Traditionally innovation from companies originate from a team of dedicated in-house R&D professionals. However off-late companies have realized that they cannot always rely on their in-house resources alone and that there is abundance of external resources that can be utilized in their quest for creating new products. This is the essence of open innovation.

Professor Henry Chesbrough defined open innovation as " a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology". Open innovation is thus, like finding hidden gold in a rusted iron box. The ideas are distributed everywhere. But the success lies in how we can use our internal strength along with external resources in identifying and creating innovative solutions.

Procter and Gamble (P&G) has a successful open innovation program termed ‘Connect + Develop’ (C+D). Its overall goal is to have access to minds of millions of scientists, engineers and companies across the world. C+D has an impact almost in everything P&G does, including packaging, marketing, design and business services. The former Chief Technology Officer of P&G, Mr. Bruce Brown says "C+D has helped deliver some of P&G’s leading innovations, and is critical in helping P&G deliver on renewed growth strategy moving forward.

Unfortunately, no Indian Company can boast of a similar success story. However the Government of India has taken certain initiatives to promote open innovation. The Ministry of Micro, small and medium enterprises (MSME), in collaboration with National Institute of Design (NID) as a nodal agent, has established a program called ‘Design clinic scheme’, which provides opportunity to explore various minds from industry to solve design issues. MSME ministry funds for completing design projects as well as for organizing seminars and workshops to create awareness. Hopefully this scheme may create some change in the Indian open innovation culture.

The innovation culture in most Indian companies comes with a rigid structure and strict boundaries. Each company has its own flow of R&D process. Exceptional thoughts and ‘Out of Box‘ ideas are rarely generated in a closed and structured innovation environment. A repetition of the same R&D process under the influence of the same innovation environment does not result in breakthrough innovation.

For Indian companies to take up open innovation there are some key points that may be considered.

  • a. Explore the reasons for embracing open innovation
    • Before embracing open innovation, we should analyse the reason ‘Why it is required?’ There may be many reasons to embrace open innovation. Generally the reasons tends to be lack of innovative ideas or lack of intangible resources or difficulty in managing the balance between routine production process and R&D. Open innovation provides opportunity to explore distinctive minds, who can infuse fresh thoughts and ideas into the company. It works well by bringing in fresh minds who may sometimes be entirely unrelated to the internal innovation environment.

    • In mid 2014, Apple Inc hired Angela Ahrendts, CEO of Burberry (a lifestyle and fashion products giant). She was given the responsibility of providing strategic direction, expansion and operation of Apple’s retail and online stores. From an outsider’s view, it is unobvious to hire a person from a totally different field. However what Apple did here was quite interesting and unique, and that is why, maybe, they are in the list of world’s most innovative companies.

  • b. Create a new specific open innovation channel
    • Even if companies take up open innovation, the existing in-house innovation culture should not be abandoned completely. The new innovation culture which focuses on open innovation should be implemented parallelly with the existing in-house R&D. P&G’s C+D has been successful, because it has combined both the processes together.

  • c. Consider the entire innovation ecosystem
    • Generally when an idea is given birth, there are lot of things to be considered before implementing it. In open innovation, each idea has its own ecosystem. The entire ecosystem has to be considered in depth to avoid any failures.

    • In 1990 Michelin, a leader in tyre manufacturer, developed an advanced tyre which had a sensor to detect the puncture and a hard wheel fixed inside the tyre to make sure the vehicle runs smooth even after the puncture. In making this revolutionary tyre, Michelin pulled in another giant, Goodyear, to occupy almost 40% of the world’s tyre market. They also tied up with leading automotive manufactures to make use of the tyre. However by 2007, Michelin completely abandon the product.

    • How did such a revolutionary product fail in the market? What did Michelin not foresee leading to the failure of such an innovative product?. The after-sales service of-course! No garage was ready to repair the punctured tyres, which required huge availability of space and expensive machines. Evidently Michelin hadn’t confronted the entire ecosystem leading to failure of the innovative product.

  • d. Adapt towards distinctive minds
    • Open innovation involves inputs from various minds, where each idea provides a unique solution by approaching the problem in a distinct way. Gathering all those solutions and consolidating or validating those solutions to bring the final output, requires mental as well as resources readiness. The person in charge should have greater adaptability to handle the hotchpotch of ideas and bring them to one finite and workable solution. The communication strategy should be ideal between the external inventor or contributor and the internal team, so that imbalance in procuring resources and other needs can be avoided.

Conclusion

Bigger results cannot be expected without doing something extra-ordinary. Companies should change their routine path and implement creative thinking in innovation culture. There is always a right time to do things. That right time is now!

Viknesh. T.K

Patent Analyst
Surana and Surana International Attorneys

It can be understood as a situation of coexistence when two companies use a similar or identical trademark (in terms of denomination, color, image, etc.) to commercialize a product or service without generating any kind of prejudice between them. The expansion of the cross-border trade as consequence of the conquest of new international markets and the important growth of the companies have created a new scenario where the risk of coincidences of trademark denominations increases. In this time of globalized economy, trademark coexistence is an everyday situation between identical or related products or services within a local market.

The companies that own similar trademarks often conclude trademark coexistence agreements in order to avoid costly judiciary proceedings that may be damaging to their development in the market.

Through these contracts that are generally accepted by the National Trademark Offices in the world, two or more natural or legal persons agree the coexistence of their trademarks at the level of the registration and/or in the market. However, these coexistence agreements shall not produce confusion for the consumers regarding the commercial origin of each product or service identified with a trademark.

It is noteworthy that for several years now, trademark coexistence agreements were rarely accepted by the Peruvian Trademark Office for not complying with the established conditions. In this regard, by a precedent of mandatory compliance, the Intellectual Property Chamber of the Tribunal of the Institute for the Defense of Competition and Protection of Intellectual Property of Peru (INDECOPI) settled a strong position. In its Resolution Nº. 4665-2014/TPI-INDECOPI dated December 15, 2014, the Tribunal stated that "for a trademark coexistence agreement to be capable of minimizing the potential risk of confusion into which the consumer may be misled, it must contain some minimum conditions, such as:

  • a) Information about the signs that are object of the agreement, consigning the denominative and figurative elements that constitute them, as well as the products and services to which are referred those signs (as they are registered and / or requested).
  • b) Delimitation of the territorial scope in which the agreement will be applicable.
  • c) Delimitation of the products and/or services to which the signs matter of the coexistence agreement in the market will be restricted. For this purpose, it is necessary that the parties request the effective limitation of the goods and/or services in the registrations and respective applications.
  • d) Delimitation of the form of use and/or presentation of signs.
  • e) To foresee the effects of breaching the agreement.
  • f) To establish mechanisms for dispute resolution if any litigious matter between the parties occurs.

For these reasons, agreements that do not contain the minimum conditions set above will not be accepted by the Administrative Authority; however, this does not determine that agreements containing such minimum conditions will be approved automatically, since the Authority shall examine whether what was agreed by the parties comply or not with the purpose that is pursued through the agreement.

Finally, as stated above, the acceptance of a coexistence agreement is a faculty that assists to the Administrative Authority and will depend mainly on the conditions expressed therein, all of this in support of safeguarding the interest of the consumers."

In the case settled by the Specialized Chamber for Intellectual Property, the trademark "CASCADE" requested by The Procter & Gamble Company has been denied for being similar to the previously registered trademark CASCADE CHOPARD, owned by the company Chopard Accessories Limited, considering a risk of confusion despite of the existence of a trademark coexistence agreement concluded between these two companies.

In this regard, we consider that, although the intention of INDECOPI to specify new clear criteria for acceptance of coexistence agreements was commendable, the minimum conditions established seem to be strict, even more when the Chamber appreciates severely the fulfillment of each of these. In addition, it is noted that the fulfillment of the criteria does not ensure that the requested trademark be granted since in any case the risk of confusion that could be created in the minds of consumers should be evaluated. Finally the Chamber states that it will not accept letters of consent for the use of a trademark by a competitor, for the reason that they are unilateral expressions of will that the Peruvian law does not foresee.

There is no doubt that two fundamental freedoms are confronting: freedom of trade and industry against the general interest of the consumers. However, focusing the concern on the protection of consumers should not result in the almost systematic rejection of coexistence agreements. In effect, it is good to remember that in every economic system, the more offer there is on the market, more the consumer can choose the product that best meets its needs and at the price that is more convenient for him to pay.

Finally the attempt of INDECOPI to clarify the conditions of acceptance of coexistence agreements should be appreciated and, although the first case of application of such terms seems a severe decision, future decisions of the Authority regarding coexistence agreements will design trends of appreciation of the conditions.

Oscar A. Mago Carranza
Juan Carlos Díaz Iglesias
Luis Maura Moscoso
Federico Mevius Pigati
Fernando Santivañez Juli