American manufacturers are engaged in a desperate struggle to stay competitive on a global scale. To simply stay afloat in the face of tough foreign competition, American manufacturers need to be efficient and innovative.
The innovations that manufacturers make to be more competitive are also known as their Intellectual Properties, or IPs. Having unique IPs give a manufacturer the competitive edge that they need to win business from competitors. As such, a company’s IP needs to be protected as strongly as possible from pirates and thieves.
The need to protect your company’s IP was the focus of a recent article by Marlin Steel’s CEO that was featured in the Spring issue of Wire Forming Tech.
What were the highlights of the Wire Forming Tech article by Marlin Steel’s CEO? How can manufacturers deal with IP theft and stay afloat? Here are a few takeaways from the article to help you find ways to protect your IP and deal with theft:
IP Theft Costs Companies Roughly $300 Billion Each Year
Some businesses might think that they can’t possibly be affected by IP theft, that their process is secure, and that the theft of their intellectual property would have a minimal impact at worst.
Did you know that IP theft costs the U.S. economy as much as $300 billion dollars each year?
Once taken by a competitor, they can use your hard-earned IP to improve their processes without the expense of the research and development investments that your own company has to pay for. This enables the competitor to undercut your company on price. When all other factors are the same, this can be devastating.
Marlin Steel was once affected by IP theft from competitors in China and India. These companies had taken product designs and website images from Marlin to create cheap knock-offs and ship them to ports all over the world, including Marlin’s home territory of Baltimore, MD.
Best Practices to Minimize IP Theft Risk & Impact
IP theft threats come from many different sources. There is internal theft of IP by former disgruntled employees, theft by cybercriminals who make a living off of stealing and selling trade secrets, and competitors who use every avenue at their disposal to take away your company’s “secret sauce.”
While no company is ever 100% protected from IP theft by all sources, there are a few best practices that you can use to minimize your IP theft risk, including:
- Assess and Inventory Your IP Portfolio. One of the most basic steps in protecting your company’s IPs is to know what your IPs are and where you’re storing the documentation for them. IP you aren’t tracking is IP that is going unprotected.
- Use Nondisclosure Agreements. NDAs are an important part of making sure that employees do not share proprietary information about your company’s processes and designs with third parties. With NDAs, you have a legal recourse that you can take if an employee does violate the terms of the agreement. Use NDAs with every employee, especially temp workers.
- Educate Employees about Basic IP and Cybersecurity. Making sure that employees are aware of common cybersecurity risks at work can go a long way to reducing your company’s vulnerability to outside attacks. Establish clear guidelines for using computers and the internet at work, and you’ll save yourself a lot of hassle later on.
- Invest in Improved IT Systems Security. At a minimum, all computers at your worksite should have basic antivirus and spam filtering software installed. Making this investment should be a no-brainer for any modern business, as it is well worth the cost to prevent thieves from stealing your company’s secret sauce with ease.
No matter how effective your IP protection measures are, you should always prepare for the worst. As events in the last few years have proven, almost no amount of cybersecurity can keep a sufficiently talented and determined team of thieves at bay indefinitely.
More effective laws and improved enforcement measures are necessary to prevent cybercrime and keep criminals at bay.
The Three Major Types of IP Theft Affecting U.S. Manufacturers
A NAJI report cited within the article detailed the impact of IP theft on American manufacturers. According to the report, there are three major types of IP theft “impacting technology-intensive USA firms.” These forms of IP theft include:
- Piracy. U.S.-based companies suffer piracy of their copyrighted works (copyrighted designs, for example).
- Counterfeiting. Many U.S. companies have proprietary brands, complete with logos and unique designs. Foreign competitors often make cheap knock-offs that leverage the brand recognition of the original manufacturer’s logo and design to make sales, harming the brand image of the original manufacturer as well as stealing their market segment.
- Trade Secret Theft. Many companies spend years developing proprietary assembly techniques and material formulas to give themselves an advantage. When business data and trade secrets are stolen, competitors can use that information to replicate the more efficient manufacturing process the original company may have spent years and thousands of dollars to develop.
These three forms of IP theft pose a very real threat to manufacturers throughout the USA, one that needs to be addressed.
Countering IP Theft
Thankfully, American manufacturing businesses are not totally helpless against the ravages of foreign IP thieves. In recent years, state Attorneys General have begun to strike back at foreign IP thieves. In several cases, an Attorney General has used consumer protection statutes to take action against overseas manufacturers using stolen IP, preventing the shipment of products made using stolen IP into their states.
Additionally, organizations such as the National Alliance for Jobs and Innovation (NAJI) have given manufacturers a place to voice their concerns and make sure that they’re heard by policymakers on Capitol Hill.
If your company is affected by IP theft, leveraging the resources of your State’s Attorney General and organization such as NAJI can have a huge impact.
Working together, we can bring back the pride of the “Made in America” label and continue to grow the American economy.