Twenty percent of companies have had trade secrets stolen, according to a report recently released by Baker McKenzie.
The report, “The Rising Importance of Safeguarding Trade Secrets,” also showed that many companies may not be prepared to respond to this problem. Just under a third of companies surveyed have procedures in place to respond to the threat of or actual theft of trade secrets.
“In our digital age, it is more challenging than ever to keep a secret,” Paul Rawlinson, global chair at Baker McKenzie, wrote in the report. “Nearly everything it seems ends up on social media.”
Eighty-two percent of respondents said trade secrets are an important, often essential, part of their businesses, according to the report.
Rawlinson added: “Today's trade secrets are more susceptible to the threat of being hacked or downloaded, but they are of no less value to the companies that own them … Nearly half of the 400 senior executives in our survey said their trade secrets are more important than their patents and trademarks.”
The most targeted industry for theft, the survey found, was health care, with 33% of executives reporting theft of trade secrets in that sector. Health care was followed by industrials at 18% and information, communication and technology at 17%.
As for who employers are worried could be responsible for trade secret theft, 32% of respondents said they feared having trade secrets stolen by former employees, another 28% fear suppliers, consultants and other third parties would steal trade secrets. Twenty percent pointed to current employees, while 15% are concerned that rogue or state sponsored cybercriminals or hackers may steal their secrets.
Of survey respondents, 69% foresee trade secret protection becoming more critical than safeguarding other types of intellectual property given how quickly innovation is occurring in technology.
“Unlike patents and other forms of intellectual property, it's much more difficult, if not impossible, to put the genie back in the bottle once a trade secret has become public,” Rawlinson noted in the report. “That makes it even more crucial for board-level executives to better understand the threats and manage those risks by taking action.”
According to the report, it is less expensive to protect trade secrets compared to other types of IP protection because trade secrets do not have to be registered with the government.
“Preserving trade secrets requires that companies inventory their trade secrets, limit the number of people who know the information, develop technical controls to protect their trade secrets and train employees on the importance of trade secrets,” the report stated. “They must also test their controls and implement action plans for responding to threats and actual theft.”
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