EOLE 2016 : The Legal Side of Open Innovation

The 2016 edition of the European Open Source & free software Law Event (EOLE), organized during the Paris Open Source Summit on November 15th, was dedicated to Open Innovation and to the related legal questions. 

Once attributed exclusively to the R&D department, innovation is now opened up to other departments within a company but also to the entire society. Open Innovation overturns the traditional conception of innovation. Introduced by Henry Chesbrough in 2003, Open Innovation refers to the capacity of companies to benefit from external contributions. Innovation is not reduced anymore to only one organization: it refers to the ability to invent or create better with and through others. Open Innovation allows us to take full advantage of external forces: in this context, stakeholders of the ecosystem are improving their capabilities, benefiting from the creativity and intelligence of everyone. Open Innovation also promotes breaking down barriers within organizations themselves, and the end of compartmentalized innovation.

Open Innovation is defined by this opening trend, which is increasingly adopted by organizations of all types. This trend is the result of globalization and has witnessed a strong acceleration with the development of digital technology and the widespread use of the Internet. The increase of production rate and the shrinking of products’ life cycles also contributed to the development of Open Innovation.

Open Innovation provides a multitude of benefits for companies: strengthening relationships with customers or community, gaining access to new markets, growth acceleration, outsourcing and distribution of risks linked to innovation, improvement of their brand image…

Open Innovation raises a number of legal questions, especially in terms of intellectual property management, and is therefore of particular interest to lawyers. Those lawyers could contribute to the adoption of a specific strategy inside their organization to facilitate, or even make systematic the implementation of Open Innovation.

The 8th edition of EOLE focused on the position adopted by lawyers on Open Innovation, and to the role of open models in this dynamic. The speakers first discussed the links between Open Data and innovation. Despite Open Data being a popular topic, it is often reduced to public administrations, even though it is an older and broader topic. Besides, if there are indeed strong links between Open Data and innovation, this opening must go along with a formalized strategy to enable innovation.

Finally, speakers also dealt with two topics which are not discussed enough when it comes to Open Innovation strategies: interfaces and infrastructures. Yet, both topics are highly relevant since they support innovation by getting people to work together.

Open Data & Innovation 

Open Data falls within an approach of openness and transparency. Even if an Open Data policy can be conducted in the private sector just as well as the public sector, this term is often used to refer to the availability of public data. European PSI Directives are placing Member States under reporting obligations in terms of the re-use of public sector information. In France, all the legislation is based on the CADA law of 1978 and seeks to extend the availabilty of public data.

Nevertheless, it turns out that administration in charge are facing difficulties to respect this obligation. Loïck Gerard identified four points that can explain the delay of Belgium in opening their data: its federal nature, the lack of political interest, the lack of guidelines and the lack of unification.

As Belgium is a federal state, the transposition of PSI directives falls within the jurisduction of several legislators, resulting in as many different legislations. The lack of political interest can be explained by the fact that public administrations don’t yet see the value of Open Data. Besides that, they suffer from a lack of guidance and support: a lot of them don’t really know what Open Data is and no one there can teach them. Finally, Belgium suffers from a lack of unification: there is a lot of disparities and there are several portals – even if the creation of a federal portal is being discussed. To access all data published by Belgian public administrations, you have to use multiple portals, making it more difficult to access. 

If the link between Open Data and innovation seems pretty obvious, we should not fall into the trap thinking that opening data will instantly entail innovation: making data available is not enough to, as if by magic, create innovation. Public administrations need to stop thinking in terms of number of datasets available, but to think about the ecosystem which is created, and to the quality of this data, which need to be up to date and useful. Barcelona can be taken here as an example: it managed to create an ecosystem within which 55 companies are actually using data that has been released. The “Smart City Campus – 22@” has been created, as a way to promote the development of innovations linked to Smart Cities.

Legal questions also arise with Open Data: is it possible to protect data which is being released ? Even though data is not protected by itself, datasets are protected by a sui generis right: the database right. A particular license has been created to match the specificites of databases: the ODbL (Open Database License). This license transposes the copyleft notion and ensures that every derivated database is accessible, editable and reusable by everyone.

Finally, it should be noted that the balance of power is in favor of public administrations. With free software, individuals — or small groups of individuals — can make a massive impact on the community. But with Open Data it is different. Collecting data require a massive effort, so you can’t do it  

Unlike free software (Open Source), where individuals — or small groups of individuals — can have a significant impact on the community, with Open Data you need a massive amount of data to be aggregated. And a single person can’t produce the effort needed to collect this data! Public administrations must take into consideration the role they have to play. 

Strategy

How to promote innovation within an organization, thanks to an Open Innovation strategy? With an opening strategy, contractual relations are increasing, as a natural consequence of the increasing number of collaborations. Since Open Innovation is a recurring occurrence, the implementation of an Open Innovation strategy needs to include an appropriate legal framework, allowing to think ahead this collaboration.

Legal aspects must have been considered in order not to hinder openness and collaboration. It can be achieved through the creation of a legal toolbox, allowing to gather all the documents, contract templates, recommendation, etc. which are helpful on a day-to-day basis for all the members of the organization. It would also be useful, in terms of contracts concluded with partners, to systematize clauses / terms allowing the implementation of Open Data, Open Source, etc.

Thus, the management of intellectual property rights has to be totally redesigned: with Open Innovation, intellectual property should not be seen anymore only as a protection tool. From now on, the company strategy turns from protection to valuation of its immaterial assets. 

It is now essential not to reduce innovation to the only intellectual property that it produces. Organizations should not only measure their performance just by looking at the number and value of patents registered. An indicator exclusively based on patents is not relevant, especially in a context of Open Innovation. However, that does not mean that patents should not be taken into consideration in the collaboration strategy, since they can lead to the conclusion of specific licenses for example.

Besides, an Open Innovation strategy needs to be followed by clear and complementary strategies in terms of Open Data, Open Source, Open Hardware, Open APIs, etc. There are a lot of possible combinations between those different models, but all of them require a certain amount of letting go. This attitude is the only way to favor contribution of outsiders and consequently, evolution of state of the art and collective innovation.

Open interfaces et innovation

The term “Open Interfaces” refers to the transposition of the Open Source model to interfaces. An interface can be broadly defined as a point where two systems, subjects or organizations meet and interact. In terms of computing, it mainly refers to APIs (Application Program Interfaces), formats and protocols. An Open Innovation mindset is collaborative by its very nature, thus these interfaces have to be opened to allow interoperability. The availability of interfaces of a product guarantees its interoperability and reduces lock-in effects. In this regard, interoperability is one of the major issue in the area of IoT (Internet of Things): one can assume that IoT will not be capable of developing without a strong interoperability between software and hardware. Without interoperability, products would not be able to reinforce each other and the market would shut down.

Europe is looking at interoperability, as indicated by the publication of the INTILA license. This license supports interoperability and gives confidence by providing a legal framework to specifications which have not been formalized / made official. 

This idea is very prominent in the area of Hardware, and especially Open Hardware (or Open Source Hardware). Open Hardware is a material with freely accessible specifications, so that anybody can study, modify, build and distribute those specifications or the material based on them. The publication of technical specifications of a product — moreover in a clear and documented form — strengthen its interoperability.

Sibelga, the manager of the electricity and gas network in Brussels, has launched the PlugElec system. This example illustrates the implementation of an Open Hardware strategy with an objective of interoperability development. Since electric board meters were too expansive to remove and to replace, Sibelga decided to develop specifications of a new board. Within this Open Hardware initiative, Sibelga got together with every player of the ecosystem in order to write the technical specifications for the new PugElec board. To widely spread this documentation, Sibelga placed these technical specifications under a specific Open Hardware license. Since no actual Open Hardware license was fitting their criterias — especially a strong copyleft effect — Sibelga decided to write a specific license. This license is available on their website in english, french and dutsch: http://www.sibelga.be/openhardware/fr. With this process, Sibelga strengthens vertical interoperability, i.e. the capacity for other players of the ecosystem to innovate around this new board meter, by developing compatible products or systems. The goal was to create a new standard and to reduce the production cost of the board.

Contracts can also be seen as an interface: they are indeed an interface between two persons. Could they also be qualified as an interface supporting innovation ? Free licenses, for example, are contracts of assignment of intellectual property rights which give rights to users and enable innovation. 

Infrastructures and innovation 

How do organizational structures sustain collaborative innovation within free and open source projects?

Organizations facing this situation have two options : create an internal platform, integrated / built-in to the organization itself, or use an external platform. Their choice depend on the level of trust of the ecosystem’s stakeholders. Organizations that benefit from a high level of trust — such as Universities — can create an internal platform, whereas others would more likely use an external structure.

The relationship between the company and the community which will be created around an Open Innovation project must also be considered. Companies should not try to control the community, but should try to motivate it. This incentive could be created by the organization of events such as hackathons, meetups… which can create innovation by getting people to work with a broader environment than the one they are used to interact with. To that end, it is important to think ahead to the legal questions linked to those events and especially to intellectual property rights agreements related to the participants’ contributions. 

It is also important to ensure that there are no barriers to entry which would prevent new players from joining the project. This is especially true when the project is quite old: then, you need to make the documentation available for the players, in order to allow them to have the same level of knowledge, despite their limited experience in the project. The LibreOffice project, led by The Document Foundation and represented by Italo Vignoli, can be seen as an example of transparency. The whole documentation linked to the project is available online (documentation of the product but also documentation linked to the development process : guidelines to write the code, tests, etc.). 

The Software Freedom Conservancy structure, whose purpose is the development and promote of Free and Open Source Software projects, has two interesting characteristics that could explain its success. First, the structure decided to be a non-profit organization (charitable entity). Secondly, they have a sort of “incubator style”: projects can join Conservancy but can also leave very easily.