Business Technology: Intellectual Gray Area In New World OrderBusiness Technology: Intellectual Gray Area In New World Order

A couple of weeks ago, I offered my thoughts on IBM's new plan to open some of its substantial R&D brainpower and expertise to some of its customers. Called On Demand Innovation Services, the new group will be staffed with 200 research consultants from among IBM's more than 3,000 R&D workers around the globe and has received $1 billion in funding for the next three years ("IBM Gives Customers A Hand In Future Of IT," Nov. 25, 2002). At the time, I wrote: "This is the new standard for customer collaboration to which serious technology vendors, like it or not, will be held. It is extraordinary, it is risky as hell, it is brilliant, and it is the future."

A letter from a reader, though, suggests that I keep the champagne on ice a bit longer before celebrating the perfect new world order: What about, he asks, such issues as who owns the resultant intellectual property? Can IBM's Innovation Services apply what it learns in other engagements, or must it begin each new one with a clean slate? And is such cleanliness even possible?

"If the customer will 'drive the direction of the IT industry,' as Lou Gerstner states, how will IBM guarantee that IP secrets and rights will be maintained if customers approach IBM with innovative ways to solve business-process issues?" asks Jeff Meier, CIO and VP for IT and corporate quality at Fujitsu Network Communications in Richardson, Texas. "Intellectual capital is a tough asset to manage and protect. Quite a gray area to promise that, if two companies jointly come up with a great idea and consequent new service or product, it won't be passed along in some shape or form to a fierce competitor."

Good questions. How do these issues get ironed out? How is the customer protected? At the same time, how does IBM gain the benefit of the work and investment it has made?

"The big question," Jeff says, "is this: Will IBM protect what they did for one company by promising not to share it with another? If not -- and maybe that's OK -- I think IBM will be a big winner here as well. You might even be able to call what they are doing an 'extended R&D' model, with actual customers being part of the Big Blue think tank, even as IBM generates revenue while that goes on."

Oh, but wait, says naive little me, no company would treat another unfairly, would it?

"I'm not saying companies have to try to go it alone. But I'm also saying this has been a major issue for me here at FNC -- whether it has been with a major external IT services provider, or a software developer, or whoever. Our IT, sales, and product-management teams came up with some great ideas on a product-configuration tool that we paid a software company to develop. After it was completed and launched, this software company announced a big contract with another company in our industry. Who's to say that what they learned working with FNC stayed locked in their minds and didn't somehow show up in this other company's portal configurator? How do we protect the competitive edge we might have gained from our significant investment on this tool? When that other big contract was announced, they said this software company was selected because of their 'deep experience and knowledge of the telecom industry.' But you know what? When we engaged them way back when, we were told that we were their first customer for this type of product in this market. Up front, did we make sure they committed to protecting our IP rights? You betcha. But if they can generate more revenue by somehow differently packaging what they did for us and selling it to someone else? Well, ...."

His final question: "With this in mind, what will this 'IBM field of creativity' look like?"

Good question. And next week, we'll hear IBM's answer.

Bob Evans
Editor in Chief
[email protected]

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