There is no better illustration of this fact than the following statements:

  • Uber – the world’s largest taxi company owns no vehicles.
  • FaceBook – the world’s most popular media owner creates no content.
  • Alibaba – the world’s most valuable retailer has no inventory.
  • AirBnB – the world’s largest accommodation provider owns no real estate.

Whereas 40 years ago you could touch and feel the majority of business assets, this is no longer the case. Now, it is ethereal intangible assets that create real business value such as ‘traditional’ IP –patents, trade marks, copyright and designs alongside know how and goodwill. This seismic shift has been described as an economic inversion.

If your business is your IP, you need to protect it from prying eyes. Image: iStock/Gajus
If your business is your IP, you need to protect it from prying eyes. Image: iStock/Gajus

This is significant because it is now more vital than ever for businesses to ensure they capture, register (where possible) and protect their IP from those who might seek to copy it.

The Federation of Small Businesses recently conducted a survey of its members which remarkably found that no less than a quarter of firms with IP had been infringed within the last five years. This is a staggeringly high statistic and one that is likely to increase given the huge growth in the number of start-ups in this country. This growth means that more IP will be created - whether it’s company names, new technology or online content  - and the more likely it is that they will “bump” into other businesses’ IP.

This means that companies need to be aware of the risks and threats, and respond to them swiftly.

Types of threats.

Many infringements actually arise unintentionally. A newly incorporated company may innocently adopt a name similar to another, or a technology which already exists. In such circumstances it is hoped that the parties act sensibly and come to a mutually agreeable arrangement.   However it can also be a very expensive mistake.

Other types of infringements however are nothing short of theft. For example, where a company seeks to acquire the source code of a rival’s software product or re-engineer a product that is protected by a patent. These attacks are the most damaging and can just as easily come from within an organisation as from outside.

Unsurprisingly, one of the biggest threats comes from company employees, either whilst still employed or when leaving the firm.

This is particularly relevant in the technology industry.  Only this month in the USA, Jawbone issued proceedings against its fierce rival Fitbit, alleging that five employees who joined Fitbit from Jawbone took with them highly confidential information relating to Jawbone’s IP and business strategy. This is not an uncommon allegation.

External threats

External threats can come in a number of guises. Suppliers, distributors and other partners may have access to proprietary information and can take advantage of that access. Again, there are a number of steps that can be taken to reduce the risk of infringement.

Firstly ensure you own the IP under any collaboration agreement and  enter into NDAs with all partners. Limiting access to confidential information to those that need it also reduces the risk of IP infringement.

The final threat comes from competitors and it is unlikely you will know anything about it until it starts affecting your business. The best way to combat this is to ensure you keep a close eye on your market place so that you can take action as soon as possible. Nipping infringements in the bud is the best way of ensuring a quick and cheap resolution.  Generally, the longer the infringement continues the harder it is to stop.

Unfortunately, IP infringement is not uncommon and whilst there are steps you can take to reduce the risk, it can never be eradicated completely. The more successful you are the higher the risk of someone trying to copy you. Consider IP insurance, which will cover the legal costs of stopping infringers – investors like it as it means they wont have to dig deep to fund expensive litigation and it protects vital cash flow which is better spent on growing your business.

Best Practice

The following steps should be put in place to protect against employees leaking or leaving with confidential information:

  1. On starting, you should make it clear to all employees that you take the misuse of sensitive data extremely seriously and that sanctions will apply should they decide to breach that code.
  2. Implement data and office area restrictions so access to confidential information is only available to those that need it.
  3. Make sure you are able to monitor employee’s digital footprints so that if any confidential information is downloaded for unauthorised purposes or goes missing, it can be traced.
  4. Implement a strict policy for those employees who hand in their notice. Most theft occurs during this period so ensure they cannot access any sensitive information and remind them of their duties to keep sensitive information confidential.

David Bloom is CEO and founder of Safeguard iP, the UK’s only dedicated IP insurance Broker