Intellectual property protection: 10 tips to keep IP safe

Your company's intellectual property—whether that's patents, trade secrets or just employee know-how—may be more valuable than your physical assets. Here's to establish basic policies and procedures for IP protection.

1 2 Page 2
Page 2 of 2

Over the years, France, China, Latin America and the former Soviet Union states have all developed reputations as places where industrial espionage is widely accepted, even encouraged, as a way of promoting the country's economy. Many other countries are worse. A good resource for evaluating the threat of doing business in different parts of the world is the Corruption Perceptions Index published each year by Transparency International. In 2020, the Corruption Perceptions Index ranked the following 5 countries as being "perceived as most corrupt": South Sudan, Somalia, Syria, Yemen, and Venezuela.

How IP spies and thieves work

Leonard Fuld, a competitive intelligence expert, says more damage is done by a company's lax security than by thieves. All of the data that thieves can gather from the examples below tells a competitor what your company is doing. Combined, the right details might help a rival reduce your first-to-market advantage, improve the efficiency of their own manufacturing facility or refocus their research in a profitable direction:

  • Salespeople showing off upcoming products at trade shows
  • Technical organizations describing their R&D facilities in job listings
  • Suppliers bragging about sales on their websites
  • Publicity departments issuing press releases about new patent filings
  • Companies in industries targeted by regulators over-reporting information about manufacturing facilities to the Environmental Protection Agency or OSHA, which can become part of the public record
  • Employees posting comments on Internet bulletin boards

John Nolan, founder of the Phoenix Consulting Group, has some amazing stories of what people will tell him over the phone. People like him are the reason that seemingly benign lists of employee names, titles and phone extensions, or internal newsletters announcing retirements or promotions, should be closely guarded. That's because the more Nolan knows about the person who answers the phone, the better he can work that person for information. "I identify myself and say, 'I'm working on a project, and I'm told you're the smartest person when it comes to yellow marker pens. Is this a good time to talk?'" says Nolan, describing his methods. 

"Fifty out of 100 people are willing to talk to us with just that kind of information." The other 50? They ask what Phoenix Consulting Group is. Nolan replies (and this is true) that Phoenix is a research company working on a project for a client he can't name because of a confidentiality agreement. Fifteen people will then usually hang up, but the other 35 start talking. Not a bad hit rate. 

Nolan starts taking notes that will eventually make their way into two files. The first file is information for his client, and the second is a database of 120,000 past sources, including information about their expertise, how friendly they were, and personal details such as their hobbies or where they went to graduate school. Often business intelligence gatherers use well-practiced tactics for eliciting information without asking for it directly, or by implying that they are someone they aren't. 

This tactic is known as "social engineering." Such scams might also include pretexting calls from someone pretending to be a student working on a research project, an employee at a conference who needs some paperwork, or a board member's secretary who needs an address list to mail Christmas cards. Most of those calls are not illegal. Lawyers say that while it is against the law to pretend to be someone else, it's not illegal to be dishonest. 

Any public place where employees go, snoops can also go: airports, coffee shops, restaurants and bars near company offices and factories, and, of course, trade shows. An operative working for the competition might corner one of your researchers after a presentation, or pose as a potential customer to try to get a demo of a new product or learn about pricing from your sales team. That operative might simply take off his name badge before approaching your booth at a trade show. Employees must know not to talk about sensitive business in public places, and how to work with the marketing department to make sure the risks of revealing inside information at a trade show don't outweigh the benefits of drumming up business.

Job interviews are another possible leak. Daring competitors may risk sending one of their own employees to a job interview, or they could hire a competitive intelligence firm to do so. Conversely, a competitor might invite one of your employees in for a job interview with no other purpose than gleaning information about your processes.

In some ways, trade secrets are easy to protect. Stealing them is illegal under the 1996 Economic Espionage Act. Employees usually know that they're valuable, and non-disclosure agreements may protect your company further. What's more complicated is helping employees understand how seemingly innocuous details can be strung together into a bigger picture—and how a simple company phone list becomes a weapon in the hands of snoops like John Nolan. 

Consider this scenario: Nolan once had a client who wanted him to find out whether any rivals were working on a certain technology. During his research of public records, he came across nine or 10 people who had been publishing papers on this specialized area since they were grad students together. Suddenly, they all stopped writing about the technology. Nolan did some background work and discovered that they had all moved to a certain part of the country to work for the same company. 

None of that constituted a trade secret or even, necessarily, strategic information, but Nolan saw a picture forming. "What that told us was that they had stopped [publishing information about the technology] because they recognized that the technology had gotten to a point where it was probably going to be profitable," Nolan says. Then, by calling the people on the phone, going to meetings where they were speaking on other topics, and asking them afterward about the research they were no longer speaking publicly about, Nolan's firm was able to figure out when the technology would hit the market. This information, he says, gave his client a two-year heads up on the competition's plans. 

Editor's note: This article has been updated to more accurately reflect recent trends and examples.

Copyright © 2021 IDG Communications, Inc.

1 2 Page 2
Page 2 of 2
7 hot cybersecurity trends (and 2 going cold)