Intellectual Property Theft – I Can Invent, Manufacture, and Commercialize Faster Than They Can Steal…?

By Michael D. Moberly

Three ironies…

The first irony is that some companies tout an ‘I can invent faster than they can steal’ strategy at a time when intangible – knowledge-based assets have clearly outpaced tangible (physical) assets as the dominant source of most company’s value, revenue, value and ‘building blocks’ for growth, profitability, and sustainability.

For example, the source of value of products such as computers, cellular phones, pharmaceuticals, even some branded consumer products, has, in most instances, shifted from its physical content to its knowledge (intangible asset) content.  Corporate and institutional investment in intangibles such as R&D, brand development, and intellectual, structural, and relationship capital is growing at a substantially faster pace than tangible investments throughout most all developed countries. (Blair, Margaret M., Wallman, Steven M.H. Understanding Intangible Sources of Value.  Brookings Institution. 2000)

The second irony to a ‘I can invent and commercialize faster than they can steal’ strategy is that it’s being touted at a time when corporate and state sponsored business intelligence, economic espionage, information brokering, and data mining and cyber espionage have become more intensive.

The Office of the National Counterintelligence Executive (ONCIX) Annual Report to Congress on Foreign Economic Collection and Industrial Espionage and the American Society for Industrial Security’s Trends In Proprietary Information Loss Survey, and  SANS Institutes’ Study on Cyber Espionage, just to site a few, consistently indicate that ‘the U.S. continues to be threatened by the theft of proprietary economic information and critical technologies.

ONCIX’ Annual Reports consistently point out that risks to sensitive (proprietary) business information and advanced technologies have dramatically increased in the post-Cold War era as foreign governments – both former adversaries and allies – have shifted their espionage resources away from military and political to commercial targets.  The information assets sought are not simply technological data but also financial and commercial information that will deliver a competitive edge in the global economy.

Contrary to some companies perceptions,, leading-edge technologies are not the only assets being targeted.’ (ONCIX Annual Report to The President on Economic Espionage)

A company’s plans, intentions, and capabilities are of interest to competitors and economic adversaries alike because the perspectives-insights gleaned can be used to undermine the targeted company’s competitive advantages, erode its profitability, and stifle momentum for its projects and initiatives.

Implicit in the third irony of the ‘I can invent and commercialize faster than they can steal’ strategy evolve around company turf protection that doesn’t allow information asset protection and computer/IT security practitioners to fully recognize and/or act on their ‘risk commonalities’ to create efficiencies and improved information asset protection.

Perceptually, computer/IT security is often considered the dominant domain for information protection, especially in light of the significant amount of (tangible) resources organizations routinely dedicate to protecting he data and information in their computing – IT systems.

Some computer/IT security practitioners would have us believe that all valuable information evolves from and is stored in computers and IT systems.  Therefore, their logic continues, as a company’s computers and computing systems are (presumed to be) secure, so is the company’s proprietary-sensitive information, trade secrets, proprietary know how, and intellectual property.

But, the question; is the system secure?, carries less meaning today.  The more meaningful question is; has the company’s proprietary-sensitive information, trade secrets, and other valuable intellectual capital adequately protected against events and/or acts known to be competitively – economically harmful?  An often overlooked (neglected) aspect of computer/IT security is that proprietary – competitive advantage assets exist in many formats other than (solely) electronic bits and bytes!

As these realities become more routine action items on company management team agendas, they may be less inclined to summarily dismiss the benefits of adopting a more strategic view about protecting, preserving, and monitoring the value of their intangible assets.

Every Management Team Knows Intangible Assets Have Value, Or Do They?

The professionally condescending adage, ‘talk is cheap’, unfortunately remains indicative of some attitudes held by management teams about the value of intangible assets.  It is only in the past twenty years that we have come to realize that intangibles’ have taken on a new character, that is, they have passed from merely being an instrument through which companies acquire and manage other assets, to being primary assets themselves and the emergence of intangible assets as commodities which require continual protection and definition of ownership rights.  (Branscomb, Anne Wells. Who Owns Information?  From Privacy to Public Access.  Basic Books, 1994).

Today’s companies increasingly find themselves producing an entirely different type of product, i.e., knowledge – intellectual capital, which has become a dominant form of economic – competitive advantage muscle.  Nearly all of the world’s most innovative, successful and wealthy companies are those that wield, manage, and safeguard their knowledge (know how and intellectual capital) effectively.

Michael Dertouzos offers a different view about the value of information assets, i.e., he says, most people believe…

  • information can be easily replicated or replaced, therefore, it has little, if any, value
  • information is passive and exists in abundance, therefore little value is attached other than to its owner or originator.  (Dertouzos, Michael. What Will Be, How theNew World of Information Will Change Our Lives.  Harper Edge. 1997)

Such perspectives often play out as management teams’ rationale for applying only the most cursory (minimal) measures to protect and preserve the value of their intangible assets.

Another perspective readily found in both public and private sectors’ is the assumption that there is a correlation in how certain information is characterized or classified and its value, i.e., top secret, secret, confidential, proprietary, sensitive, etc. Presumably the higher the classification level, the greater its value.  But, given today’s extraordinarily sophisticated and globally predatorial data mining and open source intelligence and analysis capabilities, any presumed relationship between classification and value has largely diminished because the targeting of ideas and innovation routinely occurs long before classification processes are applied.

[This post originally appeared on the Business IP and Intangible Asset Blog.]

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