It’s One Thing to Risk a Partnership … and Another to Risk Your Intellectual Property

Partnering with competitors was once absolutely not done in the minority business community. However, tough times make for strange bedfellows, and minority owned businesses are exploring competitor partnerships in increasing numbers. Now that the potential of a competitor partnership is a reality for many, how can firms making the leap work to protect their intellectual property (IP)?

Emotional, ethical and legal protections for IP must exist within competitor partnerships. By leveraging each one, it is possible for a MWBE to join forces with a former competitor to create new products, offer new services, and win additional business without unnecessary exposure. In this way, both firms can thrive, together or separately, in the present and the future.

Emotional Considerations

The first element to manage when partnering with a competitor is the emotional side of the partnership. Going forward, you’re going to be on the same team, and an allied mindset needs to be cultivated from the top down. IP theft is more likely to occur in partnerships where there is lingering rivalry or disrespect, according to studies of failed partnerships.

Your business is choosing to be in this partnership because it offers something to both sides – scale, scope, or innovation power. These are real benefits, but it can be hard for everyone in the firm to accept that “the enemy” is now an ally. MWBEs that take the time at the start to build emotional relationships – team building retreats, open meetings, even staff picnics – lay the foundations to avoid the tense, animosity filled environments that cause problems later. By dealing with this side of the relationship at the start, firms acknowledge the human side and publicly indicate what behaviors are expected from staff.

Ethical Considerations

The next element to address are the ethical considerations when sharing IP. Within the context of the partnership, MWBEs need to define what constitutes fair and appropriate use, and what IP uses would be considered breaches of the contract terms. It’s an element of partnership governance that can clear up potential issues before key pieces of data are shared.

Ethical discussions are also a good point for the partnership to do a gut check. Building a trust-based partnership with a competitor is possible, but not if little red flags keep going off. If a desperate kind of business necessity is driving you together, but warning bells are sounding, it may be better to seek another partner or consider a sale.

Legal Considerations

Together with emotional and ethical points, would-be partners need to address the legal aspect of the partnership. It’s not just about contracts with corporations – it’s about the contract the partners have with each other. Basic terms should address patents, copyrights, trademarks, and trade secrets for the IP being brought into the relationship and any IP developed as a part of the relationship.

While some may think of it as putting the cart before the horse, firms that address the possibility of jointly developed IP revenue and ownership issues from the start can operate more peacefully with this governance in place. Even the largest firms with mentor-protégé programming that shares IP, such as the Northrop Grumman program, have these documents in place. It is a process and it does take time, but these governance safeguards do offer significant protection and clarity on IP issues.

Together, Apart, And In The Future

In selecting a competitor to have as a partner, MWBEs need to work through the emotional, ethical, and legal matches first. These help secure the right competitor to have at your side – one that understands and respects not just your company, but the potential of the relationship.

With the basics nailed down, both firms can proceed with confidence. This brings in the benefits of a partnership – resources, innovation, synergies – without the nightmares. Basic guideposts also help establish trust at each stage, and these governance documents serve to guide both the joining and the dissolution of any partnership formed.

After all, even the most successful competitor partnerships can not expect to last for ever. Take the case of H.B. Fuller, now one of the largest players in the adhesives space. They partnered with Nordic Adhesives Technology for a year, sharing technologies and successfully winning new business contracts in the consumer packaged goods space. However, rather than continue the partnership, H.B. Fuller went on to acquire the firm. Was this a measure of failure? Hardly – just one of the paths that a successfully organized partnership can peacefully take.

The shift in the partnership worked because the two firms had established the rules of operation while they were together, and had done so in a way that didn’t create a forever-or-death contract. Many MWBE partnerships with competitors are strategic for specific contract goals or innovations, giving them a temporary nature. By defining the in, out, and who owns what from the start, even temporary partnerships can be protected and create long-term benefits.

Partnering with a competitor is no longer rare in the MWBE world, and firms with the right governance structures in place to protect IP do walk away winners. As the business landscape continues to deliver challenges, successfully partnering with friends, foes, and strategic leaders will be necessary. Knowing how to do so without unnecessary risk allows MWBEs to build their value without sacrificing the soul of their business models.

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