March 15, 2011

Crowdsourcing as IP-strategy

Crowdsourcing is a concept that is used ever more often when knowledge intensive industries are discussed. Arturas Vedrickas today briefly describes a location based social network known as Foursquare on the CIP FORUM blog that is planning to harness its large base of users. There are currently many interesting examples of crowdsourcing initiatives in the IT-industry where of course Wikipedia is one of my personal favorites. However, this concept is certainly spreading into other knowledge intensive industries such as the biomedical society. This is perhaps not surprising, given that the biotech revolution has transformed the whole pharma industry into a data driven reality where knowledge is key.


Crowdsourcing refers to outsourcing tasks that would usually be performed by people within a company or institution to an outside 'crowd' of people, outside the organization. This way of harnessing the power of the many differs from other types of open innovation in that members of the crowd nowadays has grown accustomed to generally expect some kind of incentive or reward. This has been a rather quick transition given that the term 'crowdsourcing' itself was coined less than 5 years ago, by Jeff Howe writing for Wired magazine.

Harnessing the Global Brain in Life Science

Early efforts in the biomedical field to use this innovation strategy was - not surprisingly - implemented in the fields most closely similar to the IT-industry. Namely bioinformatics. Some of these efforts included BioJava, BioPerl, BioPython, Bio-SPICE and BioRuby. Two early initiatives, in 2000, without the word "bio" in their names were Screensaver Lifesaver and Folding@Home. Both of these harnessed the power of volunteers. Foldin@Home models the thermodynamics of protein folding, while the Screensaver Livesaver used 3 500 000+ volunteers to run molecular modeling simulations, docking potential ligands into the binding sites of known drug targets for various diseases.

Indianapolis based pharma giant Eli Lilly was one of the first Life Science companies to implement this way of thinking. In fact, it is more accurate to say that Eli Lilly was part of creating and defining the field of openness within Life Science. At the same time as Folding@Home and SL were launched, Sidney Junell, then head of Lilly, organized a group of executives to explore new ways of working. Impressively, no fewer than three successful open innovation companies—InnoCentive, based in Waltham, Massachusetts, YourEncore, in Indianapolis and Cincinnati, and Collaborative Drug Discovery, based in Burlingame, California—sprang from these discussions. For the past decade, Eli Lilly has maintained a leading position in the Life Science field of internet-led open innovation.

Several interesting initiatives have sprung up over the last few years in this industry. Within genomics, 23andMe (a model I have written about here on Intangitopia in the past) is a company that accumulates data from its customers through crowdsourcing. Customers of the personal genomics startup who submit samples of their saliva for genotyping have the opportunity to take part in surveys, which, when combined with their genetic information, can provide useful information to the wider group about genetic linkage. This approach of course becomes even more powerful still when genetic data are combined with contributions from patients. For Parkinson's disease 23andMe tries to achieve this through to collecting genetic data from individuals in a partnership with PatientsLikeMe and the Michael J. Fox Foundation. Patients Like Me, in turn, is also a crowdsourcing site that allows its - by now 80 000 - members to share details of symptoms and treatments with each other, as well as with the research and medical communities. The reward in this case is to learn more about one's condition through the experience of others.

Business implications and using crowdsourcing as innovation strategy

Given the intellectual property difficulties that is generated by the volunteer computing models (Folding@Home and Screensaver Livesaver), these have largely been embraced by the academic and not-for-profit sectors. But what about the other models: are these also incompatible with IP? Of course not.

A recent example of an implemented corporate model for harnessing crowd-sourcing is that of Life Technologies (LT). The company announced in December a $7 million crowdsourcing initiative called the Life Grand Challenges Contest. Focus of the contest is on LT's new Personal Genome Machine acquired from Connecticut–based startup Ion Torrent. The sequencing technology costs $50,000 to buy and can sequence a sample at a cost of $500 in just two hours. But that is apparently not good enough for Jonathan Rothberg, founder and CEO of Ion Torrent. The first three $1-million challenges in the contest ask innovators to devise ways to make Ion Torrent's technology even faster, cheaper and more accurate.

Implementing crowdsourcing in your IP-strategy

A model that I have seen successfully implemented in the IP-strategy of a large biotech company actually used crowdsourcing. This particular company often used the Innocentive platform for this very purpose. Innocentive connects a community of solvers with seekers (companies that post technically challenging research or management problems). Any individual may register as a solver. Solvers pay no fees, but most formally register for a challenge before they receive the full, confidential outline of the project. While seekers pay to register on the site and again to register each challenge. If a problem is solved, pre-defined reward(s) is/are paid to one or more solvers out of the registration fee. Intellectual property is thus protected under secrecy agreements (formal registration for solvers) and transacted to the seeker as a reward is paid to a solver.

When the company had made a new discovery it posted the problem (not its solution/discovery) on Innocentive. This way, the company was typically able to "purchase" additional solutions to the same problem by paying out Innocentive rewards. An approach that was much cheaper than inventing these solutions in-house. Patent applications covering the various solutions would then be filed and consequently a much stronger position against invent-around risks resulted.

Alternative IP-strategies and IP-based business will be discussed during CIP FORUM in May.

(Btw, don't miss the early bird fee before the end of March)

Looking forward to see you there.

Tobias Thornblad


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