How to Get the Most from Your Host: Risks and Rewards of Intellectual Property Terms in Governmental Prize Competitions

Abstract

Prize competitions, or innovation tournaments, incentivize the participation of various perspectives with the possibility of winning a prize from the host. The host invites external participation but retains control over the competition to balance its liability risks and intellectual property rewards. In theory, these competitions are high-risk, high-reward. Therefore, both an effective host and competitor should account for the risks and rewards inherent in the contract terms and the structure of the competition. Whether intentionally or inadvertently, hosts employ one of four values: persuasive, possessive, prudent, or passive. The host’s approach to acquiring intellectual property rights through the competition and its defenses to protect itself from liability determine its distinct legal strategy in prize competitions. Accordingly, hosts structure their competitions to reflect their views while using intellectual property rights as a motivator. For example, the values and constraints of passive governmental hosts, as opposed to persuasive private hosts, enable the competitor to benefit by retaining more of its rights. Therefore, competitors should identify the host’s motivations and know about their intellectual property rights in jeopardy throughout the competition to compete effectively. Governmental competitions may offer lower-reward opportunities than private competitions, but the competition structure and terms of governmental competitions provide competitors with lower-risk opportunities enabling a broad competitor market to compete effectively. Thus, public-sector prize competitions are likely more advantageous to risk-averse competitors, whereas risk-taking competitors with more capital may take on the higher-risk and higher-reward private sector prize competitions.