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The Cost of Compromised Intellectual Property

Intellectual Property

Intellectual Property (IP) is a driving force behind economic growth. Protecting IP encourages innovation and fosters competition, thereby bolstering the worldwide economy. In our highly global, fiercely competitive markets, IP is often critical to a company’s uniqueness, potential, and survival. Thus, although IP may be intangible and difficult to quantify, it is a business asset of tremendous worth. Because the IP of a particular company is just like any other business asset (i.e., valuable), appropriate measures must be taken to protect it.

Unfortunately, as with most things that are stored in cyber space, IP that is stored virtually is extremely vulnerable and can easily end up in the wrong hands. Obviously, highly valuable IP may be directly targeted and obtained as a result of a deliberate hack. However, it is more likely that a company’s IP will be compromised due to simple oversight or carelessness. Specifically, IP is frequently jeopardized because of a company’s failure to take adequate security measures with its documents. Of course, the IP assets of a business may include copyrights, patents, trademarks, and/or trade secrets. Regardless of the type or form, companies cannot afford the costs of compromised intellectual property, financial and otherwise.

Monetary Costs

Clearly, there are a myriad of monetary costs associated with compromised IP, including the cost to create or recreate it and the loss of income or earnings attributable to IP. In addition, in the event of a damaging breach, certain actions may need to be taken and may involve additional expenditures, such as recovery, insurance, and enforcement costs, as well as legal fees and potential litigation expenses.

The financial ramifications of compromised IP may be substantial and perpetual, and it is difficult to anticipate the overall dollar value of such an occurrence. Rather than surmise the possibilities, companies with sensitive IP should proactively secure it from the outset by utilizing highly secure networks, such as uploading important documents to a virtual data room. There are simple, affordable solutions, which only take minutes to set up, that can save enormous amounts of time and money down the road.

Non-Monetary Costs (with Inevitable Monetary Implications)

For most businesses, the primary goal is to improve the bottom line. Because of the emphasis on profitability, the focus frequently rests on concrete facts and figures. Nonetheless, there are plenty of non-monetary costs that stem from compromised IP, and such costs undoubtedly affect the bottom line. This is yet another reason that companies whose survival depends, at least in part, on their IP must ensure that any and all sensitive information is safely stored.

For example, everyone has probably heard about the retailers that recently suffered from considerable data security breaches. This sort of harmful publicity inherently damages a company’s reputation with investors and consumers. A spate of negativity may cause investors to sell off their stock and propel consumers to seek goods and services elsewhere. However, a damaged reputation does more than just send investors and consumers in other directions, which of course adversely impacts revenue generation. Data breaches and the ensuing tainted reputation can cause valuation declines and may undermine a company’s market share, which can eventually lead to a company’s complete demise. Obviously, a company whose IP is compromised may succumb to the same fate. As a result, it is imperative that companies take proper precautions to safeguard sensitive information and avoid the many costs of compromised IP.

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