.
(Mortara, 2010). Dependent on the agreements, the rights each firms has to exploit the invention has in the
marketplace can differ. Slowinski and Zerby (2008) have reported the following options:
Option 1) In the “Sole contract clause option”, inventorship and RTU are equivalent, meaning that only the firm
that invents the IP can exploit the IP. This option has a major drawback that it might make OI
collaborations contra productive. While OI is based on sharing of knowledge the Sole option make
partners reluctant to do so for information that it views as likely to lead to an invention and sole RTU as
a consequence. But if the OI collaboration is with different partners along the value chain this option is
frequently used in combination with lead time or first mover advantages for the downstream partner
(Mortara, 2010).

Option 2) In the “Joint contract clause option”, the RTU the invention is independent of the inventorship. Each
firm will have the rights to use the IP no matter which firm’s employees made the invention.
Option 3) Joint option but with exclusive rights allocation in clearly defined business areas to each partner.
These rights are allocated with the intent of allowing each partner to meet its marketplace and strategic interests.
These rights could, for example, relate to different geographies, fields of use and timeframes.
 Other forms of help

The Parties involved in a technology acquisition often help each other in a variety of other ways (Mortara,
2010). For example, a large company might support a smaller one by helping it to identify more customers in its
market area. A key advantage gained from partnerships is the opportunity to share the risks of innovation. In
early-stage of the collaboration, this should be recognised as an intrinsic form of currency exchange.
The technology seller often benefits from the buyer’s knowledge, for example concerning markets, competitors,
or other technologies.
Indirect value of patents

Patents may also fulfill a number of additional advantages other than the legal right to deny third parties the use
of an invention (Hall et al., 2012), such as;
1) signaling of the quality of an invention to potential investors and customers,
2) a generally improved public image by conveying technological leadership through large patent
portfolios,
3) deterrence of infringement suites,
4) an increase in bargaining power in (cross‐)licensing negotiations,
5) the ability to participate in patent pools,
6) the possibility to signal to potential research collaborators expertise in a specific area.
Academic institutes are particular sensitive for publication of results as it in their interest to show the world they
are doing pioneering research and to publish the most striking results as quickly as possible (Slowinski and
Zerby, 2008). But to obtain IP protection will causes significant delays. It is important to have an early and
candid discussion about the marketplace needs of the for-profit partner. Nevertheless, these too long delays can
prevent the relevant academic researcher from entering into a collaboration.

2.2.3 OI management
According to Slowinksi and Zerby (2008), companies that want to avoid IP conflicts the OI should focus
attention to management of three good (laboratory) practices:
1) Know your obligations under the agreements
2) Maintain up-to-date documentation
3) Allow the partner to review patent prior to filing and publications prior to submission.
Next, to ensure that all interactions are documented and to review the partnership on a regular basis.
Minshall et al. (2010), report to maintain regular and open contact with the partner (and not only when there is a
problem), to mark and link key contacts of both firms and to keep all stakeholders informed of the development.
Poppo and Zenger (2002) have found that relational governance and formal contracts do complement each
other. Managers appear to couple the increasingly customized contracts with high levels of relational
governance (and vice versa).
Summary
In summary, attractive incentives, good relationships and capable OI management are indeed all essential pre-
requisites for successful OI but each has a different deliverable (see table 9). Problems related to these (design)
factors might be part of the root cause for an OI collaborations not to succeed hence limit profiting from open
innovation.
OI pre-requisite: Deliverable:
Relationship & Binding factor to start OI and “oil” in the OI machine to keep it going
management
Contracts Formal control mechanisms to define the OI case and to cover all kind of
potential scenarios. Ring fences the OI collaboration.
Incentives The WHY to start the OI collaboration and to keep motivated till the end.
Table 9. OI prerequisite overview
Next, also without contracts, a collaboration might result into new IP but into many issues at the same time as
well. More about OI outcomes will be addressed in next section.
2.3 Profiting from OI

If all OI pre-requisites have been carefully considered and addressed as required, an OI collaboration might
succeed and deliver new protected IP. The next step is to start with profiting and to maximize the returns from
OI. But, according to Hall et al. (2012), the value of IP lies in affecting third parties behaviour rather than
directly affecting firm’s own profitability. Basically IP ensures a firm’s own freedom only by blocking third
parties from claiming IP rights on a specific invention. So there is more than IP needed to profit from (open)
innovation. If additional investments are required for the commercialization and profiting, IP and its protected
do form the necessary justification.

As described in the PFI paradigm (Teece, 1986), complementary assets form one of the three important factors
required for profiting from innovation. As such the selection of the right OI partner might even be influenced
by the complementary assets available at the partner.
However, viewed through the lens of complementary assets theory (Pisano, 2006), a firm with very strong
downstream complementary assets may have strong strategic incentives to make and keep “upstream” IP weak
to prevent foreclosure of opportunities. The value of those assets is higher in a weak appropriability regime
than in a strong one. So, if strategic considerations are also included as one of the partner selection criteria, a
consortium with a more complete set of complementary assets can be compiled which will ease the
commercialisation and linked profiting.
2.4 Summary of the theoretical framework

In previous sections, the prerequisites for OI collaborations to succeed in their objectives have been described
based on literature research. Where in closed innovation IP can be obtained, in OI new IP might be obtained as
there are additional elements required for success. To profit from OI, the IP needs to be protected. The
possibility for IP protection finds it origin in the OI prerequisites and especially in the OI contracts. As such it
is justified to state that value can be captured if IP is obtained and protected which both finds it origin in the OI
pre-requisites.
In summary there are a lot of OI (design) factors which together might result in a successful OI but also in
failing OI collaborations.
Nevertheless, in practice, many firms consider the IP part as very challenging when other actors are involved
(Luoma et al. 2010). As such the remaining question is what are the critical fail and success factors in practice
to limit the risks for knowledge spills and imitation but as well to maximize the returns of OI? How to study
this? In next chapter all this will be addressed.

Results of theoretical framework did lead to the following conceptual model:
Pre-requisites for an
OI collaboration
consortium:
n
Incentives
Partner
relationship New IP & its Profiting
protection from OI
Contracts
(Success / Fail)
OI Factors
management
Figure 7. Conceptual model
This conceptual model functions also as framework for the empirical study where the potential success and fail
factors are investigated.

3. Empirical research
In this chapter the method that has been used for the empirical research is described and explained.
The results of the interviews have been used to find the fail & success factors as well as to validate and to
extend the theoretical framework provided in Chapter 2. In addition, the results have been used to derive
conclusions (chapter 5) and recommendations (chapter 6) for profiting from Open Innovation.
3.1 Research method

The ultimate success of every innovation is directly related to the amount of value that is captured. Very
positive but also very negative OI experiences are often remembered as best in practice and as such are expected
to offer interesting insights when searching for the critical fail and success factors that has caused those
experiences. In this empirical part of the study we want to make use of those experiences to answer the
remaining question what the critical fail and success factors are in practice for value capturing in OI?
Qualitative research via interviews has been selected as this method offers most flexibility (Baarda et al., 2009).
On the one hand, the Critical Incident Technique (Flanagan, 1954) or CIT has been identified as the best
technique for findings these critical factors. But on the other hand, the question is whether an OI project and its
management, that easily can take many years, is based on critical incidents. Probing through follow up
questions related to CIT will help to clarify and to overcome this.
Chell (1998) and Gremler (2004) described CIT as a well proven qualitative interview procedure which
facilitates the investigation of significant occurrences (events, incidents, processes, or issues) identified by the
respondent, the way they are managed and the outcomes in terms of perceived effects. The objective is to gain
understanding of the incident from the perspective of the individual, taking into account cognitive, affective and
behavioral elements.
The CIT method is inductive in nature and produces unequivocal and very concrete information as respondents
have the opportunity to give a detailed account of their experiences. CIT does not restrict observations to a
limited set of variables or activities. This makes the CIT especially useful for subjects like ours that are
sparingly documented and increased knowledge of the subject is needed (Bitner et al., 1990).
Next, as an exploratory method, CIT shares drawbacks of other inductive methods. Fewer people are studied
and as such it is less easy to draw generalizations or, especially, solid conclusions. This drawback can be and
has been limited as much as possible by taking a random sample of the population of interest. Next, by open
questions a random response will be obtained. Overall the random sample is expected to represent the
population.

The CIT method offers a clearly defined, systematic and sequential research process which consists of the
following five steps:
1. Establish the general aims.
2. Establish plans and specifications – see table 9 and appendix 2,3 and 4
3. Collect the data
4. Analyze the data – chapter 4
5. Interpret and report the data – chapter 5
Flanagan (1954) suggests that the general aim, the specific activity as well as the plan and specifications should
be carefully documented to ensure consistency and objectivity in data collection. For that purpose see table 10
and appendix 2, 3 and 4.
The general aim Profiting from OI

The specific activity IP in OI
The situation Who: Marketing or R&D managers in the Chemical industry with practical experience with OI.
Where: At the offices of the managers. All located within the Benelux.
What: All aspects related to IP protection during OI collaborations
Critical incidents Recent incidents in OI collaborations related to the use of IP and that made significant positive
or negative impact on captured value.
Observer Sole researcher to ensure consistency in data collection.
Professional experience with the subject so that no training or additional researchers was
required.
Table 10: Plan and specifications overview
As part of the preparation also a trial interview with a colleague has been done. This experience has been used
to add some more probing questions to the interview topic lists. Also feedback was provided to use the power
of silence in the interview as this tool might help to persuade the interviewee to go even deeper into the topic.
3.2 Population
The population of respondents consists of employees in chemical industry in the Benelux, that are;
• responsible for innovation,
• involved in Marketing and/or R&D for more than 5 years,
• have practical experienced with Open Innovation,
• are willing to share practical experience with OI type collaborations.
All firms are involved in business to business transactions and are operating internationally.
One exception is the company the Meritus Group, which is a small consultancy firm. But the interview did
mainly cover the prior period when the respondent was employed by a multinational and very active with OI.
Next, although a colleague is part of the population, this experienced R&D manager has only been working for
one year within the company. To avoid potential conflicts of interest, the company related subjects have been
abandoned in the interview. The colleague is not the same as used for the trial interview.

The reason why I have approached these respondents and organizations, is that they are covering markets and
expertise with different perspective. This selection was useful to assess the proposed model from Arizona
Chemical point of view. I have approached six persons by phone and given them a brief set of background
information. All were willing to accept my request for an interview but two of them recommended and
organized an interview with another person within their organization, as they believed those to be a better fit
with the subject.
Of the six respondents interviewed, I met four of them before personally.
Table 11 gives an overview of the respondents.
Company Interview location Interview date

Van Wijhe Verf BV Zwolle, company office 29 May 2013
VOF Meritus Group Zwolle, Lumen Hotel, restaurant 10 June 2013
Arizona Chemical BV Almere, company office 14 June 2013
Umicore Brugge (B), company office 18 June 2013
PPG Amsterdam, R&D , office 21 June 2013
BioMCN Almere, company office 26 June 2013
Table 11: Companies that participated in the interviews
This selection can be described as a non-specific random sample (Baarda et al., 2009)
3.3 Interview set-up

All interviews took place in the period May-June 2013 at the location where the respondents’ offices are based.
The exception here is the interview with the Meritus groep as this took place at the restaurant of a local hotel.
Following the brief introduction of the subject by phone and the acceptance of the invite, each interview started
with an outline of the interview. Next, all interviews have been done in the Dutch language.
The interviews have been structured into three parts:
1) Introduction:
Introduced and verified the understanding of the scope as well as the purpose of the interview. Next, the
professional background of the respondent has been reviewed. Both to make sure the respondent
understands the subject, as well as to previous OI experiences.
At the same time it was once again stressed that this interview is not about specifics of the OI partners
or the people involved but only about the OI management, the IP and its protection. In case partner
and/or people names do slip into the interview they will be coded in the analysis and reporting part.

2) CIT part:
Respondents have been asked to describe OI experiences and its effect on IP that stand out due to very
positive as well as very negative deliverables. During and after their description, additional probing
questions have been raised to understand better what factors did cause failure or success here. Focused
questions about the relationship with IP have been raised.
3) Verification part:
Respondents have been asked, based on their current knowledge and experience, what pre-requisites
they have for their next OI collaboration, the IP and its protection. This is to verify if factors are
missing and to validate the factors and theoretical framework that are described in chapter 2.
Each interview, including the introduction, took about one hour. The introduction has not been recorded. The
rest has been digital recorded with permission. For more interview details like the invite talking points, the
interview topic list and the interview tools see appendices 2, 3 and 4 respectively.
3.4 Interview analysis plan

The recorded interviews have been transferred into a transcript. After completion of all interviews, irrelevant
information (like industry rumors etc.) has been removed from the transcripts. Relevant excerpts have been
highlighted and coded. The coding process was based on concepts which were later grouped and categorized.
Also the OI projects discussed have been segmented. The chosen viewpoints were not defined beforehand but
emerged during the analysis of the interview materials.
3.5 Interview experiences

In six interviews about sixteen OI projects passed the scene. Three of the sixteen OI project where still active
and running. Ten where described as successful and three as failed OI projects.
Finding critical factors for the successful projects appeared to be very difficult. Often, success was defined as
“resulting into new knowledge”. Knowledge that confirms that a certain scoped solution is not possible is
perceived as a successful OI collaboration but one without new IP and without any profit.
Next, in two OI projects, the interviewees were not involved from the beginning and as such not able to answer
all questions related to these projects making is hard to identify the critical factors.
Also, when probing for the fail/success factors for a specific OI project, it appeared difficult to keep the
respondents focused. Frequently respondents did go off-track by referring to other OI experiences.

4. Interview results
This chapter summarizes the main results from the interviews.
All the interviewees did have experiences with OI and also recognized and acknowledged the problem statement
that managing OI, to limit the risks and to maximize returns, is very challenging. This does confirm the
relevance and topicality of current research.
The layout of this chapter is as follow: first the CIT results will be described. Next the structure of the
conceptual model is followed from the right to the left side. Finally falsification possibilities will be reviewed.
4.1 CIT success and fail factors for profiting from open innovation
As described in section 3.5 finding critical success and fail factors for the OI projects appeared very difficult.
Nevertheless three of the sixteen OI projects that were discussed during the interviews did clearly fail and the
critical fail factor could be identified as:
Timing/Priorities: In two of the three failing OI projects it appeared that the expectations where mutually not the
same from a timing or priority point of view. Basically one partner did not want to wait for the other anymore.
No mutual goal or incentive (between the OI partners or due to lack of alignment within the organization at one
of the parties): In one case, no mutual goal or incentive could be identified. When probing the interviewee
mentioned that the start was fuzzy and not clear at all upfront. It appeared that the mutual higher management
had committed to something, which detail he could not remember anymore the exact details. In the kick off
meeting when the researchers of both companies were present, it became soon clear that the objectives was not
realistic.
Clearly, incidents do happen but most of the time they are addressed and solved by the mutual OI management.
Or as one described it “if the potential incentive at the end is big enough mutually, the motivation to address
issues during the collaboration will often be bigger than to allow it to escalate it into a critical fail factor”.
So, the CIT research method did only deliver a limited set of critical fail and critical success factors in this
empirical research. The probing questions following the CIT method however did still deliver valuable insights
on precautions one should take to limit the risks for imitation and to maximize the returns when one wants to
profit from OI. These are summarized in the remainder of this chapter under the heading of the specific themes.
To verify the theoretical framework additionally, interviewees have been asked, based on their current
knowledge and experience, what pre-requisites they have for their next OI collaboration, the IP and its

protection. In addition to the factors described in chapter 2, the factors COSTS have been mentioned. Not each
company is of the opinion that OI is more cost effective than closed innovation, hence also focus on costs.
4.2 Profiting from open innovation

Value can have a different meaning for each party. In ten of the sixteen OI projects mentioned in the interviews
was with partners along the value chain. In these “supplier and customer” OI collaborations, the value is indeed
different for each partner. Typically the supplier gains new patented knowledge with the help of the customer
that fits their target market while the customers gain a new innovative and highly desired product in
combination with sufficient lead time to benefit via first mover advantage. It appeared that not much
proprietary IP has to be shared in this type of OI. As such this type of partnership does not only represent low
risk for imitation but also a good fit from a complementary assets point of view. Hence, as described in the PFI
theory, profiting from OI is looks to be more easy here.
The OI type recognized as more simple and obvious, are those OI collaborations where value for money is
exchanged between partners. In three of the sixteen OI project money was exchanged. One interviewee
described the parallel with what is seen in the homebuilding industry where construction companies hire and use
various sub-contractors next to their own work force.
Surprisingly also other insights related to profiting from OI have been gained. In one interview, a case was
described where the partner selection was directly linked to the company strategy so that access to a new
geographic market area could be gained more efficiently and more profitable. It was explained that certain
countries, especially the emergent countries like China, are often protecting their domestic industries as well as
their market. To access and to compete locally, collaborations with local universities, institutes or even local
competitors with the purpose to please governments and to reduce potential access barriers are considered as a
usefull strategic tool. Hence the phrase “If you can’t beat them, join them” was used in this interview. Here
clearly partner selection has been a strategic consideration to ease the profiting.
Another respondent referred to his OI projects as subjects for which there are no closed innovation alternatives
within his company. “If OI was only about cost and time saving, I would clone my people but unfortunately this
would only result into more hands but not into better ideas.”
4.3 IP and IP protection

According to one of the interviewees, patents facilitate value capturing but do not offer a guarantee for profiting.
Another interviewee highlighted the fact that only a few percent of all the patents in the world are profitable and
which is seen as logic and not as a problem. This was explained via the IP strategy of his own employer. Not
knowing how profitable an innovation might become upfront makes that his employer often applies for a patent.

Over the patent lifetime each patent is reviewed for its profitability and/or strategic value on a regular basis. For
most patents counts that his employer typically decides to stop payments within 2 years. Stopping patent fee
payments means the patent will lapse and the right to forbid and fight imitation in court is lost. However, what
is seen as more important, is that competitors are not able to patent the same anymore. As such one can see
patents also as defensive tools or as expensive publications.
Dependent on the geographical scope of a patent, the costs to apply and to maintain it can be huge (up till 100
k€ and more). Based on this, two of the interviewees mentioned that they refuse to collaborate with institutes
and/or universities if they insist on a portion of the ownership of the new IP rights unless they invest money into
the collaboration as well.
In contrast to the debate on who new IP should be granted within the OI collaborations, in two OI project it was
highlighted that the partner did have a clear interest not to own any of the forthcoming IP. In case one of the
partners is a consultant or a subcontractor in return for money, they have an interest not to be exposed to any
other obligation forthcoming from the collaboration. Else it will limit them to be independent and to remain an
attractive partner for the next collaboration.
In the supplier-customers OI type, it was noticed that each partner was able to set its own IP strategy within the
collaboration. Where suppliers typical protect their innovation with patents, the partnering customer typically
used secrecy. It was explained that secrecy is still perceived as more efficient in their market (the coating
market) as formulated products are difficult to imitate so far. In addition, it was explained that new health and
safety regulations (like REACH) force chemical formulators to disclose more and more compositional
information which might favor the use of patents in the (near) future.
In the case were political interwovenness played a major role, it was also highlighted that the OI risks for input
knowledge spills were rated as high. To manage this only selected knowledge was introduced into the OI
collaboration so that risk for IP spills was limited.
4.4 OI pre-requisites
In summary, when asking for positive and negative OI experiences as well as for the OI pre-requisites for their
next OI collaboration, the IP and its protection, indeed the following elements could be derived and clustered
together: incentives, partnership, contracts and OI management.

Each element will be described in more detail below:
1) Incentives
Without mutual incentives no one is going to invest in an OI collaboration and as are such a true pre-
requisite for each OI collaboration. Although each party might explain and enjoy these incentives in
different forms or ways.
As such different words have been used by the respondents such as “interest”, “OI alibi”.
Via some cases it was noticed that when strategy at one of the partners was involved, this could cause some
difficulties in the OI collaboration. In one case, it was assumed that it would be critical to have a certain co-
product developed and available in the market to stimulate the sales of another radical but internal invention.
For this strategic reason an OI collaboration with a capable co-producer was started. But to get this
collaboration started turned out to be very difficult for two reasons. One, the co-producer partner did not
know about the market potential for the radical invention so could not estimate the market potential for the
new co-product and, two, was very suspicious about the true incentive model that did drive the other partner
to collaborate at the same time. Despite this, a successful OI collaboration followed and both the radical
invention as well as the co-invention are commercial available and successful in today’s market.
2) Partnerships
Under the heading partnership, various sub-elements could be grouped together but each is worth discussing
separately. All except one of the respondents did refer to one of these sub-elements as being very important
for the success of the OI.
Reputation:
As one respondent described it, after it is known what we want to do via OI, the next step is to identify an
appropriate partner. Appropriate does mean skilled in the art as well being known as reliable in their market.
Skilled in the art can be verified via patents and other publications. Being reliable is a subjective
observation. Nevertheless it was highlighted as one of the important partner selection criteria. One
respondent described that reputation is also influenced by the way they contribute to OI collaboration
themselves. This manager made the comparison between their own closed innovation and their OI projects
and stated that in their closed innovation they stop projects much faster than when compared with their OI
equivalents. As explanation was given that they do not want to get the reputation of giving up their part of
the OI development too easy.
Experience
One respondent mentioned that positive OI experiences makes is it appealing and tempting to do another
OI collaboration with the same partners. When probing whether it is the partner firm or the people involved
at the partner, the respondent mentioned that there is no rule but when referring to large companies and/or
institutes as partner, he clearly refers to the people involved in this projects.

Trust
As one respondent described it, contracts offer only a legal fallback position. In addition, when you want to
or have to make use of these legal contracts in court, you have to prove you are correct as well. As such of
more importance is mutual trust.
Communication
In general, all respondents referred to the importance of good communication. One respondent was more
specific and mentioned that typically in OI, know-how from various domains are combined which makes it
especially important to assure all refer to the same definitions.
Buy-in
One respondent referred to the importance of having the buy-in from the people who do the actual work
within the OI consortium besides the mutual management. Lacking sufficient buy-in at the “shop floor” was
seen as a crucial factor causing OI collaboration failure.
3) Contracts
Contracts are first and foremost seen as practical tools to make sure all partners have no miss-understanding
of the purpose and objective of the collaboration as well as to highlight the proprietary nature of the
information that is shared and created. Next, the IP is protected legally via contracts as well. At the same
time interviewees share the opinion that a collaboration contract is only one of the elements. Or as one
respondent put it “it is like a temporary marriage that establishes rights and obligations. And as most of us
know, a marriage needs to be maintained properly as when the wedding contract does come out of the
drawer you know it is too late already”. In addition, another respondent also referred to the too high costs of
litigation limiting disputes to go actually into court. Or in other words, contracts are only a tool to define the
box that describes the boundaries within the collaboration will take place and to protect knowledge and IP
legally.
Following negative OI experiences, one interviewee referred to progress issues due to asymmetric priorities
of parties involved. The interviewee also described a tool to overcome these issues namely via the use an
effort obligation agreement. The outcome of OI might be unknown as the subject remains innovation, but
via an effort obligation the OI collaboration can be managed better.
4) OI management
In case of disputes, in closed innovation as well as in intercompany business unit collaborations there is
always clarity on the final arbiter when needed namely the company CEO. The same clarity is lacking in OI.
The best alternative in OI is often to address all possible scenarios in the OI contracts. Next, various
respondents also refer to frequent meetings by the so called “OI steering team” to discuss progress on the
objectives, its feasibility and to address any issue.

Referring to OI issues and OI management, one of the interviewees could imagine that an independent third
party or an independent manager, who is very experienced with OI collaborations, could have added value
and would help to make an OI collaboration more efficient and successful.

5. Conclusions
In this chapter conclusions are presented based on the perspective of the theoretical framework and the
empirical results coming from explorative research about new product development in the Chemical industry in
the Benelux. Before addressing the problem statement of this study, the conclusions related to the following
research questions will be presented first:
• What are the prerequisites for successful OI collaborations?
• How do partner firms share and protect their input IP?
• How do partners share and protect the evolving output IP?
5.1 Conclusions regarding the prerequisites for successful OI collaborations

Among the most important pre-requisites which have been identified are contracts, partner relationships, OI
incentives and OI management. The relevance of these pre-requisites is described in scientific literature. The
proposes theoretical model has been confirmed with the feedback from the interviews. In addition, cost control
is also mentioned as a prerequisite for successful OI projects. But if cost control is viewed as an integral part of
the OI management no additional pre-requisite is needed in the model.
5.2 Conclusions how partner firms do share and protect their input IP within OI
In closed innovation, IP is protected by a legal contracts being the employment contract. IP is managed and the
ultimate internal arbiter, being the CEO or managing director, is known. The company boundaries within OI
collaborations are partly opened up or more selective and temporary permeable for the OI partner. To make
sure the shared IP stays within the collaboration the same tool is used namely contracts. So whether closed or
open, innovation is both surrounded by a legal framework to serve as protective barrier as described with the
theoretical framework of this study.
5.3 Conclusions how partners share and protect their evolving output IP
When the output IP is formally protected via one or more patents, again a legal tool is utilized. This does not
mean only formal IP protection is taking place. The empirical study learned that informal as well as formal
protection methods are used. Especially in supplier-customer OI collaborations, only a very limited amount of
IP has to be shared and each partner can set and decide on its own IP strategy.
5.4 Conclusions how to profit from OI

First of all, if profit or value means money, no clear conclusion could be drawn. Whether the IP is the result of
closed or open innovation, in both cases there is uncertainty if value can be captured. But via OI there is fair
chance that new IP can be obtained more efficient and faster.

For some OI projects, a closed equivalent would not even be possible. So, here I conclude, OI offers clearly
additional value capturing potential. Again without guarantees for success but with a reasonable chance for
return on required investments. This is also the key factor that motivates the start and the execution of OI
collaborations.
Also an interesting difference between companies involved in this study has been found. Part of the companies
first determine their OI objectives and after that search, identify and select their partner. Another part looks like
they have been approached and/or invited to become a partner in an OI collaboration. The impression is that for
last group of companies trust, reputation and other partnership aspects are more important.
Summarizing; to profit and to maximize returns from OI a lot of precautions need to be considered. Contracts
are a must-have in OI but are guided by common sense. Despite the difficulties that the compilation of OI
contracts might give rise to, it forms an essential and integral part of the OI process. Contracts give the OI
consortium the assurance that new IP can be obtained and protected as well. IP protection is needed to earn
back costs and to justify additional investments for future commercialization and profits. Herewith contracts do
close the open innovation during the project for the outside world.
Next, OI hardly fails due to disputes, as long as the mutual potential incentive is big enough. The motivation to
address issues during the collaboration will often be bigger than to allow escalation into a critical fail factor.
Last but not least, it remains innovation, so the profit can still be zero or negative although science is not limited
by statistics.

6. Limitations of the study and recommendation for further research

In this last chapter the limitations and recommendations of this research will be addressed. Last but not least a
personal reflection on this research is included.
6.1 Limitations of the study

This research study has a number of limitations:
First of all, despite the fact that the scope of the population was delimited to respondents such as coming from
the chemical industry in the Benelux, still the total number of interviewees is very limited and too limited to say
the conclusions are valid in general. For example, despite the fact that all respondents did have practical
experiences with various OI projects, this does not mean that all chemical companies in the Benelux do practice
and/or participate in OI collaborations.
Second, all respondents are directly or indirectly familiar to me, which might have influenced the answers in the
interviews. With half of the respondents I do have a direct business relation with the respondent being a
customer, a consultant or an ex-colleague with whom I worked with some years ago. Although, I never met the
other half of the respondents personally before, all these respondents do know the company I work for.
To overcome these limitations and make the current conclusions more generic acceptable, it is recommended to
do additional research with a larger population and/or in different regions and/or in other industries.
Third, OI is almost always covered by various secrecy or non-disclosure agreements. In case a successful OI is
only covered by informal IP, it is not easy to go into details as respondents are often restricted by these
agreements. The same counts when OI collaborations are still active or when the OI collaboration is in the
granting period of a patent application.
Specifically for the chemical industry, the product development cycle can easily take many years and, from a
profiting perspective, is basically split into two stages. First new IP needs to be invented and obtained. In the
second and last stage the related new tangible product is manufactured and sold (hopefully) with a profit. This
time span makes finding success and fail factors for the whole process difficult for this market. Next, often
different people are involved for the first and the last stage of the process. Or more than one invention is needed
for a scoped new innovative product. As such in this research the first step of the process has been more been
often subject than the last part while the aim was to get a more equal spread.
Last but not least, the interviews have all been done in the native language of all interviewees which is Dutch.
When writing this thesis in English, using quotes is nearly impossible.

6.2 Recommendations for further research

In addition, the following is recommended:
The PFI theory describes that profits from innovation depend on the interaction of three groups of factors:
1) the appropriability regime,
2) the complementary assets and
3) the presence or absence of a dominant paradigm in the sector in which firms operate.
In a given market sector with a tight appropriability regime, the partner choice might have a very big influence
on the share of the profits from an (open) innovation. For scholars, it is recommended to study the relation of
partner choice and the presence of complementary assets in OI in more detail than done in current research and
literature so far. Or in other words, what are the specific partner selection criteria for profiting via OI?
For businesses actively doing or considering OI, it is recommended to include marketing in the OI partner
selection process.
In general, by building in more strategic considerations into OI, not only innovation with lower costs and less
risk can be done but with more potential profits as well. In other words, when combining OI with PFI the best
of both worlds might be extracted, hence is recommended for in depth future research.
Next, one of the interviewees mentioned that an experienced but independent third party might be of added
value as facilitator or coordinator in OI collaborations? It might be interesting to study this.
6.3 Reflection
In reflection on this research I want to highlight the following:
• Conceptual models are a simplification of the reality. With hindsight, the biggest simplification is found at
the start of any OI collaboration. Where my model starts with partners and the intention to collaborate, I
am now more than ever aware as well as reminded during the interviews, that each OI partner in fact
represents an internal alliance of different functions. Before inviting other partners or accepting an OI
invitation, an internal alignment between the management and various departments must takes place and
which can be quite a challenge. An indication for that is the practical tendency to start another OI
collaboration with the same OI partner as much less internal effort is required to do so.
• The OI literature and theory refer to time and costs saving. When all time and costs of related internal
discussions before and during the collaboration are included, I wonder if these benefits still stand. Adding
the opinions of the interviewees and from various other people in the industry together, my feeling is that
the benefits of OI are more related to a higher success rate for obtaining relevant new IP than due to time
and costs savings..
• The conceptual model contains an implicit causality. Protected IP, whether the results of OI or closed
innovation, appeals to a profitable position. But those skilled in the IP art know that protected IP (whether

via secrecy or patents) on its own does not deliver any profit. Protected IP is a tool to prevent others to
imitate it. In case of protection via a patent, the IP owner still needs to find imitators, bring them to court
for infringement and prove their actions are illegal. For instance, Apple and Samsung can be found in the
newspapers on a regular basis as one after the other is filing infringement cases against each other. To
extract value and profits from protected IP one needs to get it rewarded by users in the value chain via a
business process.

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Appendix 1: Acronyms and Abbreviations
CIT Critical Incident Technique

G5 The five generations of innovation processes
G6 The sixth generation of innovation or Open Innovation
IP Intellectual Properties
JDA Joint Development Agreement
NPD New Product Development
OI Open Innovation
PFI Profiting from Innovation
RTU Right to Use
REACH REACH is the European Community Regulation on chemicals and their safe use (EC 1907/2006). It
deals with the Registration, Evaluation, Authorisation and Restriction of Chemical substances. The
law entered into force on 1 June 2007.
The aim of REACH is to improve the protection of human health and the environment through the
better and earlier identification of the intrinsic properties of chemical substances. At the same time,
REACH aims to enhance innovation and competitiveness of the EU chemicals industry.
US United States

Appendix 2: Interview Topic list
0. Algemeen
- Company details: national/multinational, firm size, # of employees, own description of activity

- Manager details: functie (hiearchie/funktioneel/operationeel). Years of exp. in company and in industry.
- Organisatie details:
1. Introductie
2. Open Innovatie ervaringen
Kunt u mij de samenwerkingsverband ervaring beschrijven waar u zeer goede resultaten me bereikt heeft. Kunt
u ook een zeer teleurstellende samenwerking ervaring met mij delen?
Ter verduidelijking
Welke OI vormen heeft u ervaring?
Technology/markt combi?
Welke plek bezette de partner in the markt of waarde keten?
Oorzaken volgens u?
Hoe is input and output IP geregeld in deze samenwerking?
Enkele voorbereide “probing questions”
Waarom gebeurde dit?

Hoe gebeurde dit?
Wat waren de gevolgen – direct en op langer termijn?
Wat gebeurde er in het vervolg?
Is dit een uitzondering of regel?
3. OI prerequisites
Wat zijn uw voorwaarden of selectiecriteria voor uw volgende partner in uw volgende OI project?
Slot: Dit waren dan de vragen. Ik wil u hartelijk bedanken voor uw medewerking. Uw antwoorden zullen
verwerkt worden in een rapport zonder dat daar gebruik wirdt gemaakt van specific bedrijfnamen en/of andere
“rugnummers”.

Appendix 3: Interview tools
http://spie.org/Images/Graphics/SPIEProfessional/SPIE_open_innovation_photonics.jpg_26 April 2013
(source:http://www2.ifm.eng.cam.ac.uk/ctm/estap.html_26 April 2013)

OPEN
INNOVATION

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Master thesis Roy Gerritsen Profiting from Open Innovation vis Intellectual Properties

Gerritsen R.W.a., 2013, Profiting From Open Innovation Via IP - Web

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Gerritsen R.W.a., 2013, Profiting From Open Innovation Via IP - Web

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http://spie.org/Images/Graphics/SPIEProfessional/SPIE_open_innovation_photonics.

jpg_26 April 2013

Profiting from Open Innovation via Intellectual Properties

drs.ing. Roy W.A. Gerritsen

Almere, October 2013

Master thesis Marketing Strategy 2012-2013

AOG School of Management – Rijksuniversiteit Groningen, The Netherlands

Mentor: dr. J.A. (Liane) Voerman

“IP rights are the currency that fuels open innovation”

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1.2 Innovation and its evolution

Generation Period Innovations process characteristics

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1.3 Benefits of Open Innovation (OI)

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Figure 1. The open innovation funnel (Mortara, 2010)

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Closed 1. Closed innovation 3. Public innovation

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1.4 Value Capturing

Figure 2. Complementary Assets needed to commercialize an Innovation.

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Figure 3. Risks of global innovation networks

1.5 Protection of Intellectual Properties (IP)

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Formal protection methods Contractual/Semi-formal Informal protection methods

As defined by the Law: A Patent is a negative monopoly or exclusionary right

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Factors Patents Secrecy / Trade secrets

1.6 Problem statement and Research Questions

1.7 Relevance of the study

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Telegraaf, voorpagina 24 mei 2013

Business relevance Figure 4.

Arizona Chemical relevance

1.8 Set up of the study

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2. Theoretical and conceptual framework

2.1 OI contracts to protect IP

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Exploration Joint or Co-development Commercialize

Initial Contact Detailed Discussion Develop Exploratory Co-development Commercial

Contract law and OI relationship

Collaboration without a contract or agreement

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Boundaries of the collaboration

Figure 5. Boundaries of the collaboration.

Figure 6, Scheme to manage contract and IP during OI collaborations (Fröhling, 2007)

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IP ownership and inventorship

Termination of the OI collaboration

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6. One partner is acquired or merged with another firm.

2.2 Other OI pre-requisites

2.2.1 Who as OI partner

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Financial Rights over something Other forms of help

 Rights to use (RTU) or exploitation rights

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 Other forms of help

Indirect value of patents

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