Fraunhofer Friday, part 3 - Getting the balance right with IP

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A couple of weeks ago I visited a German Fraunhofer Institute and have blogged on how the UK's developing network of Catapult centres could learn from the Fraunhofer Institutes when it comes to engaging SMEs, and ensuring value for taxpayers' money. This week I am going to take a look at Intellectual Property Protection, an important issue for companies when they work with external organisations.

Both the Fraunhofer Institutes and Catapult centres are built around the principle of using collaboration to help companies overcome technical barriers to innovation such as a lack of facilities and expertise. This goes with the grain of how companies already work – as EEF's forthcoming Innovation Monitor will show – the vast majority of innovative manufacturers already collaborate precisely for this reason.

But collaboration is not necessarily an easy process. One key issue that companies face when they look to collaborate with others is agreeing on Intellectual Property (IP) ownership.

Some companies I have spoken to have mentioned that concerns about IP ownership are putting them off engaging with Catapult centres. This confusion is heightened by the fact that – at present – each of the UK's seven High Value Manufacturing (HVM) Catapult centres has a different IP framework in place.

This is partly a result of the way the HVM has grown up from seven pre-existing centres, but nonetheless it can discourage companies from engaging with the centres.

How does this compare with the Fraunhofer Institutes?

The Fraunhofer network has been in place longer than the network of Catapult centres, and as such have well-established IP frameworks. Companies also engage with Fraunhofer Institutes in a different way: on a project-by-project basis as opposed to a membership basis.

Nonetheless, the Fraunhofer Institutes say that IP protection is a concern for companies that engage with them too. They understand that fears about IP protection are justified, as for many companies their IP is their source of competitive advantage. As a result they have a clear process that IP agreements are drawn up before a research project goes ahead. They also take steps to communicate the advantages of collaboration to companies to help overcome a certain ‘fear factor' about IP loss: ultimately, an Institute's motivation with IP is to maximise its freedom to operate in order to be able deliver the greatest benefit to the greatest number of companies.

Engagement process:

Company approaches Institute

Set project objectives with company

Agree schedule and budget

Negotiate contract and IP

Sign agreement

Research and development project goes ahead

For larger projects the Fraunhofer HQ in Munich has a legal department, which draws up contractual agreements with companies to determine IP how ownership will work. With smaller projects there are frameworks in place to ensure IP rights are protected.

A framework for IP ownership

These frameworks are based on the view that companies which engage in a project with Fraunhofer Institutes will receive the rights to any products, prototypes and material objects developed on their behalf as well as the rights they need in order to use these.

However, whilst a company will receive application-specific rights to ensure protection against competition, outside of this scope the Fraunhofer Institute will reserve the opportunity to exploit other know-how, inventions and IP generated from a project. This is to maximise the potential research impact of the centres which are, after all, part-publically funded.

But this brings me to another concern that some manufacturers have raised about engaging with the Catapult centres: what happens to know-how shared during a project?

Protecting know-how

Know-how is a specific form of IP referring to the “the practical knowledge of how to accomplish something”, it is generally unpatented but for many companies it is an important source of competitive advantage.

When companies engage with a Fraunhofer Institute it is on a project-by-project basis. Any data and information shared by companies in these projects is treated in strict confidence and only shared with the Fraunhofer staff who will need the information for a project. They also operate separate facilities and closed-off laboratory areas where necessary to ensure confidentiality.

Policy thoughts

Getting it right when it comes to collaboration and IP isn't easy. Companies have legitimate concerns sharing the knowledge and information that is key to their competitive advantage. But the advantages of collaborations can sometimes be limited if this knowledge isn't shared.

The Fraunhofer model strikes a good balance, ensuring agreements are in place early on, as well as taking steps to protect institutional know-how.

The consistent IP frameworks used across the 66 centres also make things easier for companies looking to engage. Once a company has worked with one Fraunhofer Institute they will know what to expect when and if when they would like to work with another. The seven centres of the HVM Catapult should also look to develop a consistent IP framework, and communicate this to companies.

The Lambert Tool Kit may provide a starting point for harmonising the Catapults' IP frameworks. However, a consultation document from the Big Innovation Centre suggests that these may suffer from a lack of awareness amongst companies, and may need updating to reflect new collaboration mechanisms.


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