Intellectual Property Leakage: How Does It Happen?

Intellectual property (IP) has become the lifeblood of many businesses.

Take pharmaceutical companies, where patents on drug formulations and production processes are crucial. Companies like Pfizer, Merck, and Novartis rely heavily on their patented drugs to generate revenue and maintain market exclusivity.

Software companies like Microsoft’s Windows operating system or Adobe’s Creative Suite, which are protected by copyrights and patents, form the core of their business model from intellectual property.

Without strong IP protection, these companies could lose their competitive edge, market share, and potentially their entire business model.

But what exactly is intellectual property? Simply put, it’s the intangible assets that give your company its competitive edge – with trade secrets being particularly crucial as they provide unique advantages not protected by traditional IP laws.

And unfortunately, intellectual property leakage is an all-too-common occurrence — where 1 in 10 employees will leak sensitive data in a 6-month period.

Build data governance best practices for your organization so you can protect against IP leakages before they happen!

Common Causes of Intellectual Property Leakage

Employee Negligence

One of the most common causes of intellectual property leakage is, unfortunately, employee negligence. It’s not always malicious – often, it’s simply a matter of not understanding the risks or not following best practices.

For example, employees might inadvertently leak confidential information through unsecured channels like personal email accounts or messaging apps. This can happen when they’re trying to work from home or collaborate with colleagues, but it can have serious consequences.

Another major risk is the use of personal devices for work. While BYOD (Bring Your Own Device) policies can increase productivity and employee satisfaction, they also introduce new security challenges. Personal devices may not have the same level of security as company-issued equipment, making them more vulnerable to hacks or data breaches.

Poor password practices are another common form of employee negligence. Using weak passwords, reusing passwords across multiple accounts, or sharing passwords with colleagues can all create vulnerabilities that cybercriminals can exploit.

Insider Threats

While employee negligence is often unintentional, insider threats are a more deliberate form of intellectual property leakage.

An insider threat refers to any current or former employee, contractor, or business partner who has authorized access to an organization’s network or data and intentionally misuses that access to negatively impact the organization’s information or systems.

IP theft by insider threats can be particularly challenging to detect because these individuals already have legitimate access to your systems and data. They know your organization’s processes and vulnerabilities, which makes it easier for them to cover their tracks.

Motivations for insider threats can vary widely – from financial gain and revenge to ideological reasons or even coercion by external parties.

Corporate espionage often involves insiders leaking IP in various ways. They might download sensitive files to personal devices, email confidential information to personal accounts, or even physically remove documents or prototypes from the workplace.

In some cases, they might sell trade secrets to competitors or use the information to start their own competing businesses.

Cyberattacks

Cybercriminals use a variety of tactics to gain unauthorized access to sensitive data, with phishing and malware being two of the most prevalent.

Phishing attacks involve tricking employees into revealing sensitive information or clicking on malicious links. These attacks can be highly targeted, using social engineering techniques to appear legitimate. For example, an attacker might impersonate a high-level executive to request sensitive information from an employee.

Malware, on the other hand, is malicious software designed to infiltrate and damage computer systems. This can include viruses, trojans, ransomware, and spyware. Once installed on a system, malware can provide cybercriminals with backdoor access to your network, allowing them to steal intellectual property or install additional malicious software.

Cybercriminals will often orchestrate a data breach to steal valuable IP, which can fetch high prices on the black market. Trade secrets, proprietary algorithms, and unreleased product designs can all fetch high prices from competitors or other malicious actors.

Weak Security Policies

Even with the best intentions, inadequate cybersecurity measures and outdated security policies can leave your intellectual property vulnerable to leakage. Security policies serve as the foundation of your organization’s approach to protecting sensitive information. When these policies are inadequate or not properly enforced, it creates gaps that can be exploited.

One key aspect of effective security policies is clear data classification and handling guidelines. Not all data is equally sensitive, and treating it as such can lead to either over-protection (which can hinder productivity) or under-protection (which can lead to leaks).

Insufficient access controls are another common weakness in security policies. Your organizations should apply the principle of least privilege, meaning employees should only have access to the data and systems necessary for their job functions.

Regularly reviewing and updating access permissions, especially when employees change roles or leave the organization, is crucial in preventing unauthorized access to sensitive IP.

It’s important to remember that security policies aren’t a “set it and forget it” affair. Regular policy reviews and updates are necessary to keep pace with evolving threats and changes in your organization. This includes considering new technologies, changing work patterns (like remote work), and new regulatory requirements.

Preventing Intellectual Property Leakage

Implementing Strong Security Measures

When it comes to preventing IP leakage, implementing strong security measures is your first line of defense. One of the most effective tools in your security arsenal is multi-factor authentication (MFA).

MFA adds an extra layer of security by requiring users to provide two or more verification factors to gain access to a resource. This could be something you know (like a password), something you have (like a smartphone), or something you are (like a fingerprint).

Encryption is another crucial security measure for protecting your intellectual property. This process converts your data into a code to prevent unauthorized access. It’s important to implement encryption for both data at rest (stored on your systems) and data in transit (being sent over networks). This ensures that even if data is intercepted, it remains unreadable without the proper decryption key.

Firewalls and intrusion detection systems (IDS) play a vital role in protecting your network from external threats. Firewalls act as a barrier between your trusted internal network and untrusted external networks, while IDS monitors network traffic for suspicious activity and alerts you to potential threats. Together, these tools can help prevent unauthorized access to your systems and detect potential breaches early.

Lastly, consider implementing data loss prevention (DLP) tools. These solutions can monitor and control data transfers, preventing sensitive information from leaving your network through unauthorized channels. DLP tools can be particularly effective in preventing accidental data leaks by employees and can also help identify potential insider threats.

Employee Training and Awareness

Creating a security-conscious culture in the workplace goes beyond just formal training sessions. It involves fostering an environment where security is everyone’s responsibility.

Encourage employees to report suspicious activities or potential security risks, and celebrate good security practices to make it clear that security is a top priority for your organization.

Regular Security Audits

There are several types of security audits you might consider.

Internal audits, conducted by your own IT or security team, can provide ongoing monitoring and quick identification of issues. External audits, performed by third-party specialists, offer an objective perspective and can often identify blind spots that internal teams might miss.

Penetration testing, or “ethical hacking,” involves simulating cyber attacks to test your defenses and identify weaknesses.

And remember: an audit is only valuable if you act on its results!

Data Security Posture Management

At its core, Data Security Posture Management (DSPM) is about gaining comprehensive visibility into your organization’s data landscape and continuously assessing and improving your security posture.

DSPM solutions provide real-time visibility into where your data is located, who has access to it, and how it’s being used. This visibility is crucial for identifying potential risks and vulnerabilities that could lead to intellectual property leakage. For example, DSPM tools can help you identify sensitive data that’s stored in unsecured locations or detect unusual patterns of data access that might indicate a potential insider threat.

When it comes to preventing IP leakage, DSPM can provide a comprehensive view of your data ecosystem, allowing you to implement more targeted and effective security measures.

It can also help you identify and close security gaps before they can be exploited, detect potential leaks in real time, and provide valuable insights for refining your overall security strategy.

DSMP in IP: Add Qohash To Your Toolbelt

We offer a suite of powerful DSMP solutions designed to give organizations complete visibility and control over their sensitive data, including valuable IP.

Track your sensitive data with Qostodian, our tool that secures your data security posture proactively so you can prevent leaks and breaches before they happen. Request a demo today for a personalized look into the difference that comprehensive data visibility can make for your organization.