Patently obvious

Philanthropy 2173 pronounces the creation of the corporate Eco-Patent Commons to be "the beginning of a new kind of knowledge-based philanthropy." 

My own response to the news was quite different.  When I read about it in the Wall Street Journal Monday morning, I actually laughed so hard I had to put down my coffee.

Why?  Because the Eco-Patent Commons is just a clever update of an old marketing scheme. 

Sure, the press release makes it sound sustainalicious, as if corporations like IBM and Sony were donating their valuable intellectual property assets to the world for open-source development. 

That's what they want you to think, anyway.

But look carefully at what the corporations are actually doing.  Ferget about the PR fluff; pay attention to the gruesome details.  The following paragraph from the WSJ & an IBM lawyer gives the game away:

[W]hile individual patents that are donated may not be bringing in licensing revenue, or be protecting actual products, donating them still represents a gift of value. "We're pledging that we won't assert the patents that are put into the commons against anyone who is using them in an environmentally friendly way."

Ha!  Check out the sleight of hand.  The strategy should be rather familiar to anyone in business--the publicity touts the billions and billions earned by the IP assets of the donor companies, but what's the actual transaction?  Getting good PR from donating their under-performing IP assets and promising not to go after folks who use them in ways that aren't likely to generate substantial revenue.     

A brand new world?  More like Thrift Shop Horrors gussied up in the lingo of Open Source 2.0.  It's the next generation of dumping remaindered books on the Salvation Army or giving stale bread to City Harvest, then proclaiming yourself the next Mother Teresa.

Instead of this PR show, pay more attention to how oh-so-old-fashioned-and-traditional charities have been building multi-million-dollar empires by leveraging their IP assets.  When there isn't a strike, the Motion Picture Academy of Arts & Sciences makes fifty million bucks tax-free A YEAR by selling the broadcast rights to the Oscars.  Leading universities--Columbia, Harvard, MIT, Stanford--have reaped billions from acting as de facto patent farms.  The NCAA, NFL and Major League Baseball--fuhgeddaboudit.  And off-the-radar screen, much smaller players have been licensing software, marketing trademarks, harvesting copyrights--in short, strategically managing their IP portfolio--in a host of profitable ways.

Nonprofit lawyers have known this--and done this--literally for decades.  Yet outlier charities that want to get in the game must be careful.  Jumping on the open-source bandwagon can make you feel with-it, but in all likelihood it won't make your group financially self-sustaining, let alone rich.  There's also a real potential for innovation to flat-line.  What groups need to make this work is a nuanced grounding in IP law and how it relates to cognitive psychology and organizational dynamics.  

Morever, if your charity does manage to leverage its intellectual property, it needs to try to do so in a way that won't attract negative attention from the IRS, the media or legislators.  Far from being marginal, the nonprofit IP boom has scaled to such a degree over the past generation that questions are now being raised about whether it's appropriate for nonprofits to be so commercial.  Congress zapped tax-exemption for unrelated business fifty years ago; don't think the same thing couldn't happen to exempt orgs' IP.

Does this mean I'm opposed to the Eco-Patent Commons?  Nah, far from it.  Let a thousand flowers bloom and all that.

But if you really want to understand what's going on with charity and intellectual property . . .