Managing Unsolicited Idea Submission Risk for Open Innovation | Practical Law

Managing Unsolicited Idea Submission Risk for Open Innovation | Practical Law

Many companies have adopted an open innovation model to increase the effectiveness of their innovation process and may acquire intellectual property from other entities. Unsolicited idea submissions from third parties concerning different areas of the company's business may be one aspect of such an open innovation model. However, without proper policies and safeguards in place concerning unsolicited idea submissions, the company may find itself subject to legal claims by the submitter that may hamper many of the company's own ongoing or future developments.

Managing Unsolicited Idea Submission Risk for Open Innovation

Practical Law Article 5-549-7865 (Approx. 4 pages)

Managing Unsolicited Idea Submission Risk for Open Innovation

by Practical Law Intellectual Property and Technology
Published on 26 Nov 2013 • USA (National/Federal)
Many companies have adopted an open innovation model to increase the effectiveness of their innovation process and may acquire intellectual property from other entities. Unsolicited idea submissions from third parties concerning different areas of the company's business may be one aspect of such an open innovation model. However, without proper policies and safeguards in place concerning unsolicited idea submissions, the company may find itself subject to legal claims by the submitter that may hamper many of the company's own ongoing or future developments.
Many companies receive unsolicited idea submissions from third parties concerning different aspects of the company's business. These submissions may include ideas for new:
  • Products or services.
  • Advertising campaigns.
  • Trademarks.
  • Books and movies.
Different companies have different approaches to unsolicited ideas that depend on many factors and the industry in which the company operates. In some industries, for example, media and entertainment, companies commonly refuse to accept any unsolicited ideas. Other companies only accept unsolicited ideas that are the subject of an issued patent or at least a published patent application.
All companies, in particular those that have their own research and development activity, should consider their policy for receiving any unsolicited idea from a third party. In many situations, the ideas that are new and useful to a particular company are typically generated by any or all of the following:
  • The company's internal scientific and technical staff.
  • Consultants specifically hired by the company to participate in certain research and development activities.
  • Joint development activities pursued based on formal joint development agreements.
  • Business and brand development and marketing personnel.
As a result, many unsolicited ideas are of little or no value to the company because they may:
  • Have already been known to or developed by the company and its consultants or partners.
  • Not be protectable by a patent.
Even though it is unlikely that any valuable ideas will be provided by third-party submissions:
  • In certain industries there may be opportunities for a company to expand its innovation pipeline by considering third-party unsolicited idea submissions.
  • It may be prudent to consider those ideas to potentially obtain an advantage over the competition.
  • There is the possibility that a valuable product idea may come from an unsolicited third-party idea submission.
  • Many companies view third-party idea submissions as part of their open innovation culture.
  • Reviewing unsolicited ideas may help companies maintain good customer relations.
However, companies should consider the risk that may arise from considering unsolicited ideas. For example, if the company mishandles unsolicited ideas, it can be liable to the submitter based on:
  • The submitter's property right in the idea and the claim that the company misappropriated that right by implementing the same or a similar idea.
  • A quasi-contract where the submitter claims the company was unjustly enriched by exploiting the idea without compensating the submitter.
  • An express or implied contract between the parties where the submitter claims the company agreed to accept and exploit the submission in exchange for compensating the submitter.
Where the company decides that there is value in reviewing these submissions, the company should minimize its risk by taking appropriate precautions to minimize misunderstanding and potential claims by the submitter against the company recipient. For example, the company may consider the following procedures for handling unsolicited idea submissions:
  • The submitter is:
    • instructed to submit in writing a brief non-confidential description of the idea without any explanation of how it accomplishes the results; and
    • cautioned against disclosing any information considered confidential or proprietary.
  • The company does not internally circulate any unsolicited idea until the submitter executes an approved agreement (see Standard Document, Unsolicited Idea Submission Response Letter Agreement).
  • The company only reviews ideas that are covered by an issued US patent or, at the least, a published US patent application.
  • The company has personnel separate from the technical staff engaged in the company's ongoing research and development to:
    • initially review the unsolicited idea after the appropriate agreement has been signed; and
    • determine whether the unsolicited idea merits the risk of additional evaluation by a larger or different audience, such as members of the company's technical staff.
The company should avoid accepting any confidential information concerning the unsolicited idea except in unusual circumstances. Confidential arrangements may create unnecessary obligations or other limitations concerning the company's own technology advances or improvements. This may be especially problematic for information related to the company's areas of active research or development.