BANGALORE, INDIA: As economic activity around the world continues to shift from the creation of physical products to the creation of intangible products, turning ideas into assets is one of the most critical functions for companies in today’s knowledge-based global economy.  Innovation has long been on CEOs’ agendas, but it is effective creation and management of intellectual property that holds the key to accelerating the pace of innovation.

The Internet has been a significant contributor to these changes, creating an infrastructure that enables work to flow to where it can best be performed, across geographies, cultures and time zones.

This globalization in turns forces us to re-examine how we compete, and more and more people realize that innovation is the single greatest driver of competitive advantage, productivity, economic growth and societal change.  To stimulate innovation, we must be able to foster a climate where new ideas can thrive. Open technologies enable collaboration on a broader scale than ever before, drawing upon the brightest and most creative minds across industry, government and academia.  From innovation, entirely new forms of business value are created, and entirely new industries and markets are born.

This trend has important implications for intellectual property.  In the old days, companies used to focus on developing proprietary solutions and used patents to exclude others from using the ideas.  Today, open technology standards as best embodied by the Internet are enabling new forms of collaboration and the emergence of entirely new business models where patents are instead shared to protect these open technologies.  As we move into the knowledge-based economy of the 21st century, a continuum of innovation has emerged, stretching from the old proprietary model to a more open and collaborative model.  

Organizations must endeavor to find the ideal balance along this continuum. The key for business is to know when to share your intellectual property, or parts of it, and when to keep it to yourself.  This can only be accomplished by considering intellectual property as an integral part of a business strategy, not just something that results from other activities.  As counter-intuitive as it might sound, this analysis could lead your business to consider sharing its intellectual property to jump-start a nascent industry or product category.  In which case, your intellectual property will form the basis of that new area, and participants can compete on the merits of their unique implementation. 

At IBM, we have adopted a balanced approach to intellectual property management by embracing both models - open collaborative innovation and proprietary innovation.  We do not only create intellectual property for our hardware, software and services businesses, but also share our intellectual property based on our business goals and objectives as well as the overall benefit to the public. 

Striking a balanced intellectual property approach requires us to strategically share our intellectual property to foster collaborative innovation and stimulate economic growth. IBM took such an approach when it pledged hundreds of patents to the open source community; the healthcare and educational fields, and to encourage environmentally-friendly manufacturing and development through the creation of an Eco-Patent Commons.

Similarly, governments around the world are examining where they are on this spectrum and how they can set the appropriate framework for innovation and competition -- policies that promote local innovation but also ensure that those local economies can participate in the global marketplace. Collaboration is central to improving and maintaining economic growth and competitiveness across a broad set of industries.  It’s also key to solving the toughest problems confronting society. 

Governments, working with the private sector, should encourage collaborative innovation and adapt their laws and policies, including intellectual property policies, to enable markets and people to engage in cross-organizational, cross-border, cross-disciplinary innovation.

IBM believes that strong, global, intellectual property systems encourage both collaborative and proprietary innovation.  But the strength of those systems depend on the quality they produce. Quality depends on granting patents only for ideas that embody genuine scientific progress and technological innovation.  incremental development often does not rise to the level of patent worthiness.  Therefore, intellectual property laws and policies require careful management and updating to encourageinnovation, while preventing over-protection that would work against the public interest.

Intellectual property is your strategic business asset that you should both guard and in which you should invest.  Investing intellectual property in the adoption of open standards and open source software solutions is demonstrably a viable business model which will expand and accelerate the innovation marketplace and knowledge economy.

Guruduth Banavar, Director, IBM India Research Laboratory