Global Digital Exemplars – Managing the innovation process

Innovation is an integral part of any quest for digital maturity and technology underpins most innovative projects. Moving data and services from an offline, paper based environment online necessitates a new way of thinking, new processes and procedures and often new methodologies and technologies to facilitate the transformation.

There are a number of routes to achieving digital transformation, but it is unlikely that the technical solutions that a trust requires will be available “off the shelf” and ready to go. Trusts are more likely to have to:

1. Work closely with technology suppliers to create solutions that fit their requirements, resulting in bespoke modifications to existing systems or, in some cases entirely new software tools; and/or
2. Utilise internal resources to create new, innovative systems from square one thus   building solutions that are tailored entirely to their own individual requirements.

Both approaches have benefits and disadvantages from a practical and commercial point of view, but both also raise an interesting legal consideration.  What happens to any intellectual property (IP) that is generated as part of the innovation process?

If you are working with a supplier, then the supplier is likely to want to claim ownership over any resulting IP, or at the least, secure rights to incorporate the same into their other offerings to other customers.  Your attitude to this may depend on:

1. The cost to you of their development services.  If they are willing to take a collaborative approach and view this as an investment in whole or in part, then you may be more open to sharing the IP input with them.  If however you are funding the development entirely, you may feel that you should have the right to own the IP or control the future usage and exploitation of it.
2. Your ability to secure unrestricted rights for your trust and others, particularly your Fast Followers, to utilise the IP in their journey to digital maturity and on a broader basis.
3. The commercial potential of the bespoke systems generated. This could be an opportunity to receive future revenues and recoup some of your (and the NHS’s) investment in your digital transformation.  It may be that your supplier is best placed to realise that potential and arrangements will need to be structured in order to allow them to do so, without compromising your use of the systems and ensuring a generous enough return to you. It may be however, that a different commercial partner is better placed to maximise the future exploitation incomes and you will need to agree with your supplier how this will work.   If you control the IP, then this becomes much easier to facilitate, but the commercial partner may also need practical, technical input from your supplier in order to commercialise the IP on your behalf.

In all circumstances, when working with a supplier, your contract terms will be key. IP issues should be tabled early in your discussions and should cover off the following basic points:

1. Who owns “background” IP – that which either party brings to the table?
2. Who owns “foreground” IP – that which is created during the project. Who will protect, maintain and enforce it?
3. What rights does each party have to use the IP owned by the other party?
4. Is any third party software or system required? What are the terms on which it is supplied? Do those terms restrict your intended usage or potential roll out of your systems in the future?
5. Is any open source software to be used? If so, what are the licence terms and how do they impact on what can be done with any systems incorporating that open source software in the future?

The agreed position should be documented fully and incorporated properly into your supplier contract. The greater the detail, the greater the certainty and the less likelihood of a dispute over IP in the future.

Where aspects of your project are undertaken internally, with no external input, then IP should still be considered in the early stages. Trusts should remember that IP generated by employees is generally owned by the trust as employer, but, IP generated by all other non-employee contributors, including self employed consultants, contractors, freelancers, students and volunteers, remain the property of the creator even if they are paid for their endeavours.  Any non-employees must be engaged under appropriate written contracts which transfer any resulting IP to the trust.

Whenever and by whoever IP is generated, trusts need to assess it in order to ascertain whether it should be formally protected, the steps necessary to do so and the likely value of that IP.  Can the IP be exploited? Does it have commercial potential? How can that potential value best be realised? Often trusts will have an IP policy which will provide an appropriate framework for dealing with these issues by providing a means for collating and assessing IP information. If not then the start of a transformation project, which will undoubtedly result in the generation of IP, is a good time to formulate such a policy. It is also a good time for trusts to review their existing policies and ensure that they are adequate and appropriate for what is likely to be a period of intense innovation.

At Hempsons our experienced team advises on all aspects of IP.  If you are embarking on your exemplar programme and require advice on contractual terms and suppliers, IP policies or IP protection, management and exploitation generally, then please contact Jamie Foster on 020 7484 7594 or email (j.foster@hempsons.co.uk) or Alex Jaques on 01423 724002 or email (a.jaques@hempsons.co.uk).