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Yes, crowdsourcing can do wonders for your business, but do you understand the risks to your intellectual property?


Changes in technology, a global economy and new business paradigms that encourage open innovation and community collaboration are seeing us move away from a focus on control to capturing value from knowledge outside the company.

These new business models use collaboration in innovative ways that can help businesses reduce their expenses and innovate faster which is why we have seen crowdsourcing, peer production and collective invention take hold.

However, it remains imperative that business owners thoroughly understand the impact these collaborative paradigms have on creating and protecting intellectual property.

There are three questions you should consider when undertaking collaborative models.

1. Who owns what?

It is crucial to be clear from the very start about who owns the results of these collaborative processes because the default legal position can cause enormous problems. For example, discussion of ideas may constitute publication and compromise future patents.

Furthermore, copyright is owned by the author so it is possible for collaboration to result in multiple people to owning the copyrights, each of whom has an effective a right of veto over how those rights will be used or exploited.

This is a common problem with independent films and games. It can cripple projects.

2. Who is what?

It is important to nail down the nature of the collaborative arrangement for without clarity, you may easily find yourself knee-deep in the murky waters of legal wrangles.

For example, a collaboration may be an unincorporated joint venture where people retain their own separate identity, are responsible for their own expenses, and share in outputs not profit. However, it may become a partnership with all partners being jointly and several liable for expenses.

Wrongly structured, a collaboration could make you liable for someone else’s unpaid bills.

3. Who can know what?

Smart businesses ensure that everyone in the organisation, employees and contractors alike, understand what must be shared, what may be shared or what may never be shared with a collaborative partner.

Putting in place Confidentiality and Non-disclosure Agreements (NDA) does not have to be an expensive affair. There are a number of online legal document portals where you can purchase Confidentiality Agreements or NDAs.

However, keep in mind that many online publishers provide “dead” templates for which they accept no responsibility. It is therefore important that you insist on “live” online documents accompanied by a statement of legal advice.

Protecting the other users

Furthermore, for businesses that utilise competition platforms whereby users submit an idea or design with the possibility of winning a prize, issues around plagiarism and violation of intellectual property could easily arise.

Having a clear Copyright Policy, User Agreement, Code of Conduct or Terms of Service are all proactive steps one can take to discourage infringements of any sort.

All in all, while there are issues to be aware of when it comes to managing intellectual property in this new collaborative economy, the fact remains that well executed, crowdsourcing, peer production and collective invention have great reward potential.

Scott Chamberlain is the CEO of Chamberlains Law Firm, which not only offers online access to its Precedents (documents, agreements, contracts, etc) and supporting services (assistance and advice), but provides a signed letter of advice, Certificate of Legal Services and access to your documents for 7 years. Chamberlains provides legal services online, in-house and on hand.