OPEN INNOVATION – OPPORTUNITIES AND RISKS OF

IP TRANSFER ACROSS BORDERS

Robert D. FordFebruary 24, 2011Innovation Across Borders ConferenceMaRS Centre, Toronto, Ontario

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Gowlings

One of Canada’s largest national law firms•750 professionals across 8 Canadian offices and

Moscow and London

Cross-disciplinary:•Intellectual Property •Advocacy•Corporate Finance•Licensing, Strategic Alliances and Joint Ventures•Mergers and Acquisitions•Regulatory, Government Relations and Product

Liability services

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Business Models for Technology Commercialization

CLOSED INNOVATION - ruled the 20th century

OPEN SOURCE - emerged early 1990s

OPEN INNOVATION - emerged mid-late 1990s

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Closed Innovation

• 20th century “Big Business” model

• based on internal / vertical commercialization

• excludes external inputs (except for institutional R&D)

• USA, early 1900s - Europe & Japan early 1950’s

• heyday, 1950s-1980s (Fortune 500 companies)

• Increasing DECLINE 1990s to present

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Closed Innovation

Research Productdevelopment

Market

Firm's boundary

Firm's boundary

Product pipeline

Internalresearchprojects

© Henry Chesbrough, 2003, “Open Innovation”

University IP

Govt R&D IP

Firm's boundary

Firm's boundary

Product pipeline

Internalresearchprojects

University IP

Govt R&D IP

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• free re-distribution of software in source code form

• shared rights to use the technology

• collaborative further development & sharing of the technology

• no monetary rewards to the innovators

• Open Source IS NOT a sustainable business model

• primarily used by electronic gaming industry & academia

Open Source (Principles)

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• mid-1990s – “Closed Innovation” biotechnology commercialization ran into court battles over IP

Open Innovation (Drivers)

• internal projects dropped by Fortune 500 companies = layoffs and unemployment

• unemployed highly trained personnel started companies

• realization that ~90% of IP was not commercialized

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• explosion in electronic communications & media

• powerful low cost/no cost internet search engines

• appearance of fast-track commercialization clusters

• evolution of “OPEN INNOVATION” commercialization

Open Innovation (Drivers)

2000’s

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• takes advantage of others’ knowledge, successes & IP

Open Innovation (Principles)

• accelerates speed of commercialization

• based on rapid diffusion – adoption – imitation

• requires brokering of knowledge & IP & collaborations

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• focus on extensive licensing:• licensing-in• licensing-out• cross-licensing

• greatly expands value capture from protected IP

• patents used as “currency” (not as barriers)

Open Innovation (Principles)

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Open Innovation (How it works)

© Chesbrough et al., 2006, “Open Innovation; Researching a New Paradigm””

University IP

Govt R&D IP

Other companies' IP

University IP

Govt R&D IP

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The Panel

• Jennifer Thompson, V.P. Corporate Development & Investor Relations EnWave Corporation (TSX-V: ENW)

• Dr. Yousef. Haj-Ahmad, M.Sc., Ph.D.President & CEO, Norgen Biotek Corp.

• Mr. Martin Bonenfant, Intellectual Property Analyst, Medicago Inc.

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The Discussion Questions

• How does one protect IP in a global economy?

• What does one "give" and what does one "take" in global collaboration?

• Examples of "open innovation" best practices for SMEs?