Theft of Trade Secrets and IP: A Sobering Business Reality and ‘Wake-Up Call’

Michael D. Moberly – February 5, 2009

First, let me emphasize at the outset, as I consistently have in previous posts, I am not a protectionist, and under no circumstances am I advocating government protectionist policies.  I am, however, a strong proponent of Article I, Section 8 of the U.S. Constitution that states, quite clearly, ‘if I invent, I’m the one who should reap the economic benefits’, presuming, of course, I (a.) abide by the relevant laws and best practices insofar as monitoring all attempts to misappropriate, infringe, and steal (my IP) which will inevitably occur, and (b.) aggressively pursue any and all who wish to deprive me of the full and rightful benefits accruing from my invention.

The first, and perhaps most important reality to consider is that not all cultures’ – economies’ – countries embrace this philosophy, notwithstanding that it is a basic requisite to WTO membership.

In McAfee’s study, Unsecured Economies: Protecting Vital Information, conducted by Purdue University’s CERIAS unit, survey respondens and experts agreed that:

‘if an enterprise can appropriate R&D at minimal cost compared to its competitor and the company can still produce a comparable product at a far lower cost, basic economics dictates that the firm will win in the marketplace…’

‘therefore, the incentives for industrial – economic espionage are high, particularly in highly sought after developing markets, where many old economy firms might not be well established by brand reputation…’

While the sentiment (reality) conveyed above is certainly a long understood fact among information asset protection professionals, there remain a significant number of companies who have yet, or are extremely slow to respond to this global and very costly reality.  What’s more, many, if not a majority of companies, still do not have an integrated (enterprise-wide) approach to address the problem, i.e.,

– converges the expertise of information asset security, HR, IP counsel, IT, risk management, marketing, and R&D, etc.

– ensure that control, use, ownership, and value of the information (intangibles, IP, trade secret, competitive advantage) assets are sustained for the duration of the transaction or deal.

Ultimately, there must be (a.) a continually shared and respected dialogue among the different areas, (b.) recognition of each areas’ perceptions of risks and threats, and (c.) the tools – attitude to reach consensus on actions to take and resources to use.



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