Intellectual property accounts for about 40% of the net asset value of all corporations in America.1 One clear method of extracting value from these assets is by entering the licensing market for trademarks and copyrights which, globally, involves $100 billion per year. But the potential of this market is not limited to traditional firms and for-profit enterprises. Companies specializing in collegiate-sports licensing have been helping colleges and universities maximize revenue through licensing deals. Given that they are institutions that specialize in the creation and cultivation of knowledge and expression, colleges and universities should naturally be attuned to the potential that exists in these intellectual property-related activities.
The rise of generic pharmaceuticals has resulted in large price reductions and numerous opportunities for large and small drug companies. Now, provisions in the new comprehensive health care law combined with a wave of patent expirations on major biologics are opening the door to companies interested in pursuing generic versions of brand-name biologics, known as follow-on biologics or biosimilars. Perhaps the best example is the case of Merck’s investment in and creation of a follow-on biologics unit, Merck BioVentures.
Whether you call it “crowdsourcing,”2 “open innovation,”3 or “the wisdom of crowds,”4 the collaborative approach to innovation is becoming a force. It is an increasingly common tactic employed by businesses, individual inventors, and government bodies. After having set aside any sense of paranoia about protecting their intellectual property rights, these leaders are turning to customers, competitors, and even the public at large for inspiration in solving a host of technological and design problems.
More often, firms turn to companies like IdeaWicket, NineSigma, and Napkin Labs, all of whom act as innovation “middlemen” by connecting seekers with solvers. The best-known of these entities is InnoCentive, a company founded within Eli Lilly in 2001 that became independent in 2005. InnoCentive strives to “help companies innovate better, to find the fastest path to solutions.”5 Firms that want to take advantage of InnoCentive’s services first post a project by constructing a detailed list of their goals. Then, InnoCentive’s community selects projects to “solve” from among those listed. The result can be hundreds of ideas for the firm’s technological or design problems.6 Prize money for the best ideas, which serves as an inducement for the problem solvers, ranges from $5,000 to $1 million.7 The solvers come from 175 countries. More than one third have doctorates.8
Dwayne Spradlin, president and chief executive of InnoCentive, says that, for many companies, embracing open innovation requires a large cultural shift.9 Two particular concerns are that companies that post information about their problems risk giving valuable information to competitors, or that a solver will devise a useful solution but refuse to hand it over to the organization that initially sought it.10 So far, neither concern has materialized.11 In fact, InnoCentive appears to have been remarkably successful. Giants like Procter & Gamble and even the United States government have turned to the InnoCentive community for help in solving their problems.
Given that intellectual property accounts for about 40% of the net asset value of all corporations in America,12 for-profit entities have frequently had to contend with intellectual property-related issues. However, non-profits with a connection to knowledge and ideas, such as museums, can also benefit tremendously from seriously considering their approach to intellectual property. These institutions are akin to the media companies, software firms, and biotechnology entities that have such strong interests in intellectual property in the for-profit context. Though it may seem counter-intuitive, an open intellectual property strategy may be more beneficial to museums than to for-profits in the information business, because the mission of cultural heritage organizations extends beyond revenue creation to include preserving and disseminating ideas, expression, and knowledge. The examples in this case study demonstrate how licensing and branding can benefit museums, licensees, and the public at large.
The stories of Research in Motion and Apple provide examples of the benefits of a smart intellectual property strategy, as well as the litigious nature of the smartphone industry. An increasingly crowded smartphone market is also raising the attractiveness of the patent-licensing business model employed by firms like Qualcomm and InterDigital.
Each year, the world produces about 7 million tons of coffee.13 Together, we drink 500 billion cups of coffee annually.14 The potential for profits to be derived from this massive coffee trade are obvious. The money to be gained (or lost) as a result of the intellectual property strategies employed by the multi-national coffee purchasers, and the coffee-producing countries that supply, them is less obvious. This case study examines the dispute over the right to use the term “Sidamo” in describing coffee products between the Government of Ethiopia and the coffee giant Starbucks.
The patenting of university research can be big business. In 2007, technology licensing revenues generated by the top ten universities alone accounted for nearly $1.5 billion.15 These impressive revenues were built upon a strong foundation of university-based research and development. The National Science Board reported that US academic institutions spent $48 billion on research and development in 2006, accounting for 33% of total research nationally.16 As the licensing-revenue numbers indicate, this laboratory research can resonate powerfully in our everyday lives. Large corporations like Google, Cirrus Logic, and Genentech have all based their products on university-licensed intellectual property.17
The Cohen-Boyer patents for recombinant DNA rank among the most revered and lucrative academic licenses in U.S. history. These licenses were issued on a non-exclusive, rather than the conventional exclusive, basis. Despite the impressive returns that it has generated, the Cohen-Boyer IP strategy of non-exclusive licensing pursued by Stanford and the University of California at San Francisco (UCSF) in the 1980s and 90s has generally not been replicated in large part by universities throughout the United States. Instead, exclusive licensing has become the norm throughout US research universities.18 This case study explores the incentive structures that characterize university settings through the lens of the Cohen-Boyer Patents.