At first glance, the concept of OI is in direct conflict with IP rights, since the first postulates the dynamic flow of ideas and knowledge, while the second is associated with exclusion and the protection of innovations. This is the reason behind the criticism, expressed by OI enthusiasts who put into question the relevance of IP as an incentive for innovation and its overall positive impact on society[1]. However, the two opposed concepts seem to have a focal point, as some researchers take a softer approach on the interdependency between OI and IP rights[2]. According to Guellec and la Potterie (2007)[3] patents, are a double-edged sword in regard to the diffusion of knowledge. Filing a patent request necessitates a clear description of the invention, which becomes publicly available after the request is filed. Thus, patenting brings company secrets into the public domain and creates a “cards on the table” situation, where the level of technological progress is made clearer and informational asymmetries are avoided. This creates an environment, which motivates entities to collaborate and enter into contractual relationships with each other (either to exploit or circumvent the technology, protected by the patent). On the other hand, patents restrict the free flow of knowledge, since third parties have to make financial contributions in order to profit from the patented invention. This characteristic of patents represents the so called “necessary evil”, which gives innovators protection from free-riders and imitators, and provides them with the opportunity to capture value from their own ideas. Thus, patents serve as an incentive for innovation and are in advantage for the advancement of technology. However, patents may sometimes be abused, and used in monopolistic practices, such as patent thickets or patent fencing. The dual-character of this legal tool is referred to as the openness paradox. The concept is the topic of various research[4] and is narrowed down to the clash between the need to share and protect knowledge simultaneously in order to boost innovation.

With an appropriate IP policy in place, IP can become the currency of Open Innovation[5]. It can serve as an incentive for firms to negotiate, create collaborative projects and enter into contractual relationships. Patents enable firms to more easily “spot” foreign assets which might be useful for their own innovation development process. Patents are also seen as a convenient tool for the transfer of the aforesaid intellectual capital (either by transferring patent ownership rights or by reaching a licensing agreement for usage i.e.) in a legally certain and timely manner[6]. IP has also provided key leverage for newborn start-up companies, which have close to no manufacturing or financial capabilities and lack distribution channels, but have cutting-edge technology, desperately sought for in a specific commercial sector.



[1] Pénin J., Hussler C., Burger-Helmchen T., New shapes and new stakes: a portrait of open innovation as a promising phenomenon, Journal of Innovation Economics & Management, p. 11-29

[2] De Laat, 2005; von Hippel and von Krogh, 2003. These authors stress that IPR should not transfer control to a single owner but should be similar to “copyleft” licensing, seen in the open source community.

[3] Guellec D, la Potterie B, (2007) The Economics of the European Patent System: IP Policy for Innovation and Competition, Oxford Scholarship Online, p.8

[4] Stefan I., Bengtsson L., Appropriability mechanisms, openness and firm performance

https://www.diva-portal.org/smash/get/diva2:772172/FULLTEXT01.pdf

[5] Alexy O, Criscuolo P, Salter A (2009) Does IP strategy have to cripple open innovation? MIT Sloan Management Review 51(1):70–77

[6] Graham S., Mowery D., Intellectual Property Rights in the Software Industry: Implications for Open Innovation (2006), p.185: “...IP protection creates a platform for the transfer of knowledge assets...”