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IBM, the largest United States patent holder, made an unusual move in 2005 when it donated 500 patents to the open source community and relinquished royalties on a number of patents used in education and healthcare.

While some observers thought those moves would hurt Big Blue's innovation and income, the Armonk, New York-based firm defended its position in 2006 as the No 1 patent-holder in the US for the 14th year in a row.

David Yaun, IBM vice-president in charge of several innovation initiatives, believes the shift to open and collaborative innovation became a key to IBM's success in 2006.

"Companies need to think about intellectual property using a new terminology, such as intellectual capital," he says.

While intellectual property is usually regarded as something companies protect, set fences around it or lock in a safe, Yaun says intellectual capital is different - companies can spend capital, share it or protect part of it.

Two factors led the US giant to make the shift.

At the beginning of this century, IBM began to think about where its innovation would come from and it sensed a change in the nature of innovation itself. Innovation is no longer only about gadgets, it thought, but is open, collaborative, multi-disciplinary and global.

The company also began to query its 330,000 employees in 2003, asking them what IBM's values should be and "innovation for our company and the world" became one of IBM's three core values.

In response to a changing environment and demands from employees, IBM held extensive forums and collaborative projects to open its innovations to a wider scope both internally and externally.

Last year, an IBM physicist participated the company's internal brainstorming session called InnovationJam, sharing his findings on carbon nanotubes that can be used in manufacturing semiconductors or nano-wires.

Some other scientists at the forum said the technology might not be helpful to the company itself and advised a stop to investment.

But both sides agreed to put the findings on the website of InnovationJam for comment from other researchers. In one day, 400 other IBM scientists supported continued research on the technology and funding was approved.

"Through open discussion and collaboration like this, our scope for innovation has significantly expanded," says Yaun.

There are about 3,200 researchers at IBM who were joined by 150,000 company employees, their family members and partners from 104 countries and regions to participate in InnovationJam discussions.

IBM Chairman and CEO Samuel Palmisano announced last November in Beijing that the company would invest $100 million over two years in a venture fund to support its own employees in further research and commercialization.

In addition to internal collaboration through platforms like InnovationJam and InnovationPlace, an online forum, Yaun says external collaboration is of equal importance.

In an article in Foreign Affairs magazine last March, Palmisano put forward the idea of "the globally integrated enterprise" and said a real global company should be able to use resources everywhere in the world, be they internal or external.

In 2004, the company launched a Global Innovation Outlook (GIO) program, which brings researchers, government officials, business leaders and young students together to discuss timely topics. In the first session, healthcare, government and its citizens, and the business of the world and life were all discussed.

Ten meetings were held in three cities with groups ranging in size from 30 to 50 participants.

Yaun says topics usually reflect global trends and take into account a combination of social and economic issues that have strong potential need for innovation.

"If we touch upon both spheres - society and economies - it usually means huge opportunities for innovation," says Yaun.

The company then donated 500 patents in 2005 to the open source community and removed royalties for some of its patents in education and healthcare. Last year it announced that it would open about half of its business-method patents to the public to help others innovate.

In 2006, IBM invited a group of 50 experts to participate in an online forum using Wiki technologies to discuss what the intellectual property strategy for the 21st century should be and what characteristics a properly functioning global IP marketplace should have.

At the second GIO in 2006, the topics centered on the future of the enterprise, transportation and the environment.

After the discussions, IBM changed the designs of its servers so they were more environmentally friendly and energy efficient, which also added competitiveness to its products.

In Stockholm, IBM provided transport management solutions, but with findings from the 2006 GIO, it improved the solutions and built a pilot project in Singapore. The pilot was so successful that the Singaporean government awarded a $10 million contract to the US firm and gave it access to more public transport business opportunities.

China, one of the most important markets for IBM, is also playing an active role in its innovation drives.

"China now is an exporter of many commodities, but some day it is likely to become a big exporter of ideas too," says Yaun.

The company has a complete research organization in the country, both in applied solutions and basic research. Out of its 3,000 research projects in basic sciences, over 200 are in China.

The role of China in the GIO program itself is also significant. Out of the total of 21 meetings that have been held, eight were in Chinese cities, the same number those in the US.

At this year's GIO forum the topics were media and content, Africa, and security and society.

Sessions were held in Shanghai and Beijing that considered the role China is playing and can further play in the media and in Africa.