The biggest challenge for manufacturing firms is implementing systems that enable a free flow of information throughout the supply chain while simultaneously protecting their valuable data and intellectual property from unauthorized access.
Industrial espionage is a growing threat, forcing manufacturers to take a more proactive approach to securing their intellectual property. In fact, in 2017, 620 out of 1,579 data breaches in the U.S. were in the manufacturing industry, and there have been multiple major data breaches impacting manufacturing firms in recent years.
While the need for IP protection is clear, much of a manufacturing firm’s most valuable intellectual property is in the form of unstructured data – data which is difficult for typical data loss prevention solutions to recognize and protect. To adequately secure sensitive unstructured data and IP, manufacturers need a robust security platform to protect against insider and outsider threats by securing data across endpoints, networks, storage, and in the cloud.
To learn more about how manufacturing firms can secure and protect their valuable intellectual property, we reached out to a panel of manufacturing professionals and intellectual property experts and asked them to answer this question:
"What’s your top tip for IP protection for manufacturing firms?"
Read on to learn what our experts had to say about how manufacturing firms can best protect their intellectual property.
Joe Bailey
Joe Bailey is the Business Development Consultant at My Trading Skills.
"The best way for manufacturing firms to protect their intellectual property is by…"
Using high-level encryption to safeguard it from access by unauthorized third parties. Encryption should be applied to the storage of the IP as well as on the sharing of this valuable data to authorized individuals.
Bottom line: Using highly advanced encryption technology, manufacturing firms will be better positioned for protecting their intellectual property.
David Reischer, Esq.
David Reischer, Esq. is an Attorney & CEO of LegalAdvice.com.
"A manufacturing can protect their brand by…"
Acquiring trademark and/or patent protection for unique product design and functionality, packaging, and other unique source identifiers by filing a patent and trademark application at the United States Patent & Trademark Office (USPTO). A registered patent and/or trademark at the USPTO will allow a business to bring a lawsuit against third parties that copy a company's product or brand. A registered patent or trademark prevents third parties from using a functional element or source identifier that is the same or similar and confusing to a registered patent and/or trademark at the USPTO. A patent or trademark registration at the USPTO will allow the registrant to bring a lawsuit to stop infringers and seek damages against third parties that dilute a company product or brand.
Jon Moorhouse
Jon Moorhouse is a consultant (a senior lawyer with 20 years' IP/legal experience) at Keystone Law (UK law firm). Until recently, Jon spent 13 years as a senior in-house intellectual property legal counsel at Shell. He also has previous tech/IP legal experience before that at global law firms/multinationals.
"My top tip for IP protection for manufacturing firms is…"
Good internal management of trade secrets. Manufacturing has traditionally meant technology best protected by patents and trade secrets. Patents protect novel, inventive, and industrially applicable technical inventions in the form of products, processes, or apparatus. So, the manufactured product may itself be a patentable invention, but the method or apparatus used to manufacture also may be patentable. The challenge is how to enforce a patent against possible infringers to maintain your exclusive position. Patent infringement litigation is a long and expensive process and requires evidence to demonstrate the infringing activity to the court. You may be able to get hold of products that could have been made using your patented manufacturing process, but how can you show someone applied your process? It’s not impossible, but often is difficult.
An alternative is to protect the manufacturing processes as a trade secret: that is, as information not shared publicly, whose value derives from not being shared publicly, and which you can show you take steps to keep secret. Whereas a patent necessarily means publicly disclosing your invention to the world in return for exclusive rights for up to 20 years in the countries where you patent, a trade secret does not need to be (should not be) shared with anyone else. You can potentially protect it for much longer – so long as the idea is kept secret and is still valuable. If someone does replicate your process, you can bring a claim for unlawfully acquiring/using/disclosing a trade secret, or breach of confidence. You have the same evidential challenge to show that your process was used, but here, if you can show you had solid secrecy arrangements in place, you may be able to prove that they did in fact use a different method or independently invented the same method (if they can show the latter, your claim would not succeed).
A recent high profile trade secrets case was the former Google employee who left to join Uber's automated vehicle team. Google was able to show that he had taken thousands of design/process documents with him, and successfully claimed hundreds of millions in U.S. dollars.
A further angle is the increased automation of manufacturing processes, with algorithms and software running the show. These may be patentable if you can show a technical effect rather than it just being computer program. Otherwise, trade secrets are again a good route for IP protection. If you can get hold of the coding someone uses, you may be able to show copyright infringement if they have, in fact, copied a substantial part of your code. Consider including a deliberate error in your code, which can be good evidence of copying if this pops up in their software, as well.
So how do you manage this in practice? Do not share these trade secrets with all your workforce – restrict to key employees/contractors only. Ensure they have appropriate confidentiality clauses in their contracts, and ensure you have appropriate security (physical and virtual files) to minimize the chance of industrial espionage. Also consider good internal compliance processes (with serious penalties including firing for breach of confidentiality), as well as internal governance processes, especially in larger organizations. There is no point in one part of the company spending a lot on R&D to protect trade secrets if another part of the company is going to spill the beans to the first partner or customer who shows interest.
Of course, a commercially astute manufacturing firm will also be looking to develop – and protect – its brand as well as its technology. IP rights play a key role here too – being careful to protect names, logos, or slogans (maybe even smells, shapes, or colors!) as registered trademarks and perhaps also copyright or design rights in marketing materials and packaging of the manufactured products.
Jana Gouchev
Jana Gouchev is the managing attorney of Gouchev Law. She was named as one of the Top 3 Business Lawyers in New York for 2019, featured in Forbes, and a top lawyer in U.S. News and World Reports.
"The following are the top tips I’d recommend for my manufacturing clients…"
- It is crucial for the manufacturer to negotiate Manufacturing Agreements very carefully, as those agreements with product developers govern who owns the product design – the manufacturer or its customer. The IP provision is the most important one in the agreement, in my opinion, because it governs who the owner of the intellectual property is. Just like in many other industries, the intellectual property is where the value of the company centers. IP of the product design typically belongs to the product creator and not the manufacturer. But if the manufacturer developed an improvement of the product, the manufacturer can own that invention if that language was carefully weaved into the manufacturing agreement.
- Another area important to manufacturers but often ignored and not discussed is trade secrets. Trade secrets are an incredibly important part of IP for manufacturers, particularly. The types of trade secrets in the manufacturing industry include methods of manufacturing products that make it less expensive to produce than competitors, ways to create higher quality products, materials used, or the combination of them. It is important for manufacturers to take steps to preserve trade secret protection. Those steps include monitoring information storage, securing computers/servers, NDAs with vendors and employees, physical security, and limiting public access.
These are two different, but equally important, points regarding how to protect and utilize IP related to manufacturing companies.
Abe Cohn
Abe Cohn is an Intellectual Property Lawyer at Cohn Legal, PLLC, a law firm designed specifically to provide a boutique and highly individualized experience for entrepreneurs and Startups.
"Naturally, manufacturing firms very often have a broad and diverse portfolio of assets requiring intellectual property protection (including product names in need of trademarks)…"
However, assuming this firm has recently developed a proprietary invention and would like to protect it with a patent, the most important step it must first take is to conduct a patent-viability search. In short, a patent-viability search provides the answer to the following question: How similar, if at all, is the proposed invention to an existing, patented invention?
Unfortunately, patent-viability searches are often skipped due to a combination of hubris (“Trust me – this idea is completely new and does not exist ANYWHERE”) and the tendency to view the patent-viability search as an excessive and unnecessary cost. While both intuitions are understandable, they are simply shortsighted and may result in far more harm than good. Patent-viability searches serve the critical purpose of ascertaining whether a proposed invention is, in fact, new and the extent to which the invention, in its proposed iteration, infringes on the protected features of an existing invention.
Here, the devil really is in the details, and it is up to the intellectual property attorney to sufficiently parse the nuanced attributes of the proposed invention so as to conduct a truly rigorous and comprehensive search. Without first running a patent-viability search, the manufacturing firm runs the immense risk of developing a new product that it can actually never own, and worse, which may already infringe on another manufacturing firm's patented product.
Joe Gerard
Joe Gerard is the CEO of i-Sight Software, where he spends his time finding ways to help clients improve their investigations, reporting, and risk management.
"Use your data…"
Protecting your company’s IP can be like playing whack-a-mole. As soon as you shut down one counterfeiter, another one pops up somewhere else. The key to effective IP protection is in something you already have but may not be using effectively: your data. Using case management software to run reports on all of your IP case data can help you pinpoint where problems are occurring in your supply chain. This gives you the opportunity to do root cause analysis and then address the areas of risk with deeper scrutiny or training.
Marc Misthal
Marc Misthal counsels a wide range of clients from around the world, including businesses in the fashion, apparel, computer technology, restaurant, entertainment, jewelry, luxury goods, furniture, cosmetics, retail, and consumer goods industries. Mr. Misthal's experience also includes negotiating license agreements, working with law enforcement to combat counterfeiting, and filing and prosecuting trademark and copyright applications.
"A top tip for IP protection for manufacturing firms would be…"
Get protection, whatever form it might take (patent, trademark, copyright, trade secret, etc.). We often see companies that do not secure protection in the belief that doing so is too expensive. These companies later discover that someone has copied their very important product and naturally want to take action. At that point, it can be too late (especially as it relates to patents, which in the U.S. generally must be filed within one year of the invention being publicly disclosed). So, if you have a product that you think could be successful or could wind up being widely copied, before you release it to the market or show it to anyone, speak with a competent intellectual property attorney.
Jonathan Bensen
Jonathan Bensen is the CISO at Balbix. Bensen is a veteran in the cybersecurity industry with more than 20 years of experience. He has been globally recognized for developing, advising, and launching innovative products for large enterprises and government customers alike.
"The enterprise attack surface is massive and growing rapidly, especially in manufacturing, making the defense of partner data and company IP quite difficult…"
The typical manufacturing enterprise can have thousands of IT assets (devices, apps, and users), and there are hundreds of ways in which each asset can be compromised. To defend IP, companies must first understand their breach risk and take into account the information about asset inventory, vulnerabilities, active threats, exposure, ease of propagation, compensating controls and business criticality. A medium-sized manufacturer can have over one hundred million time-varying parameters that must be analyzed to accurately determine breach risk, and for larger organizations this number can be in the hundreds of billions.
Legacy cybersecurity tools and processes are simply not able to scale with the size and complexity of the enterprise attack surface. Thus, most organizations lack visibility into their cybersecurity posture and have a poor understanding of their breach risk. Due to this lack of visibility, the right decisions do not get made, and the correct actions do not get prioritized, leaving enterprises wide open to attack and compromise.
That is why manufacturers and enterprises across all industries increasingly using AI and ML powered security platforms to enable their security teams to get an accurate idea of breach risk by analyzing up to several hundred billion time-varying signals across their network. As a result, corporate security teams and CISOs can continuously analyze the high-volume, high-velocity cybersecurity data generated within their organization's network and gain real-time visibility into their company's breach risk. Premier AI-powered platforms even provide prioritized steps to remediate critical issues first, driving cyber-risk reduction throughout the enterprise and enabling them to better protect their customers' information.
Anthony M. Verna III
Anthony M. Verna III is the managing partner at Verna Law, P.C. With a strong focus on Trademark, Copyright, Domain Names, Entertainment, and Advertising law, Verna Law, P.C. strives to provide all Intellectual Property services a modern business of any size may need to market and promote itself better.
"There are many items that manufacturing firms need to keep in mind in protection of IP…"
- Is the company itself the owner of the product it is manufacturing? If it is, then the firm needs to seek the advice of patent counsel. Patent counsel should perform a patent search, draft an opinion letter about the ability to receive a patent on the new invention, and then file the patent application if the product qualifies for a patent.
- Does the company have patents on products it is manufacturing? Then the company needs to be able to enforce its patents. A simplistic way of thinking of patent infringement is: Does a junior product to the patented invention do substantially the same thing in substantially the same way for substantially the same result? If the answer to this question is yes, then the manufacturing firm needs to be able to send a cease-and-desist letter and file a lawsuit. (Filing a lawsuit is more important.
- Does the company manufacture products that others have designed? Then the company needs its contracts in order. Does the manufacturing company own any improvements it makes? That would be an important negotiation point. Review all plans from the company that designed the product. Many bigger companies do send multiple plans to multiple manufacturers as a way to track counterfeit products and which factories have leaks. So, all supply chains need to be locked down – all information with employees need to be designated as confidential. Agreements with employees need to be reviewed, especially outlining what is confidential.
Stephen Connolly
Stephen Connolly is consultant and writer on IP and business issues for the brand protection and anti-counterfeiting company, Pointer Brand Protection. Pointer works with a wide range of brands to remove online counterfeits and to provide IP-protection strategies for businesses.
"One important tip, which many manufacturing businesses miss, is to consider IP defense at the very start of your processes…"
The protection of intellectual property should be prioritized at the beginning of a product lifecycle rather than as an afterthought because the theft of your original ideas, images, and products can occur overnight. So, it's imperative to have a strategy already in place that can quickly be put into practice.
Part of this is to make sure you have a relevant combination of trademarks, copyright, patents and design rights, depending on what is being protected. You may still have your ideas copied online (and offline), but with an IP portfolio that covers all your property you will be able to react much quicker. Likewise, you will have a legal basis for acting against infringers if it's needed.
Consider also how your business might change in the future. Perhaps you are only manufacturing a single product at the moment, but within five years you may want to sell these same goods in a range of international markets. Because trademark law works according to region and product classification, a successful IP protection strategy includes thinking about not just the present but also the future. IP protection in China will, for example, require country-specific trademarks that can take up to two years to put in place.
Planning for the future also means monitoring the market and then having a plan for quickly and effectively removing online counterfeits. If your problem also encompasses large-scale manufacturers who you believe should face criminal charges, then also having a relationship with qualified investigators will be crucial.
Vernon Riley
Vernon Riley C.Eng MIMechE, MEng, ACGI is a Chartered Mechanical Engineer with 30 years’ experience in manufacturing, commerce, and technology. He is currently helping marketing agencies map analytics onto corporate clients. His vision is to transform the relationship between marketing agencies and their clients using higher quality reporting systems.
"While the traditional methods are worthy of exploration, there are two important tips for protecting IP…"
- Ensure that the IP you wish to protect involves a process that can be undertaken within your manufacturing business. If it involves sub-contract processes, that's fine. Just ensure the combination of sub-processes can't be known or discovered by people outside your business. Processes are inherently much more difficult to describe accurately than individual components. They normally involve a unique combination of people, technology, and organization. This makes it hard for a competitor to pick up the blueprint and just implement it.
- Hold the intellectual property in a non-trading company that grants licenses to your manufacturing business. This helps protect your IP if the business hits a cashflow problem or some other kind of trading problem. If IP is held directly by the business, any administrator or company taking it over in adverse circumstances walks away owning all the intellectual property. But if licenses had been granted by a non-trading entity, then the situation would be governed by the terms of the license and negotiations. Obviously, the licenses need to be carefully constructed in order to vest sufficient value in the manufacturing business. But this should be within the skills of a suitable experts on Intellectual Property and business valuation.
Polly Kay
Polly Kay is an IT Manager at English Blinds.
"Ensure that your employees aren't the weakest link in your IP protection…"
Even if your physical and digital IP protection is irreproachable, human error can still cause immeasurable damage to even the most conscientious of firms in terms of their IP security protocols.
How this looks in practice will depend on your niche and industry, the level and number of employees that have access to your proprietary concepts, and the sensitivity and threat level pertaining to your IP. However, there are a few key points that all manufacturing firms need to consider.
Make clear provisions within employee contracts to mandate the appropriate level of both secrecy and confidentiality, as well as responsibility on the employee's part to take reasonable steps and follow provided protocols to keep the company's IP safe. This might include specific details such as the rules surrounding using or accessing company documents on non-company-owned devices where physical property is stored and whether it can be removed from the premises, what to do if they suspect they have been compromised, and control protocols in terms of access and accountability.
Additionally, the importance of protecting the company's IP should not simply be buried in a multi-page employment contract, but highlighted and explained in detail to each employee and refreshed regularly.
Security checks and spot-checks on employees may also be beneficial in some industries, too.
Excellent control and oversight of both physical and digital security is essential, as well, in order to monitor the movement and accessing of IP and ensure that this is not compromised by dishonest or less conscientious employees.
Finally, a comprehensive threat analysis that is regularly reviewed and updated is a must for the protection of any manufacturing firm's IP, and this should pay special attention to employee policies and activities in this respect, as well.
Rob Honeycutt
Rob Honeycutt is the founder and CEO of SixAxis, SafeRack, and a growing list of product-specific brands offering innovative industrial safety solutions across a variety of vertical markets including petroleum, aggregate, chemical, aerospace, marine, and food and beverage.
"The most important tools in protecting your company’s intellectual property are…
A bulletproof non-disclosure agreement and a stellar patent attorney. Nothing is more valuable than the creative ideas you generate and the inventions that spring from them. Invest wisely in their protection and give your business the competitive advantage it deserves.
Shayne Sherman
Shayne Sherman is the CEO of TechLoris.
"IP of your team and your customers should be treated as the crown jewels …"
Especially with the ease of on-demand manufacturing, as there's a shortened lead time necessary to manufacture and get on shelves.
Depending on the manufacturer and their maturity, generally, compliance classifies their data as the highest sensitivity but also ensures that innovation has a good amount of collaboration with legal to appropriately document and patent ASAP.
Once safeguards are in place, insider threats are the biggest weakness, so there's a need to create employee data restriction policies and have data exfiltration scanning tools and incident plans for triage in the event of a breach.
Rahul Kumar Singh
Rahul is the Editor in Chief at HubsAdda.
"Trademarks are registered, and you can register your copyright…"
These are rock-solid protections that allow you to sue if a third party uses those forms of intellectual property.
Beyond that, we are talking trade secrets, which you should never show anyone, ever, and design patents, which is the shape of your product – the look and feel, not the function.
There isn’t any way to truly prevent your competitor from breaking the law and copying your IP. You can only respond legally after they have done so.
Nishank Khanna
Nishank is the CMO of Clarify Capital.
"Two of the largest concerns for manufacturing firms are lack of control over their value chain and black-market replicas…"
In the ever-growing digitized manufacturing industry, here are my top tips on how to protect your IP:
- Prioritize data and have a risk management policy in place. Manufacturers need to have a contingency plan and understand what their most important data is, in the event a competitor or gains access to it.
- Vet all vendors' security practices. Gain better visibility and control over security in the entire supply chain by thoroughly vetting the security practices of all vendors. It's critical to know what IP can be compromised by elements in the external supply chain.
Ronan David
Ronan David is the VP of Strategy at EfficientIP. He develops the strategic direction for EfficientIP, which delivers fully integrated network security and automated solutions for DDI (DNS-DHCP-IPAM). He oversees EfficientIP's customer and partner relationships, resulting in corporate growth and development within the security market.
"The manufacturing sector has a vested interest in keeping intellectual property – processes, trade secrets and formulas, product launch dates – protected from being appropriated by the competition…"
In many cases, this data is stored on a company’s network, which can be infiltrated by incentivized hackers. The IDC 2019 Global DNS Threat Report shows 1 out of 8 companies surveyed globally had intellectual property or sensitive information stolen via a DNS attack. Manufacturers should place priority on built-in DNS security while using real-time DNS analytics to help detect and prevent advanced network attacks like DGA malware and zero-day malicious domains.
Bryant Lee
Bryant Lee is the managing partner of Cognition IP, a modern IP law firm focused on using technology to make the patent process faster and more efficient. Prior to founding the firm, he worked an AmLaw 100 law firm and represented Fortune 500 companies patent litigation.
"Manufacturing firms should carefully consider filing for patent protection well in advance of producing and selling their products…"
Public demonstrations of the product at conferences or other events and sales for the product are generally considered public disclosures that would prevent patenting in most countries outside of the United States. Also, marketing departments often launch marketing campaigns several months before the official release of the product, and these disclosures are also public disclosures that can prevent patenting outside of the United States.
Calloway Cook
Calloway Cook is the President of a U.S.-based dietary supplements manufacturer called Illuminate Labs.
"Consumer product manufacturers who have a proprietary formula should protect their formula with a patent as soon as it's finalized…"
Ideally, this is done before the product goes to market. Since the patent approval process is lengthy, it's risky to wait until a company is taking in revenue to file for a patent. The original formulation owner runs the risk of a competitor filing a patent for their formulation once it's in the public domain. I would recommend businesses, if they have the budget to do so, attain legal counsel rather than trying to file a patent themselves, since it can be confusing and extremely time consuming.
Andrei Mincov
Andrei Mincov’s passion for intellectual property was ignited by a 1996 copyright dispute between his father, famous Russian composer Mark Minkov, and a radio station that stole his music to make an unauthorized Samsung ad. Today, Andrei is the founder of Trademark Factory®, the only firm in the world that helps growth-minded entrepreneurs and businesses from around the world trademark their brands – risk-free, guaranteed.
"There is no reason in the world to spend a minute of your life or a dollar out of your pocket building a brand you don't own…"
For manufacturing firms, the brand is often the most valuable asset, and should be treated as if it matters — because it does.
Bryce Bowman
Bryce has held numerous leadership roles including Finance Director of a multinational supply chain and Division CFO of a $150 million business. With this experience, Bryce founded People First Planning with the goal of helping medium-sized businesses reduce waste through improved planning.
"Adopt delayed differentiation in production…"
With delayed differentiation, manufacturers produce the generic component of their product early in the production process. Specialized components are then added to the product at a later stage of production, often at a different facility. As an example, car manufacturers typically have common components, such as a vehicle chassis, that are used across their vehicle lineup. These generic components are built at one facility and then shipped to other plants to be integrated in the final assembly of numerous vehicle models.
To deter theft of IP or trade secrets, manufacturers may strategically adopt delayed differentiation such that their least trustworthy vendors only produce the generic component of their products. The specialized components with valuable IP may be added at a later stage of the production process. With this approach, the manufacturer never reveals its IP to those partners it deems a risk, while still employing the lowest-cost producer when it makes sense.
Alexandra Zelenko
Alexandra Zelenko is a Marketing and Technical Writer at DDI Development, a company that delivers web and mobile digital solutions for a wide range of business verticals.
"Educate employees about intellectual property and identify tools to protect IP…"
Unfortunately, humans are often the weakest link in the defensive chain. That's why an IP protection effort that doesn't focus on employee awareness is going to fail. Make sure your employees are aware of how they might expose IP and educate them on how to prevent IP leaks. Also, there are an increasing number of software tools that are available for tracking IP stores. Data loss prevention (DLP) tools are now a core component of many security suites. Not only do they locate sensitive documents, but they also keep track of who will use them and how they are being used and by whom.
Syed Irfan Ajmal
Syed Irfan Ajmal is a digital marketing agency owner, international speaker, syndicated columnist, and podcast host. His bylines & citations include Forbes, the World Bank, SEMrush, Reader’s Digest, Entrepreneur, and several others. He is widely respected for his insights on Content Marketing, Organic Search, and Publicity.
"Total theft of US trade secrets accounts for anywhere from $180 billion to $540 billion per year…”"
Following are the top tips to protect your IP:
- Make sure you have all the patents and copyrights secured in a protective environment.
- Educate employees about IP and its safety and security.
- Label valuable intellectual property.
- Know your tools for protecting intellectual property.
- The company should have knowledge of where the intellectual property is.
Brian Iinuma
Brian Iinuma has over 30 years of IT experience and is the President of Strategic Systems Group, Inc, an organization that specializes in ERP implementation, migration and support, technology advising, and expert consulting services for manufacturers and distributors. Brian and team focus on business process integration and leading your company’s transformation to the intelligent enterprise.
"Manufacturing firms should consider the following for protecting IP…"
- Patent or copyright (patent for product design, copyright for software)
- Minimizing time to market (ideally, be first to market)
- Breaking the IP into components so that no one person or entity has full knowledge (e.g., recipe for a food product, different suppliers for various components)
- Continuous innovation (i.e., continuously adding to the existing I/P, thereby staying ahead of the competition)
