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Author: Devan Marr, Articling Student, Nelligan O'Brien Payne LLP

Crowdsourcing is becoming increasingly popular. It is the practice of getting services, ideas, or content by soliciting contributions from a large group of people. The advent of the internet has caused a boom in this area, allowing “crowdsourcers” to solicit help from people all over the globe. Crowdsourcing typically starts with an open call to the world to provide an answer to a problem. The crowdsourcer can then choose between the best of the submissions.

Crowdsourcing can come in various forms. It ranges from large open source platforms like Wikipedia, to smaller online competitions, and to dispersing work amongst thousands of contributors. All of these are examples of crowdsourcing, which presents a way for companies to get work done faster and more efficiently than if they had to do the work themselves. Unfortunately, it also comes with its fair share of risks.

Crowdsourcing raises significant issues with respect to intellectual property rights. Unlike Crowdfunding, which is often just a method of raising capital, crowdsourcing often has third parties designing and integrating portions of a larger protect. This process can impact the intellectual property rights of not just the source project, but of the contributors and third parties.

While there are distinct advantages to outsourcing work on a project to web, it also has its pitfalls. Without extensive research, an organization has no way of knowing if the component they have crowdsourced is the intellectual property of a third party. The spring mechanism of that new mousetrap may already be covered by a third party’s industrial design or patent. If this happens, the third party may be able to come after you for infringement.

Even where a project does not run afoul of third party intellectual property rights, you need to ensure intellectual property rights in the work you receive are properly transferred over to you and that the transfer warrants that it, in fact, owns such rights. It’s important to develop a clear and comprehensive contract with the contributors who will sign over their rights to the product. If you do not have this in place, it’s quite possible that your own contributor will come after you for a bigger piece of the pie. By having contracts that assign the intellectual property rights associated with their contribution, you can avoid these concerns.

Another concern is the platform used to crowdsource. When using third party sites to host your crowdsourcing efforts, you may be signing away some of your intellectual property rights in exchange. A prime example is Quirky, a website designed to help get projects off the ground. An individual uploads their project to the site, and if approved, Quirky sources its own stable of designers and marketers to make it a reality. In exchange, Quirky obtains all your intellectual property rights to the project in exchange for a small royalty paid to the original submitter.

So while crowdsourcing may be capitalism at its best, it’s not without its risks. If you are thinking of beginning a crowdsourcing campaign, it is important to structure your project to minimize any potential fallout relating to intellectual property concerns.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2021 Nelligan O’Brien Payne LLP.

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