South Africa: Crowd-Sourcing And Intellectual Property Considerations

Last Updated: 13 December 2018
Article by Thando Zibi

Developments in technology and social media platforms have changed the way that businesses engage with their consumer markets. Customer bases are now more accessible to business owners and as such there has been an increase in the interaction between businesses and their customers, in the research and development of new products as well as in the after-service care and retention of customers. An example of such an interaction is the sourcing of ideas from an external customer base. Though an effective way of getting instant and substantive feedback, there are intellectual property law implications to crowd-sourcing of ideas that business owners must consider for their own protection.

Ideas crowd-sourcing is defined by as the "use of sources outside of the entity or group to generate, develop and implement ideas." This means that a business makes an open-call on sharing platforms, to serve a purpose or to solve a problem. This is a cost-effective way to develop new ideas, open access to new markets and drive business efficiency. Boundaries between businesses and their customer base have become more permeable, granting business direct access to their customer's preferences and creating more confidence in product success because the customers are actively involved in the development of a product or service. An example is the use of consumer polls by Doritos, in the development of new chip flavours.

By exploring the possibilities of ideas crowdsourcing, businesses open themselves up to a wide range of fresh talent and concepts in their efforts to stimulate innovation. No one will know a product and its inner workings and failings in its everyday use, as well as the customer. Businesses can therefore make open calls to the public, through which they may source ideas on the creation and improvement of new and/or existing products. An example of this was seen when Samsung started a Strategy and Innovation Centre in Palo Alto, California for this reason. It must be noted, however, that where improvements are made on existing, registered patentable products or designs or new patents and/or designs are created, such improvements or innovations must be registered with the Companies and Intellectual Property Commission ("CIPC"). The copyright in an applicable work, such as the designing of a trademark or the composition of a photograph, will automatically vest in the author of the work and as such, the business must ensure that the copyright in the work must be assigned to it from the author.

Benefits aside, the use of ideas crowd-sourcing exposes the business to the risk of a chink in its intellectual property armour. An idea or concept not properly managed may cause more harm than good, in a business' product and/or services research and development efforts. One of the fundamental principles to be given due consideration throughout the crowd-sourcing process, is that of ownership. It is of paramount importance that the ownership in an idea or concept be interrogated so as to ascertain whether the rights in and to the idea or concept, actually vest in the submitter. It is also critical to ascertain whether the idea or concept can actually be used in that it is not derived from an existing idea or concept and therefore said use does not amount to an infringement. In the instance where ownership is unlikely, measures will have to be put in to place to ensure that access to the idea or concept may be achieved by means of a licence. The utilisation of third-party platforms for the collection, processing and presentation of the feedback received from the "crowd" also calls for the interrogation of the ownership of the rights to the feedback. It is imperative to ensure that the business owns the information and that any information disclosed by the business to the third party remains that of the business.

There are, however, instruments that can be used to protect the business' intellectual property, such as agreements that include terms and conditions, which will dictate and regulate how the intellectual property will be dealt with as well as the relationship between the business and the "crowd" from which the ideas are sourced.  In instances where the business makes use of social media platforms to engage with their customer base, social media policies must be drafted and implemented, to govern the safe interaction between users of the platform as well as between the users and the business and the business and the platform. As ideas crowd-sourcing often involves the processing of personal information, the Protection of Personal Information Act 4 of 2013 ("POPI"), requires there be a POPI policy for the regulation of the collection, processing and storage of the personal information. Website terms and conditions are a further requirement where a business has created a website as a platform for ideas crowd-sourcing.

In a competitive world where a customer's memory is often short and a business is only as good as its last success, ideas crowd-sourcing can be an exciting yet cost-effective way for a business to not only keep up with its customers latest trends and preferences but also keep a competitive edge in its existing market and beyond. However, not having the proper protective measures in place before embarking on surfing the ideas crowd, can sink your ship before its even had an opportunity to sail. It is therefore highly advisable that you consult with a suitably skilled attorney from the conception of the venture to ensure that the business and all its intellectual property are well taken care of.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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