click here to agree managing intellectual property when crowdsourcing solutions

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Click Here to Agree: Managing Intellectual Property when Crowdsourcing Solutions In the journal: Business Horizons Download the article here

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Page 1: Click here to agree  managing intellectual property when crowdsourcing solutions

Click Here to Agree: Managing Intellectual Property when Crowdsourcing Solutions

In the journal:Business Horizons

Download the article here

Page 2: Click here to agree  managing intellectual property when crowdsourcing solutions

“The legal cornerstone of any crowdsourcing initiative is a carefully considered set of contractual terms and conditions” (de Beer et al 2017: 209)

Page 3: Click here to agree  managing intellectual property when crowdsourcing solutions

The Authors

Jeremy de BeerFaculty of Law, University of Ottawa

Ian P. McCarthyBeedie School of Business, Simon Fraser University

Adam SolimanFaculty of Law, University of Ottawa

Emily TreenBeedie School of Business, Simon Fraser University

This research was funded by the:

Page 4: Click here to agree  managing intellectual property when crowdsourcing solutions

Jeremy de Beer, Ian P. McCarthy, Adam Soliman and Emily TreenClick here to agree: Managing intellectual property when crowdsourcing solutions, in Business Horizons

Download the article here

The Research Paper

Page 5: Click here to agree  managing intellectual property when crowdsourcing solutions

● It crowdsourced the design of a logo for a its blog.

● Offered a €7,000 prize for the best design, but retained property rights for all the submissions.

● So, only one winner would benefit, yet all participants transfer ownership of their IP (the designs) to Moleskine

● Also, the terms and conditions of the crowdsourcing agreement were difficult to follow and understand.

How Moleskine Messed Up

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● The design community lashed out at Moleskine for what was perceived as profiteering and free riding on the IP of consumers.

● Moleskine argued:

○ that people didn’t have to participate in the contest; and

○ that many organizations use this approach to crowdsource IP

● This response prompted further backlash from the community and, eventually, an apology from Moleskine.

How Moleskine Messed Up

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● PhantomAlert crowdsources data about traffic conditions, road hazards, and traffic enforcement locations for a mobile app.

● PhantomAlert asserted claims against Waze who have a similar application.

● PhantomAlert successfully registered copyright ownership of its crowdsourced data, and alleged that Waze copied its proprietary points of interest data.

● On March 4, 2016, a California court ruled that PhantomAlert’s claim of copyright infringement could proceed,

The Case of PhantomAlert vs Waze

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Together these two examples demonstrate that organizations need to consider intellectual property related risks when sourcing solutions from a crowd.

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1. Without terms and conditions, organizations have, by default, no rights or liabilities in respect to crowdsourced content.

2. The greater an organization’s IP demands of a crowd, the less likely the crowd is inclined to participate in the crowdsourcing exercise.

3. A more relaxed legal approach to IP will attract more crowd participants, but likely comes with more legal risk.

Three IP-related risks when crowdsourcing solutions?

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Acquiring: the degree to which an organization seeks to acquire the IP rights of crowd solutions.

● Low: when an organization takes no measures to acquire any IP rights from a crowd.

● High: when an organization takes measures to fully and exclusively acquire all IP rights from a crowd.

Terms and conditions: Acquiring rights

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● Crowd participants may include content in their submissions that they themselves did not create or have used without appropriate authorization.

● This is known as: intellectual property contamination.

Why limit your liabilities when crowdsourcing?

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Limiting liabilities: the degree to which organizations seek to safeguard themselves from potential liabilities associated with crowdsourced solutions.

● Low: the organization takes no legal measures to limit its liabilities regarding contamination.

● High: the organization takes extensive measures to protect itself from any contamination risks that could accompany crowdsourcing solutions.

Limiting liabilities

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Limits liabilitiesLow High

High

Low

Acquirerights

Possesive

Seeks to acquire extensive IP rights but does little to protect against IP contamination (e.g., Ben and Jerry’s).

Persuasive

Seeks to acquire all IP rights and is concerned about IP contamination (e.g., Doritos).

Passive

Seeks to acquire limited IP rights and does little to protect against IP contamination (e.g., Threadless).

Prudent

Seeks to acquire limited IP rights but is concerned about protect against IP contamination (e.g., Nintendo).

Legal approaches to crowdsourcing intellectual property (de Beer et al 2017)

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Approach tomanagingcrowdsourced IP

Exampleorganizationand campaign

Presentation ofterms andconditions

Summary of the IPmanagement approach

Passive Threadless - Click-wrap- Dense terms- Well-structured- Includes payment schedule- Word count = 7,563

- Rights acquired by non-exclusive license- Management of liabilities relies on norms-based community enforcement of IP rights

Possessive Ben & Jerry’sflavor submissionsportal

- Browse-wrap- Easy to read and user-friendly- Word count = 722

- Rights acquired by transferwith no management of liabilities

Persuasive Doritos—Crashthe Super Bowl

- Click-wrap- Long, paragraph-sized clauses- Uppercase font that impairs readability- Word count = 9,071

- Rights acquired by transfers for all semifinalists and by non-exclusive license for all other participants- No liability for third-party content or errors on the platform- Indemnity clause includes Frito-Lay and its affiliates

Prudent Nintendo’s#ZeldaFancontest

- Using hashtag #ZeldaFansignifies agreement- Easy to read- Word count = 2,846

- Rights acquired by non-exclusive license- Winner required to execute and deliver a release of liability- No professional content allowed- Must be original, non-commercial work

(de Beer et al 2017)

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The takeaways

Aligning motivations and rewards

• It is important for organizations to offer adequate incentives for people to participate in a crowdsourcing campaign.

• Expectation of a reward will be amplified if participants are unlikely to retain any rights and have to accept all liabilities.

• It is much more likely that non-winning contributors who are not compensated will raise intellectual property disputes.

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The takeaways

Let’s be clear

• Be as transparent as possible and use language that can be understood by the crowd, without sacrificing the legal protection afforded to legally-sound terms and conditions.

• The ramifications of not being clear and transparent and hiding behind a wall of legal jargon can prove detrimental to a brand.

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The takeaways

Consider an intermediary or existing platform

• Crowdsourcing service providers can assume responsibility for the strategic, logistical, and legal issues connected with a crowdsourcing initiative.

• Specialized crowdsourcing providers include: InnoCentive, NineSigma, eYeka, and Topcoder.

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Our framework illustrates the legal approaches that organizations can use to manage the value, risks, and effectiveness of crowdsourcing.

In the end, a reciprocating relationship emerges. The legal approach to managing crowdsourced intellectual property shapes the crowdsourcing campaign while, at the same time, the campaign shapes the legal approach.

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Dr. Ian McCarthy

@toffeemen68

Professor, Technology and Operations Management

Beedie School of Business Simon Fraser University

Ian McCarthy

It Depends Blog

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