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Intellectual property (IP) are valuable, intangible assets that provide individuals and businesses with the ideas and designs needed to expose unique products or services. IP and trade secrets have always been at risk of predatory behavior from competitors and companies with converging interests. However, technology has led to a large number of new risks and opportunities qualify for theft of valuable IP.
Theft of valuable IP can hurt the profits of large companies, but it can also destroy everyday businesses. Along with this, the FBI estimates that the theft of IP and trade secrets and piracy of software results in annual losses between $225 billion and $600 billion. A key country in the conversation about stolen IP is China, where: 1 in 5 companies that stole their IP in 2018.
Moreover, after IP theft, the story is often limited to costly legal battles in court. This lawsuit often does not compensate near the amount lost by a person or organization when their IP is stolen. In addition, challenging the entity that stole IP and trade secrets often yields little or no valuable results.
Applications of IP protection strategies are essential as a preventative measure against IP theft. Here’s how to protect your business ideas.
Related: 4 reasons why IP protection is critical to business growth
1. Pursuit of patents, trademarks, copyrights and trade secrets
When it comes to intellectual property, one of the first things that needs to be done is for the owner of that property to provide legal protection for their IP. In the US, there are four ways to: protect intellectual property.
The first way is to obtain a patent. The US Patent and Trademark Office grants protection and ownership to original inventions, from processes to machines. Patents protect inventions from unauthorized use and give inventors exclusive rights. Often technology companies such as Apple and Microsoft use patents.
The second way to legally protect IP is through a trademark. Trademarks protect several important components of a brand or work. These include protection of logos, words, colors or symbols used by an organization or individual for their service or product. Think Disney’s Mickey Mouse and other related branding.
Copyrights are the third legally protective option for IP. However, with copyright, the intellectual property must be tangible and written down, such as a book, song, original speech, poem, or other written original IP. While an original work is automatically owned by the copyright of the creator of the work, registration through the US Copyright Office helps show that ownership more clearly and quickly.
The fourth option to legally protect IP is through trade secrets. Trade secrets are IP that is not public, contains information of monetary value and gives the holder of that secret a competitive advantage. This could be a trial or even a recipe for a real secret sauce that a pizza company has on its pies.
To qualify for a trade secret, the organization or individual must actively prevent this information from becoming public. If the information is voluntarily made public, it is no longer a protected trade secret.
Related: The Procedure: Protecting Your Intellectual Property as a Small Business
2. Ensure your cybersecurity practices
Good cybersecurity practices are a fundamental strategy for wanting to protect not only IP, but also personal information such as financial information and access to sensitive accounts. Some ways to practice good cybersecurity habits are by using strong passwords and two-factor authentication applications or steps when logging into accounts. It would also be a good idea to hire a specialist or specialists to work on organizational cybersecurity only if it is financially feasible.
3. Create a risk management strategy
Potential intellectual property thieves are lurking and can jump in the blink of an eye. Regardless of the security measures in place to prevent IP theft, organizations and individuals must have risk management plans in place to prepare for the “what if?” of IP theft. Given the sensitivity and importance of IP, companies should allocate sufficient resources to organize risk management strategies for potential IP theft.
4. Consider Captive IP Insurance
While commercial insurance is valuable for insuring against many risks, it is limited in its ability to respond to rapid shifts and changes and to insure the many hidden risks that businesses face in conjunction with general operations. This is true captive insurance comes in and can act as a reservoir for holding capital in the event of a crisis or theft of valuable IP.
Intellectual property theft is shocking and can happen when least expected. With captive IP insurance, organizations can build a cash reserve and help protect their intellectual property. Captive insurance is defined by the IRS as a wholly owned insurance subsidiary that issues insurance policies to protect the parent company. Captive insurance also allows the parent company to defer taxes on loss reserves, allowing the company to build a larger pool of funds.
Related: The Basics of Protecting Your Intellectual Property Explained
5. Think about real world examples
Businesses need to sit down and imagine what kind of damage IP theft can have on them. In addition, what would the fallout look like for their bottom line and how else could that loss of IP be felt and measured?
A scary real-world example comes from 2019 when the Chinese manufacturer Stole Sinovel IP of its US partner, American Superconductor, and led to the US company Losing $1 Billion in inventory value, while Sinovel only paid a total of $59 million in fines.
The ever-present risk to IP and proprietary information makes it clear that both individuals and organizations need to take proactive measures to reduce the risk of theft of their intellectual property.