Business Intellectual Property Theft
Business theft doesn't just include the
obvious - shoplifting, embezzlement or robberies. Intellectual property theft is
an "invisible" type of business theft, meaning it often isn't thought about and
can go unnoticed. Companies don't do enough to prevent intellectual property
from being stolen or misused, and when theft of proprietary information occurs
the company may not pursue it, not realizing the cost and implications.
What is Intellectual Property Theft?
Intellectual property theft is different than the theft of physical property.
Instead, it involves stealing or misusing proprietary information a company (or
person) owns. Examples of intellectual property include copyrights (which
protect things such as written material, audio or video recordings, and even
computer code), trademarks (which protect things like a company name, product
name, logo, slogan, or package design), trade secrets (like a restaurant's
secret recipe), and patents (which protect inventions or discoveries, like the
composition of a new medication).
The Financial Cost of Intellectual Property Theft
Even though copyright violations, trademark infringement, and other intellectual
property thefts don't cause an immediate and visible financial loss the way
product thefts do, they can still be costly to your business.
Based on the government's definition of loss after 2000, the U.S. Department of
Justice (DOJ) found that "during 2002 more than half of IP theft defendants were
convicted with an infringement value of over $70,000." The DOJ also noted that
in civil intellectual property theft cases in 2002, the award amount in 57.7% of
successful cases was at least $500,000. Intellectual property theft is obviously
no small matter to any business with information worth protecting -- including
Civil vs Criminal Intellectual Property Theft
The DOJ explains that there are two types of intellectual property theft: civil
As you can see, a copyright violation or instance of trademark infringement may
fall under either civil or criminal cases.
- Civil Intellectual Property Theft
In civil cases of intellectual property theft, the victim can seek injunctions
to stop someone from using or selling their proprietary information, and they
can seek financial compensation for losses or to recover profits from the
Examples of civil intellectual property theft cases include:
- Copyright Infringement
- Trademark Infringement
- Patent Infringement
- Criminal Intellectual Property Theft
Criminal IP theft has been a hot issue for several years given the advent of
file-sharing tools on the Web, enabling people to share, distribute and create
derivative works from copyrighted materials (think movie pirating but more
advanced, and less easily tracked than catching someone with a shipment of
copied films). In 2002, the DOJ reported that less than half of criminal
defendants found guilty actually serve jail time, and only one third of
defendants are fined.
The types of cases that can be tried as criminal IP theft cases include:
- Copyright Infringement
- Trademark Infringement
- Theft of Trade Secrets
Preventing Business Intellectual Property Theft
There are several things your business can do to help prevent the theft of your
copyrights, trademarks, patents, and trade secrets. Here are some tips:
- Register your copyrights with the U.S. Copyright Office, and your trademarks
and patent applications with the U.S. Patent and Trademark Office (USPTO).
Copyrights and trademarks don't have to be officially registered to be valid
(for example, a written or recorded work is technically protected by copyright
the moment it's put in tangible form -- on paper, in a computer file, on a CD,
recorded to film, etc.). However, registered trademarks and copyrights can offer
extra rights or financial entitlement if an infringement case goes to court.
- Always mark your copyrights and trademarks clearly. For example, include a
copyright notice at the bottom of your company newsletter with the copyright
symbol (©), the year, and the company name. For trademarks, include the basic
trademark symbol (TM) if it isn't registered each time the slogan, product name,
etc. is mentioned, or the registered trademark symbol where appropriate (®).
- Protect patented technologies and company trade secrets by requiring employees
and contractors to sign non-disclosure, confidentiality, or non-compete
agreements when necessary. Make it clear what information is proprietary and
confidential. While this won't stop all instances of intellectual property theft
by employees, it gives your business a more solid legal foundation to pursue
damages if you have to take it to court.
Pursuing Intellectual Property Thieves
Sometimes protecting your intellectual property rights isn't enough -
infringement still happens. Fortunately, there are things you can do after the
fact to stop further violations and sometimes collect damages or losses.
With the prevalence of copyright infringement on the Web, the Digital Millennium
Copyright Act (DMCA) has become a useful tool. The Act allows your company to
send what are known as "DMCA notices" to an infringing party's Web hosting
provider, search engines, and other related parties. These notices offer details
proving that you're the owner of the intellectual property in question, and they
cite instances of copyright infringement on the Web. A DMCA notice to a host
might involve them forcing the violator to remove the content. A notice sent to
a search engine can result in having that infringing material de-indexed from
search results, so it won't reach new visitors and cause further losses.
Whether online or off, one early step is often to send a cease and desist
letter, detailing the infringement and requesting its prompt removal or
When all else fails, it's worth considering a civil or criminal intellectual
property theft case in the courts. After all, intellectual property theft can
cause real financial damage (on top of potential damage to your company's
image). It may sometimes be an "invisible" crime, but it's a type of business
theft your company can't afford to ignore.