Many businesses involved with the manufacturing of goods often have what is known as intellectual property, which can sometimes be the company's lifeblood. Without the secret knowledge of how to create a product or to perform a service, enterprises cannot hold a competitive advantage. Criminal enterprises, nation-states, and malicious users often target this valuable information in the hopes of becoming viable competition or beat a leading business in a field.
What is Intellectual Property?
Intellectual property (IP) is any secret information used regarding the creation of a product. This information could include blueprints or schematics for a part, formulas for synthesizing new materials, or supply chain connections for better lead times and pricing. However, intellectual property can cover more than just recipes and products.
Intellectual property is defined as "anything that is a creation of the mind" and includes literature, artistic works, and designs. However, just because intellectual property is a creation of the mind does not mean that any idea can be claimed or protected.
Legal Forms of Intellectual Property
As discussed in the previous section, intellectual property is any idea or creation of the mind. Still, one question that comes to mind is the different legal forms of intellectual property? In total, there are four legally recognized forms of intellectual property.
- Patents: Patents are a recognized design and explanation of a new device or invention. Patents claim legitimacy and ownership of an idea. Patents protect the rights of production, where making a copy of a patented idea is to commit patent infringement, which we will discuss later. Businesses and organizations submit patents to claim and protect their rights to any invention, whether the design makes it to the market. If a patent is approved and proven legitimate, patent protections last for 20 years.
- Trademarks: Trademarks are words, phrases, symbols, or designs that identify or distinguish goods from one provider from another. Trademarks are specially created names or catchphrases for the processes, properties, or qualities of an invention or idea. Unlike other forms of legally prosecutable forms of intellectual property, trademarks do not have a set lifespan. Trademarks protections remain in effect as long as Registered use in commerce continues, and the declaration of use is filed with the USPTO every 10 years.
- Copyrights: Unlike patents or trademarks used for registering or claiming inventions or phrases used for commercial products, Copyrights primarily cover or protect artistic material, such as literature, music, and artistic materials. Copyrights protection extends past the life of the creator or author.
- Trade Secrets: Compared to the previously mentioned forms of intellectual properties, trade secrets are one of the forms of intellectual property that are not publicly available for review. Trade secrets can include specific measurements for ingredients, performing a particular process, or the suppliers and pricing for specific parts. Trade Secrets are what is considered an organization's competitive advantage in their market.
What can I do to protect intellectual property?
Protecting your intellectual property should be one of your top priorities. While securing this sensitive information may seem complicated, we are here to say that it is not. Here are five ways that you can help improve the security of your IP.
- Know what is Intellectual property and where it is stored: Having a general understanding of what information is considered intellectual property and knowing where IP is stored is a simple first step for any business. Compared to other forms of sensitive data, such as customer order details, intellectual property can include various documents.
- Secure your intellectual property both physically and digitally: Once you have located what and where your valuable intellectual property is, it's time to lock it down. For paper documents, consider creating a digital copy of it and locking the document in a secure facility that few members can access. Securely back up digital forms of intellectual property to local or secured cloud storage locations. We recommend following the 3-2-1 rule, which we had covered in our backup article here.
- Educate your employees on what intellectual property is and how to protect it: Protecting your business' intellectual property is not just your responsibility, but the responsibility of your employees as well. Educating employees on what is sensitive company information and how they should respond to such attempts.
- Know what tools you are using to protect your information: Theft of vital or sensitive business secrets does not always require an extensive or complicated attack. Data theft can occur with an employee plugging in a USB thumb drive. Using tools that allow oversight on data transfers and logging can identify employees who may have malicious motives. This information is vital for identifying potential insider attacks and preventing the theft of sensitive data.
- Think global if you operate in different countries: If your business operates internationally, you need to consider your potential competition and the legal processes that protect your business from intellectual property theft. Depending on the location of our operations, different laws may be helpful to know if you have foreign competitors
Fallacies of IP Theft
Shady security providers use scare tactics to sell promises of protecting your Intellectual property. These scare tactics often leave businesses misinformed about what they should fear. Below are some of the misconceptions that we aim to debunk.
1. Insider threats steal intellectual property to sell it
Insider threats that have access to sensitive business secrets are motivated by reasons other than to make a quick sale. Individuals may use the stolen information to secure positions with rival businesses or even start their own business.
- In 2008, China's Thousand Talents Plan incentives individuals engaged in research and development in the U.S. to provide that knowledge to China in exchange for incentives, according to a U.S. Senate Homeland Security report.
- In 2019, GE almost fell victim to intellectual property theft due to a former GE engineer to progress their interest to advance the technologies in two Chinese companies. In this case, the individual stole the information to increase the potential for their new business.
- In June 2020, the former Harvard University Professor, and Chair of the Chemistry and Chemical Biology Department, was indicted on charges of making false statements to federal authorities regarding his participation in China's Thousand Talents Program.
2. Your IT Administrators are your biggest threat
Before continuing with this section, we have to say that this is a half-truth statement. Businesses with their own IT teams have to place much trust in their network administrators. Companies that have an internal IT team should utilize a system of checks and balances. Often this can involve having more than one Administrator and change control procedures, where if one Administrator is doing something suspicious, the other can report it. Logging and third-party audits can also prove to be beneficial.
3. Using expensive high-level security solutions is the only answer
While there are various security solutions that you can implement into your security strategy, there are alternative methods of protecting inexpensive data. USB blocks are simple devices that prevent users from using USB storage devices. Using policies that limit the amount of data any single person has access to is as effective
4. IP theft takes years to happen and requires sophisticated hacking
Theft of sensitive business secrets can take days, weeks, or even years. Depending on what methods a company takes to secure their IP, malicious insiders could easily steal this data in a matter of hours. The length of time needed can also depend on user permissions and the amount of data targeted. In some instances, data theft through downloading information onto a thumb drive, copied to cloud storage or sending data outside the business through multiple emails.
5. Only one person carries out the theft of business secrets
When the theft of sensitive business data is happening, usually, one person within the business or organization is responsible for stealing it. However, these IP theft operations often include business people, researchers, and designers who work on behalf of competitive companies looking to enter the market. It is rare for only one person to be involved in IP theft. After all, there has to be a buyer to warrant the risk.
6. Nation-states only target the defense sector
"They're not just targeting defense sector companies," said FBI Director Christopher Wray at the U.S. Department of Justice's China Initiative Conference in February 2020. "The Chinese have targeted companies producing everything from proprietary rice and corn seeds to software for wind turbines to high-end medical devices. And they're not just targeting innovation and R&D. They're going after cost and pricing information, internal strategy documents, bulk [personally identifiable information (PII)]—anything that can give them a competitive advantage."
Patent Infringement and IP Theft Differences
Another crime that involves the theft of a company's inventions is patent infringement. While similar to IP Theft, patent infringement occurs after a patent is approved. Compared to stealing a business's secrets, patents are released for the public to view once they are approved.
Companies that operate through patent infringement use these newfound patents to make look-alike or near-perfect copies of the already patented products. Once produced, these businesses flood the market with their illegitimate products before stopping their operation.
The main goal of patent infringement is to make as much money as possible before stopping your process. In many patent infringement cases, the product will be made and distributed outside of the United States, where U.S. patent laws are not protected. Businesses found guilty of patent infringement typically do not suffer significant legal consequences, only to pay a royalty based fine. However, the offending party must be found guilty of willful infringement, which must be proven beyond reasonable belief.
Suppose a patent holder is to seek legal action against a potential infringer within six years of the infringement. When determining the validity of a product, the court will not only look at the novelty or genuineness of the product. Still, it will also look to see if the infringing work is a product that is only slightly different from the original. With that said, there are numerous cases where a product will have their patent passed, only for the patent to be considered fraudulent. It is up to the inventor to understand and perform the necessary research before patenting or manufacturing a product.
A ruling in October 2020, the networking technology giant Cisco Systems, Inc. was told to pay $1.9 billion for IP infringement by Judge Henry Morgan. A private company in Virginia, named Centripital Networks Inc., brought Cisco to court for infringing on four of their patents for network protection.
Judge Morgan said Centripetal is owed $755.8 million for past use of the inventions, which he increased by two-and-a-half times after finding that Cisco's infringement was "willful and egregious." Morgan also ordered Cisco to pay a 10% royalty on sales of some of its products for the next three years, and then 5% in royalties three years after that period.
Centripetal said sales had been doubling each year from 2015 until it met with Cisco for a partnership and "got close to getting married but got left at the altar," as Centripetal lawyer Paul Andre of the firm Kramer Levin put it in opening arguments. He said Centripetal told Cisco about its inventions in 2016, and "Cisco kept coming back and asking for more."
"The fact that Cisco released products with Centripetal's functionality within a year of these meetings goes beyond mere coincidence," Judge Morgan said.
As a proud supporter of American manufacturing, Certitude Security® is working diligently to inform leaders and facilitate essential asset protection priorities for manufacturing businesses throughout the United States. If you are interested in learning about the empowerment services that Certitude Security® can offer, visit our website or coordinate a time to speak to a team member today.