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.

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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

IP thieves work the phones

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 "pretext" 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. 

Go into the field

During the technology boom, one early morning flight from Austin to San Jose earned the nickname "the nerd bird." Shuttling businesspeople from one high-tech center to another, that flight and others like it became great places for competitive intelligence professionals to overhear discussions among coworkers or to sneak a peek at a fellow passenger's PowerPoint presentation or financial spreadsheet. 

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.

Put the pieces together

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. 

Go beyond the gray zones

Other countries may have vastly different ethical and legal guidelines for information gathering. Almost everything we've talked about so far is legal in the United States, or at least arguably so in the hands of a clever lawyer. There's another realm of corporate sleuthing, using bugs, bribes, theft and even extortion that is widely practiced elsewhere. 

In his days as a global security consultant, Bill Boni, vice president information security at T-Mobile USA, saw several things happen that probably wouldn't happen in the U.S. A bank in South America that suspected espionage brought in a security consultancy to sweep the place of bugs. When the loss of information continued, the bank hired a different security team. "They found 27 different devices," Boni recalls. "The whole executive suite was wired for motion and sound. The first team that came in to look for bugs was probably installing them."

Espionage is sometimes sanctioned - or even carried out - by foreign governments, which may view helping local companies keep tabs on foreign rivals as a way to boost the country's economy. That's why no single set of guidelines for protecting intellectual property will work everywhere in the world. The CSO's job is to evaluate the risks for every country the company does business in, and act accordingly. Some procedures, such as reminding people to protect their laptops, will always be the same. Certain countries require more precautions. Executives traveling to Pakistan, for example, might need to register under pseudonyms, have their hotel rooms or work spaces swept for bugs, or even have security guards help protect information.

Use the Internet of Things (IoT)

One of the most vulnerable environments is the health care industry. At many hospitals, each bed may have up to 15 IoT bio-med devices, with potentially half connected to the internet. Hackers are getting wise to the fact that the value of protected health information (PHI) is much more valuable than personally identifiable information (PII). 

Weakness in a hospital network via these IoT devices makes it an easier target than in the past. It becomes critically dangerous to patients if the hacker starts changing drug administration protocols on an IoT internet-connected pump.

Most will agree that IoT manufacturers have rushed their devices to market to fill demand, without thinking about how to secure them. Among the problems: Processors in these devices are too small to house IDS, and few devices can be updated. Manufacturers are working to make devices easy to update or automatically updatable since many consumers don’t bother to perform updates on their own.

That said, most hackers are not geographically close enough to stay within range of the device and target the weakest link, the end-server. Organizations need to develop and implement their own strategies that might include securing end-servers, central servers and wireless access points since they’re most the most likely to be the target for a break-in.

Infiltrate corporate networks undetected and live there for lengthy periods of time

R.P. Eddy, CEO of Ergo a global intelligence firm, says, “I’ve worked on several M&A teams and strongly recommend to my clients that they run an audit on all their IP protections, cyber and otherwise, to see how well-protected [their IP] actually is and if they really own it. If it’s leaked out to China, Russia or a competitor, it will significantly factor into the financials in an acquisition, and not in a good way.” He had zero clients taking him up on the offer until the Verizon/Yahoo acquisition where upwards of 500 million user accounts were compromised by a state-sponsored actor. The deal price had to be restructured due to the credibility hit Yahoo took.

For more data on the impact of cyber theft of intellectual property, download the infographic below, which is from a recent survey conducted by Bitdefender.

Results from a Bitdefender survey that shows how companies fear cyber espionage. Bitdefender

Copyright © 2019 IDG Communications, Inc.

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