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Crowdsourcing: How is intellectual property important?

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  • Jul 01, 2021
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4 min read

Crowdsourcing can currently be defined as “the practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people and especially from the online community rather than from traditional employees or suppliers” (Merriam Webster Dictionary).  However, the idea of crowdsourcing itself is not new and existed well before the age of the internet.  Here, we consider crowdsourcing and its merits and risks in the context of intellectual property. 

Why use crowdsourcing?

Crowdsourcing has the potential to open up new ideas and possibilities by harnessing ideas which would not otherwise have been realised.  In principle, crowdsourcing can facilitate results via outside-of-the box thinking and by increasing the number of minds applying themselves to a particular problem or challenge. 

What are some examples of crowdsourcing?

Crowdsourcing strategies are used in a variety of technical and non-technical fields. 

One example of crowdsourcing that pre-dates the internet era is the design of the Sydney Opera House.  The winning design for this iconic landmark, by Danish architect Jørn Utzon, was chosen from an international competition in the mid-1950s.  

An example of an internet-based crowdsourcing site is the Lego Ideas Platform, which is used as a community for fans to share their own Lego creations.  The most popular ideas are assessed for potential production into new Lego sets to be sold to the public. 

Various online crowdsourcing platforms exist for logos, brand names, images, product redesign, software solutions, as well as problem-solving challenges.  Global companies are using crowdsourcing platforms seeking new innovations in technical fields including pharmaceuticals, clean tech and engineering to mention but a few.

How is intellectual property relevant?

Intellectual property rights present an opportunity to protect valuable innovations and creations and in turn realise value through exclusive rights with a defined scope and period of time.  In the hands of third parties, intellectual property rights pose a barrier and risk to new market entrants.  Therefore, it is important to consider:

  • Patent law – when solutions to technical problems are sought via crowdsourcing
  • Trade mark law – when crowdsourcing is used to come up with new product names, logos or brands
  • Design law – with respect to the visual appearance of new and distinctive products
  • Copyright law – with respect to artistic works such as drawings and literary works (any original text)

Managing intellectual property when crowdsourcing ideas

Crowdsourcing might raise issues regarding ownership of the resultant intellectual property.  Ownership of rights to crowdsourced intellectual property will generally not be governed by the usual laws which relate to contracts of employment – except, perhaps, if a company runs an internal crowdsourcing exercise in which only its own employees participate.  

Express and clear contractual terms (such as in terms and conditions which contributors are required to actively acknowledge) dealing with intellectual property ownership and licensing/use are therefore critical, just as they would be when engaging any third party contractor/consultant.  Payment for a winning response can be arranged as consideration for an assignment by agreement of all of the associated intellectual property rights.  An alternative mechanism for the formal legal transfer of the relevant intellectual property rights is by way of a deed, which does not require any consideration but does have other requirements. 

Novelty and inventive step are requirements for securing patent protection in Australia and virtually all other jurisdictions.  So, until a patent application is filed, it is prudent to avoid publishing too many (or, ideally, any) details of an invention (e.g. on a website).  If too much information is disclosed, this could later cause an invention to be ineligible for patent protection.  This is incredibly important, especially because some key jurisdictions have no grace period (Australia does have provisions protecting against self-disclosure within a specified period before a patent application’s filing date).  In this regard, we would recommend getting professional advice before making any disclosure.  

Also, it is important to be mindful of possible secret use issues associated with making commercial gain from an invention before the patent application is filed.  If the invention has been exploited commercially before the first patent application is filed, this could render the subsequently-filed patent invalid.  

In addition, it is worthwhile remembering that any information disclosed in a crowdsourcing context is available to competitors. 

A crowdsourced solution still needs the usual due diligence checks.  For instance, a granted patent confers an exclusive right to exploit the claimed invention (including but not limited to importing, using, making, selling or offering to sell a patented product or using a patented method), and to prevent others from doing so (via court proceedings).  However, the patent does not give the owner the right to exploit the invention without infringing other parties’ intellectual property rights or without obtaining any necessary regulatory approvals, so it is recommended to carry out relevant investigations to find out if exploiting the invention would infringe a patent belonging to somebody else (“Freedom to Operate”).  

Similarly, trade marks, registered designs and copyright also confer exclusive rights, so due diligence checks are needed to establish whether the proposed name or brand, design or appearance, or associated literature or artistic work might infringe the existing intellectual property rights of others.

Conclusion

Crowdsourcing has the ability to unlock ideas not previously considered, but it is not guaranteed to provide solutions. 

We recommend evaluating the potential benefits of crowdsourcing against the associated risks before proceeding.  Intellectual property can be the cornerstone of a business so it is critically important to take into account when developing a business strategy.  For advice, please contact Shelston IP. 

Authored by Serena White, DPhil and Duncan Longstaff