ftopia Blog

In the Wall Street Journal spotlight: intellectual property theft in China

Wall Street Journal has just published an interesting article in which Western businesses are encouraged to protect themselves against industrial espionage and intellectual property theft, especially in China – a land of opportunity but also a land of counterfeiting.

In the article “Patents are a Virtue” written by Geoff Nairn, we learn that although China is not the only source of pirated goods, it is the main source, according to the European Commission, as it accounts for 85% of the counterfeit goods seized in the European Union last year.

The problem is not limited to hot-selling electronic gadgets; counterfeiting plagues almost every industry. It costs Europe’s engineering industry about 10 billion euros per year, according to trade body Orgalime.

Although “reverse engineering” of Western products indeed has its presence in China, today more sophisticated counterfeiters go right to the source for the trade secrets instead, stealing design files and software codes directly from the manufacturers.

As noted in Nairn’s article, one of the big misconceptions about economic espionage is that it only affects big-name brands. But whether small or large, most businesses own intellectual property…which is susceptible to theft. Many companies undervalue their intellectual property and underestimate the risk of counterfeiting, making it even easier for their intellectual property to be stolen – especially if it exists in digital format. “You should always assume that your intellectual property is under threat,” said David Seall, a consultant to the UK manufacturing sector.

So how does a company protect its sensitive digital data?

For starters, by being fully aware of the company’s value and what constitutes its intellectual property. Also, by securing patents and trademarks and being diligent about the use of employee invention, trade-secret, non-disclosure, non-use, and non-circumvention agreements.

But awareness and contracts are not enough to protect a company’s confidential data – a secure environment in which the data can be safely stored and shared between collaborators must also be enabled. The Wall Street Journal article exemplifies this notion with its mention of TravelHorizon Group, a European travel operator that used ftopia’s secure virtual data rooms to maintain secrecy of the negotiations involved in the acquisition of a competitor.

ftopia’s service simplified TravelHorizon’s process of exchanging information between companies, lawyers, auditors, and investors, while also ensuring confidentiality of data through a battery of security measures: digital signing of all documents to safeguard their integrity, full traceability of all actions within each data room, network protection against intruders, etc.

> Read Travel Horizon case study

Source : The Wall Street Journal, Patents are Virtue, by Geoff Nairn.