Open Innovation Insights: 5 Biggest IP Legal Mistakes Small Companies Make When Working with Large Companies

Small companies often make mistakes when working with large companies in open innovation relationships. Here are 5 of the most common errors and how to avoid them.

Often, small companies are so focused on their specific technology or solution that they may not even realize the larger company’s needs are much broader. Another challenge is that small companies get too concerned about putting up IP restrictions too early in the discussions with a large potential partner – often a deal-killer. In addition, small companies should build a term sheet without an attorney present; instead, the small firm’s legal counsel should coach them on  the legal issues they need to be aware of and then get out of the way. Finally, owners of small companies tend to underestimate how long a large partner will take to utilize their technology as well as the failure rate of new products under development.

The bottom line is that the small company owners ought to seek to build relationships and communication with their potential partners, to better understand their needs. The article compares such business development to the “secrets” of a successful long-term marriage: Become friends first, try to understand what the other party wants out of the deal and don’t be afraid to talk out your disagreements.

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