IP Theft In 2024: Protecting Your Secrets

What IP Theft Will Cost You in 2024 And How To Protect Your Secrets

by Katrina Thompson — 2 months ago in Security 4 min. read

There are tangible and intangible costs to having your intellectual property stolen. However, they all lead back to negatively impacting your bottom line. Here’s how this type of fraud can hurt you in the year ahead, and how to stay smart.

What is IP Theft?

Data security firm Cyberhaven notes that IP theft breaks down into four main types:

  1. Copyright infringement: Copyrighted materials like books, movies, and music must be used with the explicit permission of the copyright holder. Anything less constitutes theft.
  2. Trademark counterfeiting: Brands register a trademark because it protects their image in the market and secures the symbol of their success. Knock-offs – be they Prada, Barbie, or the Green Bay Packers – jeopardize the original brand by not being held to the same quality standards or brand guidelines.
  3. Patent infringement: The purpose of a patent is to preserve the right to reproduce a certain item – a piece of IP – for the inventor of the item themselves. It is then theirs to sell, share, or redistribute as they wish, but to replicate their product without their consent is illegal, and constitutes patent infringement.
  4. Trade Secret Theft: Trade secrets are the “secret sauce” that gives one company a competitive edge. The theory is that they’ve earned it, and those secrets are now their intellectual property to benefit from. Stealing this information disrupts market integrity and provides dishonest competition.

IP theft can cost in a number of ways. The better companies understand those costs, the more motivated they will be to take the necessary precautions to prevent them.

Also read: 10 Best AI Voice Generators In 2024 (Free & Paid)

Financial Losses

The Commission on the Theft of American Intellectual Property estimates that losses originating from IP theft range from $225 billion to $600 billion per year, or from 1%-5% of the entire U.S. GDP.

Deloitte’s report on the hidden costs of an IP breach notes that 85% of these financial losses stem from lost contract revenues and operational disruptions, although customer breach notifications, PR outreach, regulatory fines, and investigations all carry some of the blame. In the case of lost contracts, perhaps no one understands quite like Massachusetts-based infrastructure company American Superconductor. Their top client illicitly obtained their source code and installed the pirated version on their wind turbines, costing the company $100 million in yearly recurring revenue.

Much of the burden also comes from lost revenue from the physical sale of these IP-rich products. To give a picture of just how much the rightful owners are missing out on, the U.S. Patent and Trademark Office stated that the sale of pirated and counterfeit goods totaled as high as $4.5 trillion annually.

If this was all, it would be bad enough. However, IP theft has a bigger effect on the American economy at large. Intellectual property-intense industries account for 35% of the total U.S. workforce, comprising 56 million jobs. Counterfeiting and piracy cost U.S. businesses upwards of $200 billion a year and no less than 750,000 jobs. That’s not an insignificant price to pay.

Legal Implications

Intellectual property law can be one of the costliest kinds of law practiced in the U.S. as it is. Tangling with it to extricate oneself from a sticky IP ownership situation could incur all sorts of fees, and these at higher rates than other, less specialized dilemmas.

Here’s how the figures shake out. A patent infringement case with $25 million at stake can range anywhere from $2 million to $9 million to resolve, and IP mediation alone costs roughly $100,000 per case. If the revenue losses don’t get you, the legal fees will. Protecting your IP the first time with far less costly preventative measures – like the right policies, training, and data security solutions – can make all the difference to some companies. Or at least to their executives.

Beware; if your company fails to protect its intellectual property with the proper legal due diligence, some courts could rule that you’ve forfeited your rights to it, leaving you without your intellectual property or a form of recourse. It’s best to get on this now and put the legal provisions in place to protect what you have. Protect what you have now. Many companies wait until their proprietary secrets are “just so” until they legally protect, but that could leave open vulnerable (and valuable) spots in the middle of development. On the other hand, some companies wait until it’s too late.

Protecting Intellectual Property (IP) in 2024

New IP protection legislation like the IDEA Act promises to allocate more funding to IP enforcement at the local level, and world powers like the Five Eyes Alliance have already turned a critical eye to global cases of systemic IP theft from foreign entities. However, government support doesn’t eradicate the need for private sector oversight or remove the onus for IP protection from the companies themselves.

Aside from putting the proper legal protections in place, securing your intellectual property in 2024 largely comes down to having the right cybersecurity measures in place. Key methods include:

  • Digital Rights Management (DRM): A popular way of protecting creative rights in particular, DRM attaches protections to the actual work, not the space it’s stored in. This data protection method has since spread to protecting other types of sensitive data because of its ability to limit access to certain files, restrict what a party can do with those files, restrict which party can access the files, put a geographic boundary on said files, and even revoke access after the files have been sent. It’s the ultimate creative control of your creative property.
  • Data Detection and Response (DDR): If you’ve seen the term “data lineage” around, this is the umbrella that it’s under. Data Detection and Response is a newer field in cybersecurity that protects your IP (and other critical information) by giving you a gradual overview of everywhere it’s ever been. You see every transfer, save, send, share, and storage location so no internal (or external) cup games can happen without your knowing it. Now, data can’t get conveniently “lost in the shuffle” – and end up on the Dark Web.
  • Principle of Least Privilege: This means not only enacting strict IAM policies, but making sure those policies require continuous authentication. That means not only checking identities at the door but at every significant checkpoint once they’re inside. There’s no reason someone you trust on your network in general should also have the keys to the kingdom. Beware of “privilege creep” and over-generous permission allocation. It may be more convenient now for everyone on your team to have access to X critical asset, but when one of them clicks a phishing link, you’re going to wish your IP was protected by more fool-proof means.

Things like stringent password requirements, MFA, and Secure File Transfer (SFT) methods (so your data doesn’t get duped in transit) are, of course, also a given.

Intellectual property theft will only become more common as more and more companies complete their digital transformation. Now that everything is somehow accessible in cyberspace, it becomes a matter of business criticality to secure IP in the digital realm. Anything less will lead to costs that will soon be too high to bear.

Katrina Thompson

About the Author: An ardent believer in personal data privacy and the technology behind it, Katrina Thompson is a freelance writer leaning into encryption, data privacy legislation and the intersection of information technology and human rights. She has written for Bora, Venafi, Tripwire and many other sites.

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