In a recent risk management survey, 42% of biotechnology executives reported that they were most concerned about exposure to intellectual property theft. The survey was sponsored by the Chubb Group of Insurance Companies, Biotechnology Industry Organization (BIO) and Medical Device Manufacturers Association (MDMA). A smaller percentage of those surveyed cited product recalls, tampering, lawsuits, or property loss as their top concerns.
The executives' identification of intellectual property theft as a critical business issue is not surprising given that economic espionage can be accomplished with the click of a mouse. Payment can occur just as quickly by directly depositing money into the employee's bank account. For companies that have invested significant time and resources in research and development, theft of valuable intellectual property may mean missed milestones, lost venture capital funding, disrupted clinical trials and substantial financial losses. According to the U.S. Commerce Department, annual intellectual property theft losses have risen to about $250 billion dollars and 750,000 jobs.
Given the potential for large profits and a relatively low risk of discovery compared with, for example, drug trafficking, intellectual property crimes committed by or on behalf of organized crime groups have significantly increased. Even more disturbing is the fact that, according to Ronald Noble, the Secretary General of Interpol, ?Intellectual Property Crime (IPC) is increasingly becoming the preferred method of funding for a growing number of terrorist groups.?
The vast majority of intellectual property theft is the result of disclosure of proprietary information by insiders, including both high and low level employees. The conventional fraud triangle suggests that employees are at risk to commit a crime against their employer when they experience pressure, have opportunity to commit the crime and are able to rationalize their behavior. Intellectual property crimes are no different and often involve employees who feel unappreciated; they retaliate because they have been laid off, or simply see an opportunity to financially benefit.
In light of these sobering facts, what can you do to protect your company? Conduct an IP audit and identify what is truly valuable
- Carefully consider who needs to be aware of the information and where it is stored
- Implement appropriate IT protections
- Educate employees on economic espionage and company policies, anticipating the potential for both inadvertent and intentional disclosure
- Avoid documents including aggregates of confidential information (e.g., the so-called ?how-to? manual that includes step-by-step instructions for recreating a product or process)
- Actively monitor your external relationships
- Prepare a proactive response and preservation plan to be implemented upon discovery of a breach to limit the harm and preserve evidence
- Perfect rights in valuable intellectual property assets to ensure the maximum benefit of civil and criminal enforcement actions
- Involve legal counsel every step of the way
Intellectual property theft likely will only increase over time. The threat is real and must be addressed in order to preserve the substantial value and benefit of intellectual property rights.
Steptoe & Johnson PLLC
Chief Marketing Officer