Businesses overlook intellectual property security, ASIS reports

Oct 1, 2002 12:00 PM

Businesses must make information protection a higher priority, contends a recent report by ASIS International, through its Council on Safeguarding Proprietary Information.

The report includes a Proprietary Information Loss Survey conducted among CEOs of Fortune 1,000 companies and of 600 small and mid-sized companies that belong to the U.S. Chamber of Commerce. Responses suggest proprietary information and intellectual property (IP) losses totalling between $53 billion and $59 billion from July 1, 2000 to June 30, 2001.

Since proprietary and intellectual assets are not typically tracked in corporate accounting systems, they often are not well protected. The companies cited former employees, foreign competitors, on-site contractors, and domestic competitors as prime contributors to the losses. Hackers were also considered a major problem.

ASIS reports that companies with IP protection as a high priority indicated no loss incidents. “While the risk of cyberterrorism is increasing, the theft of intellectual property is where companies are incurring the most losses to date,” says Jay Ehrenreich, senior manager at PricewaterhouseCoopers' Cybercrime Prevention and Response group.

The most common areas of infiltration were research and development (49 percent), customer lists and related data (36 percent), and financial data (27 percent).

The greatest impact of these losses, companies reported, came through increased legal fees, loss of revenue and loss of competitive advantage.

The report concludes that several issues need urgent attention:

• Companies must overcome their reluctance to share, even anonymously, information about losses in order to determine the full extent and nature of the problem.

• Companies need to centralize their loss reporting systems to ensure that comprehensive data is gathered and can be reported.

• Businesses must make information protection a higher priority and must institute sound protection procedures.

• Corporations must set up a system for valuing intellectual property assets as they are created because over the long-term the loss in competitive advantage and market share could far outweigh legal fees.

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