Business Intellectual Property Theft

Business Intellectual Property

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 yours.

Civil vs Criminal Intellectual Property Theft
The DOJ explains that there are two types of intellectual property theft: civil and criminal.

  • 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 infringing party.

  • 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
As you can see, a copyright violation or instance of trademark infringement may fall under either civil or criminal cases.

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 discontinued use.

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.