Will your employees steal from you? Did your former employees steal from you? How will you know? Certainly you’ll know if a desk or computer or truck goes missing. And if the company bank account comes up short, you’ll know that pretty quickly too. But some of your company’s most valuable assets aren’t so visible. Or they can be duplicated without the asset actually disappearing, even though their value may have sharply dropped without your even knowing it.
I’m talking about your intellectual property, or IP. Virtually every company has some, although some IP is much more valuable than others. The problem is that by the time you find out it’s been taken, the damage may already be done. Your golden goose may be laying eggs in someone else’s nest. For example:
- Your customer list may already have been shared with competitors.
- Your secret manufacturing process may be enhancing someone else’s gross profit margins.
- Your extensive software development project may have been replicated by a competitor within weeks, despite your taking months or years to develop it.
- Your trademarks and copyrights may have been cloned, and you’ll know that for the first time when the knockoffs appear.
The Commission on the Theft of American Intellectual Property estimates that annual losses due to IP theft in the US range up to $600 billion. Every year. And you can’t just send an army over to recover your property. Your only recourse upon discovery is often a lengthy court battle to prove something that’s not easy to prove. And if the thief is a foreign entity and not just a former employee – or worse in collaboration with that former employee – your task can be truly daunting.
OK, that’s the problem. How do you try to prevent it? Here are some questions to ask yourself:
- What are the ways in which our IP could potentially be compromised?
- Could the damage be minimized through legal means?
- Would a compromise cause real financial loss?
- How could the loss be measured?
- Are there ways in which the company could mitigate the loss?
Most of us are not smart enough, or tech savvy enough, to answer those questions without some professional help. But you can begin. For example, has your company attempted to make a list of its IP, so you know what exists that needs protecting? Do you have internal security policies in place that every employee knows about? Do you carefully vet potential new hires? Have you considered IP insurance as a source of compensation if it does happen?
While risk management is every CFO’s concern, my firm is not the place to help you develop effective IP protection strategies, but we know folks who are, and we’re happy to make a referral. Whether you’ve had a loss and your lawyers want technical help to prove it, or you are concerned that you have unprotected IP and you don’t know where to start, ask us. We know people.
We are Your CFO for Rent.