Contract and IP Management in Networked Innovation

In business, a contract is often understood as a written document,1 which is concluded in order to bind the two or more contracting parties and safeguard them from risks or inconvenient contingencies as well as opportunistic behaviour of the other party. Contracts, however, can be very different from each other depending on the business model in question. For instance, in ordinary sale of goods the rights and duties of contracting parties are contradictory, while in collaboration contracts the parties have joint targets. Oral agreements can be as binding as written ones, and written contracts can contain a lot of important appendices. Contracts can also be chained with other contracts (subcontracting) or be connected in a business network. Some contracts are multilateral having a lot of contracting parties. Contract law, however, has been developed for transaction contracts, the model of contract law being ordinary sale of goods, where interests of the (mostly two) parties are contradictory.2 As intellectual property law is designed for protecting clear innovations without multiple interests or multiple stakeholders, contract law is also designed for clear transactions from one party to another. When the scope of a contract gets more complicated and the time period longer, the protection of contract law decreases. In the Bazaar of Opportunities it is crucial for collaboration partners to understand clearly what they actually have agreed both in written documents and in oral agreements. In Chapter 5 we take a closer look at contracts and contracting in networked innovation, especially from the standpoint of IP management.