Ownership unbound: Reinventing intellectual property in the open innovation age

• The complexity (and openness) of evolving innovation models. In parallel, organizations are increasingly innovating in fundamentally different ways. For instance, open innovation models encourage a diverse set of collaborators (ranging from academia to technology providers to competitors) to co-create content, products, and ideas.² Despite the fact that these models represent a source of value, many organizations are deterred from them by IP concerns, as 40% of the respondents in a joint 2023 survey conducted by Deloitte and Fast Company cited the desire to protect IP as a key challenge.³ Increased collaboration among parties, coupled with greater competition from technology-assisted creation, can make it more challenging than ever to carve out and preserve value.
• The uncertain state of regulation and legal precedents. The rapidly evolving landscape of technology and innovation has outpaced the development of clear regulatory frameworks and legal precedents, leaving IP (and its protection) in a state of flux.⁴ As emerging technologies continue to challenge traditional IP boundaries, the lack of consistent global regulations and case law creates uncertainty for organizations—and creators. This legal ambiguity not only complicates the enforcement of protection rights but can also pose significant risks for organizations trying to navigate the complexities of a digital economy.
• The rise of hyper-personalization. As customers increasingly expect customized and tailored experiences, their demands for unique products and services are becoming more pronounced, putting pressure on organizations to innovate and capture value with unprecedented speed and precision to distinguish themselves in a highly competitive market.⁵ Personalization is likely no longer optional but a critical part of business strategy. Customers often seek personalized interactions that go beyond generic offerings, wanting brands to understand and anticipate their specific preferences, leading to enhanced customer satisfaction and driving long-term loyalty.⁶

Taken together, these shifts do not constitute a mere evolution, but rather a revolution that can challenge the core principles of IP protection. They are sparking new complexities—and opportunities—across the innovation and IP landscape. Are traditional approaches equipped to withstand the disruptive forces reshaping industries, or should organizations rethink the very concept of ownership in the digital age?

Cracks in the foundation: Key factors threatening legacy IP models

While the new era of ownership and value creation may seem daunting, organizations have several strategies and practical tactics at their fingertips to capitalize on these shifts. To shed light on these opportunities, we examine five factors impacting legacy IP approaches, the way organizations are working to remain competitive under these complexities, and IP strategies organizations are employing to keep pace with this rapidly evolving landscape.

Factor 1: Technological acceleration is shrinking the window for monetizing protected IP

Technology innovation and adoption cycles are faster than ever before,⁷ shrinking from decades to years, and now, to months (and in some instances even days). Innovations that once held a competitive advantage for years now face swift replication and adaptation by competitors, often also occurring within months.⁸ As a result, the exclusive window during which an organization can capitalize on its protected IP has become increasingly narrow. Businesses have far less time to develop nontraditional approaches to protecting their assets, products, and solutions.⁹

However, just as technology acceleration drives new complexities, it can also present opportunities for detecting IP infringements more quickly, uncovering market trends and gaps, and assisting in the optimization of IP portfolios to maximize value. This can enable organizations to quickly address potential infringements, helping to reduce financial losses and preventing reputational damage. It can also allow organizations to optimize the management of broader IP portfolios by identifying underutilized assets and potential licensing opportunities. For instance, Amazon now deploys AI to combat the sale of imitation goods on its platforms by scanning billions of product listings to detect counterfeit items.¹⁰ Doing so helps protect brands’ IP while simultaneously enhancing consumer trust in Amazon’s marketplace.

In another example, Patsnap—a global company that provides AI-powered IP and research and development intelligence—uses advanced algorithms to analyze vast amounts of IP data to better uncover emerging market opportunities and potential risk areas in patent development. This can drive strategic growth by uncovering new revenue streams and increasing the efficiency of IP management.¹¹ Similarly, other providers like PatentSight look for trends in market and competitor patent data to build an evaluation of a patent’s market potential.¹²

Factor 2: Open innovation requires different models for tracking and sharing value

Open innovation can encourage the sharing of ideas, resources, and technologies across organizational boundaries, fostering a collaborative environment that accelerates innovation and problem-solving.¹³ It can also have significant financial benefits; an S&P Global Market Intelligence and Harvard Business School study shows that using open-source software has saved companies almost US$9 trillion in development costs.¹⁴

However, this decentralized approach can complicate traditional IP protection by introducing multiple stakeholders, including internal and external entities (from academia, open-source forums, startups, and users to workers across all levels and even competitors) who ultimately contribute to the development of products and services. Determining ownership and managing IP rights in such a distributed innovation ecosystem can be complex, as these models often necessitate a delicate balance between collaboration and competitive advantage. And while they contribute to innovation, they can also raise questions of ownership and revenue sharing, challenging more traditional IP structures, which rely on clear lines of ownership and centralized control of assets.¹⁵

Some organizations are taking steps to maximize the advantage of these open innovation models, while protecting their business interests and the commercial viability of innovations that are co-created with partners or open-source models, including:

• Promoting a versatile subscription model that embraces open source. With this approach, organizations can allow for limited commercial use across an ecosystem, such as making their IP freely available to use and build upon up to a certain usage threshold or offering standard versions for free while requiring payment for proprietary versions. In the threshold model, organizations should monitor usage to identify instances of surpassing the usage threshold, allowing organizations to employ a flexible subscription approach to monetize their contributions. For example, Meta offers a community license for Llama 2, an open-access large language model, and allows people to use it for commercial purposes. Once a product using Llama 2 surpasses 700 million monthly users, the organization must pay for a license.¹⁶
• Pooling resources through cross-industry consortiums. By participating in open-source communities, organizations can leverage external innovation, accelerate product development, and reduce research and development costs.¹⁷ However, to protect their IP and maintain a competitive edge, leaders should strategically decide which parts of their technology to open-source while keeping critical innovations proprietary. In one example, Mayo Clinic Platform and Techcyte are collaborating on an open-source, AI-driven digital pathology platform.¹⁸ This open-source example is noteworthy given the privacy, collaboration, and innovation it’s designed to enable with other health care organizations (and potentially competitors), sharing data to develop innovative pathology models and processes while retaining control over their most valuable IP assets.

Factor 3: Globalization and digitization require navigation across complex international jurisdictions

While global diffusion of technology and the democratization of innovation have made ideation and innovation even more accessible, they also represent challenges with respect to jurisdictions and protections.¹⁹ Advanced digital technologies are available anywhere to almost everyone, making developing and altering IP easier regardless of whether the creator has proper authorization or adheres to compensation agreements. Globally, enforcement can be incredibly complicated as IP laws have often not yet caught up with technological advancements—and if they have, they typically vary among jurisdictions, leading to legal ambiguities and enforcement gaps.

Organizations should balance the need to monitor the vast digital landscape with the imperative to create a cohesive, adaptable, and globally harmonized IP system to ensure that creators and innovators are adequately protected, all while fostering an environment of cross-border collaboration and technological advancement.

Some organizations are taking steps to better manage and enforce their IP strategies across the globe, including:

• Developing a comprehensive global IP management strategy. Organizations can expand their IP strategies to encompass international markets by registering patents, trademarks, and copyrights in key regions, leveraging international legal frameworks like the World Intellectual Property Organization.²⁰ For example, in an effort to protect its innovations, such as smartphones, semiconductors, and chips, Samsung strategically expanded its IP portfolio on a global scale by engaging as one of the top IP filers across a number of key markets, including the United States, Europe, and China.²¹
• Investing in advanced digital rights management (DRM) solutions. As digital content proliferates across various platforms, ensuring the protection of IP against unauthorized use should be essential. Organizations can invest in sophisticated DRM solutions that prevent unauthorized copying and distribution while offering real-time tracking and usage analytics that help enforce licensing agreements, monitor global content access, and control digital asset distribution across multiple channels. PallyCon, a DRM service tailored for protecting premium video content, deploys “forensic watermarks” to help organizations track product usage and minimize revenue losses from piracy and unauthorized distributions.²²

Factor 4: The ambiguity of ownership and usage in fostering a trustworthy IP landscape

Together, decentralized technologies and open or collaborative innovation models can raise questions regarding the actual nature of ownership and the scope of protection. Given the speed of technology advancement, regulatory standards often cannot keep up with these shifts. These modes of invention disrupt traditional notions of authorship, data ownership, and creation, and are testing the limits of copyright and patent law.²³ For example, when an image generation tool is trained using the copyrighted works of other artists, is the resulting image a copyright violation?

Regulatory agencies are scrambling to put parameters around who owns what innovation²⁴ and thus who can monetize it, who can access it, and who should be compensated.²⁵ As more content and innovations are generated through collaborative efforts, often involving AI or multiple contributions from different jurisdictions, determining clear ownership rights becomes increasingly complex. This uncertainty can erode trust between stakeholders, as the lack of transparent guidelines and legal clarity over who owns what, and how it can be used, leaves room for disputes and potential misuse.

Similarly, because of the prolific creation supported by emerging technologies, it can be difficult to establish a single source of truth for content to preserve brand integrity. Additionally, the more content is altered, the more difficult it can be to identify what originates from the brand and what amounts to an unauthorized replica. This lack of clarity can erode trust with customers and partners, who may question the authenticity and legitimacy of AI-generated content, products, and services.

To navigate these challenges and foster a trustworthy IP landscape, some organizations are implementing robust IP management strategies to address the unique aspects of AI and digital collaboration, including approaches to embed trust directly into the content development process. One way this objective can be achieved is through content credentials; that is, a verifiable label attached to images, videos, fonts, and audio files. Already, organizations like Microsoft and OpenAI are committed to designing a file label standard (and alterations tracking) for digital assets produced on their platforms.²⁶

Factor 5: The elevated importance of data for competitive positioning

In today’s innovation-driven economy, data has become a linchpin of competitive advantage, reshaping business models and continuing to challenge conventional IP frameworks. As organizations adopt data-centric strategies to drive growth, optimize operations, and deliver highly personalized customer experiences, the lines defining IP are becoming complex as these same organizations seek to form new revenue streams.²⁷ Proprietary algorithms, unique data sets, and AI-generated insights are essential digital IP, and therefore, they’re now often as critical as traditional patents and trademarks. This shift is compelling organizations to reconsider their IP and data strategies, regarding ownership, attribution, and the appropriate mechanisms for incentivizing and rewarding data contributors.²⁸

Like open innovation, data sharing and usage require a balancing act. The shift in focus demands robust strategies to safeguard data assets and navigate the intricate intersection of IP law and data usage rights to fully capitalize on data’s value. One way that organizations are addressing this balance is through the deployment of federated data models that allow organizations to collaborate and share insights without centralizing data, thereby maintaining control and security over proprietary information.²⁹ Federated data models work by abstracting anonymized data to monetize insights without compromising the more sensitive source data.³⁰

For example, biopharmaceutical company Boehringer Ingelheim has used this approach to advance genomic research, training AI algorithms across multiple decentralized data sources without transferring the data itself to protect the underlying biomedical data. Additionally, financial institutions have explored data trusts for similar use, and social media companies have built unique business models around selling intelligence based on obfuscated user data—each aimed at improving predictive capabilities and creating more personalized services while safeguarding sensitive data at the same time. While enforcing patents may become more difficult in an open digital economy, protecting trade secrets may be a viable alternative supported by such federated models, if businesses can properly (with legal standing) express the sensitivity of the underlying data before sharing it.³¹

While these five factors reflect considerable changes, leaders who proactively plan for and activate new models to capitalize on these shifts may be better poised to be dominant in markets that are being reshaped for the next era of innovation.

Evolution of IP business models: Adapting to the future of innovation

The evolution of IP should not be ignored. The future of IP is expected to be defined by its ability to balance protection with the need for openness and collaboration, shaping an era of innovation and economic growth. To help stay competitive in this environment, organizations may need to consider evolving their IP strategies. This revolution should be rooted in flexibility, global harmonization, and the integration of cutting-edge technologies, ensuring that IP not only protects innovation but also fuels it.

While these challenges can manifest differently across markets, executive teams across industries and business types should consider the following:

• Unlock value through the strategic monetization of IP in the age of open innovation. As IP frameworks evolve, organizations should rethink traditional monetization models to align with the principles of open innovation, emphasizing collaboration and shared value. Prime examples of this strategy in action are GitHub or Open Core Model (via MySQL). Both platforms have successfully leveraged open-source contributions while monetizing their products through tiered subscription models. These models offer incremental value and change based on usage or advanced features, aligning profitability with the collaborative spirit of open innovation.³² These monetization strategies not only support open innovation but also help drive substantial revenue growth, transforming IP from a protective asset into a dynamic source of value creation. As innovation scales, so does the financial return, reinforcing the symbiotic relationship between innovation and revenue. To get started, ask yourself: How can your organization harness evolving business models to maximize innovation, IP protection, and long-term profitability?
  
• Reinforce brand trust—and loyalty—through enhanced IP stewardship. The link between brand trust and IP management is crucial for building and sustaining customer loyalty. For example, Apple’s IP protection strategy not only safeguards its innovations but also reinforces consumer trust in the brand’s quality and authenticity.³³ Statistically, brands that effectively manage their IP and reinforce trust with consumers are better positioned to charge premium prices and maintain customer loyalty, even in competitive markets, elevating brand perception and securing long-term customer relationships while driving value and revenue growth.³⁴ To get started, ask yourself: What can your organization do to navigate intense downward pricing pressure and maintain customer loyalty in increasingly fickle markets?
• Strengthen brand resilience through market-simulated contingency plans. As many organizations take a “wait and see” approach to IP regulation domestically and internationally, leadership teams can prepare for a variety of scenarios that could influence short- and long-term positioning and strategic choices. For instance, during the COVID-19 pandemic, many businesses that had pre-established contingency plans were better equipped to adapt to sudden changes, such as supply chain disruptions and shifts in consumer behavior.³⁵ Whenever the next slate of AI regulatory guidance (and associated implications) becomes clearer, the rapid pace of technological change and market trends will likely have far-reaching influences on broader IP-based business models. To get started, ask yourself: How can your organization prepare for changes to the regulatory status quo?
  

As organizations stand at a pivotal moment for both technological and societal evolution, the role of IP is crucial. Traditional models that once safeguarded innovation now face the challenge of adapting to a world defined by open collaboration, relentless technological advancement, and unpredictable market shifts. Reinforcing IP integrity, embracing new monetization strategies, and preparing for the unexpected are not just options: They’re imperative for survival and leadership in this era. The future of innovation depends on how organizations redefine and protect what they create today.