Dear Colleagues,

The level of industrial espionage is rocketing with almost daily reports of (often Chinese) hackers actively looking for trade secrets and intellectual property (IP). Although Chinese hackers are often regarded as the number one source of thieves; most trade secret thefts are actually from insiders (e.g. employees taking information out of the company with a USB-memory stick). Chinese companies claim that they have an enormous problem with hackers and IP theft. Most thieves are definitely not caught. And don’t think just because you are a humble small business that you are immune to hackers looking for useful information. Theft of intellectual property (IP) and other useful information (e.g. credit cards) affects us all.

As engineering professionals; the value of our products and services is based around keeping our Intellectual Property secret or perhaps going through the patenting process.

But the situation is somewhat more complex than this.

Patent Your IP?
The standard approach to protect intellectual property is to patent it. This theoretically gives an inventor protection for her idea. The inevitable problem with this approach is that as soon as you patent your valuable invention; you are publishing it for everyone to see.  Meaning that someone in a less lawful country can simply pinch the idea and implement it. And probably get away with it.

An example is Coca Cola – if the secret Coke recipe had been published years ago; Coca Cola would have lost the rights a long, long time ago as the patent only lasts 20 years. So Coca Cola has followed the strategy of keeping their recipe secret.

Because of this concern many companies with high-value inventions refuse to patent them for fear that they will give the opposition an opportunity to implement them immediately.

To Patent or Not to Patent
The key consideration of whether to patent an invention or to keep it secret; should be based around whether one can keep it secret at all. Not necessarily from industrial hackers and spying but whether your competitors can reverse engineer your device (once they have legitimately purchased it to reverse engineer it). So if you can some how keep your invention secret while still selling it commercially, secrecy (and not patenting) will undoubtedly be the best approach. If you can’t keep the secret indefinitely; probably the best solution to protect your IP is to patent it.

Naturally, trade secret protection only protects against theft of the secret. It doesn’t stop someone developing an equivalent product or process. Theoretically, one can litigate against theft of a patent. However, often the resources of the inventor cannot match that of the individual who has stolen the patent.

The USA has now changed the patent law to ‘first to file’ rather than ‘first to invent’; but this sadly, is likely to benefit those thieves who steal the patents.

Some Other Solutions
When developing critical code for a key element of product or service, it is vital to break the code into discrete modules and isolate these with different people working on them. Any external contractor who is doing work for a company will only access part of the overall design. The other important item is to break a database into individual databases – so if one is hacked; the thief will still lack the remaining portions.

Thanks to the Economist (and especially their respondents) on an interesting discussion on patenting IP versus doing nothing.

Perhaps an old Czech proverb has a suggestion on how to protect one's IP: Do not protect yourself by a fence, but rather by your friends.

Yours in engineering learning

Steve