Why You Should ID That IP Early

July 8, 2008

Nifty article received from McKinsey recently:

The Internet and new social-networking technologies are allowing companies and their customers to interact with unprecedented levels of richness. Some leading organizations are using this opportunity to draw customers into the heart of the product-development process.

Was thinking about this article today as I was reviewing some docs for a client. I do a lot of tech licensing work, and one of the big issues that always comes up is how to deal with licensee innovation. Before your eyes glaze over, suffice it to say that unlike some other countries, China’s legal system makes it difficult to automatically transfer certain kinds of licensee innovations – they are owned by the licensee by default and must be affirmatively assigned to the licensor. In the case of a patent or patentable invention, there is a government registration process to deal with as well.

OK, so why is this important? As the McKinsey article discusses, there is a lot more interaction going on these days, not only between licensors and licensees, but in the B-to-C relationship as well. That’s all fine and dandy for you marketing and business folks, but we poor IP lawyers are the ones that have to figure out who owns what at the end of the day. Sometimes this is not easy.

One thing I have seen recently from some multinationals is the development of pro forma documents that set forth in detail who owns what, documents that are put in front of customers, not just licensees or third party service providers, whenever such creative interaction goes on. This could take the form of a general waiver or something similar. We’ve seen this with some clients that conduct contests as well – invent the best widget (and sign it over to the company), and you win a cash prize.

The tough part is dealing with those pesky patents, though. That simple waiver just doesn’t work so well over here, so we’ve had to help companies develop slightly more intensive procedures for dealing with the backend process of IP transfer between parties. Yes, it’s a little more painful, but you certainly do not want to develop a whole new product line based on an idea submitted by a customer only to find out five years later that the patent was never legally assigned to the company – that can be a real bummer, let me tell you.