IP AS VENTURE CAPITAL: A CASE STUDY OF MICROSOFT IP VENTURES

8 Wake Forest Intell. Prop. L.J. 197

“Closed Innovation” is a term coined by Henry Chesbrough, a professor in the Management of Technology at University of California at Berkley. The effect of Closed Innovation is that only selected technologies are developed into products, while other potentially valuable technologies are left underdeveloped or unused. This article recognizes the huge opportunity costs of companies doing nothing with promising technology, rather than sharing the technology through licensing. The authors focus on the Open Innovation model—a business model by which companies license their IP to other companies and alternatively seek to license other companies’ IP to develop in-house products. The article examines the shortcomings of the Closed Innovation model, and specifies ways in which the Open Innovation model increases productivity and economic efficiency. The authors analyze the implementation of Open Innovation by Microsoft through Microsoft IP Ventures, and explain how Microsoft is maximizing its value from its IP. The authors also offer suggestions on how to improve the IP as a Venture Capital Model as implemented by Microsoft IP Ventures.