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Intellectual property theft rising quickly

February 26, 2011

If Hoosier companies fail to take the necessary steps to keep intellectual property a secret, it’s likely not going to remain a secret.

Just ask Kurt Jones, a partner at Indianapolis law firm Woodard Emhardt Moriarty McNett & Henry LLP who handles an increasing number of legitimate suspected cases of IP theft.

Five years ago, Jones saw two or three cases in a year, but now he manages twice as many.

Amie Peel Carter, a partner at Baker & Daniels LLP in Indianapolis, finds flagrant theft while monitoring the Internet to ensure client trademarks including artwork aren’t used on other websites or in domain names. Carter recently noticed an out-of-state business had copied the website of one of her Indiana-based automotive clients

“The only wording that was changed was the company name at the top of the website and the location of the company,” she said. “The pictures and all of the rest of the words were exactly the same.”

Carter, Jones and other local experts say the proliferation of the Internet—particularly in an era of mobile devices—has made stealing intellectual property easier than ever, and that most companies don’t do enough to protect themselves.

Jonathan Polak, a partner at the Indianapolis office of Cincinnati–based Taft Stettinius & Hollister LLP, sees unscrupulous businesses outside Indiana making counterfeit products or attempting to offer goods for sale on the Internet.

On eBay, “it is not uncommon to find a whole host of different products that are being offered on those sites by people who are not authorized to use the trademark [company name],” Polak said.

Overall, trademark infringement claims are much more popular than deliberate patent infringement claims, he said. Common knock-offs for the aftermarket automotive sector range from bumpers and steering wheels to license-plate frames and key chains bearing logos of major carmakers.

Jones also sees a growing problem with confidential information being snatched from employees’ home computers. With most teen-agers more computer-adept than their parents, a family member may be the culprit. In one of his real estate cases, a wife had lifted a customer list.

Rising competition is driving more theft, Jones said. Employees who leave firms to start their own businesses too often take critical information with them.

Jones doesn’t single out a particular industry prone to IP theft, but he has seen plenty of software and customer lists confiscated.

Vendors commonly see nothing wrong with sharing information with competitors of companies that gave the vendors unfettered access in the hope of landing new business or negotiating a better price.

Real estate brokers sometimes entrust agents with lists of potential buyers.

“Often, these brokers will come to me and think they have a cause of action,” Jones said. “But there is literally nothing I can do to help because these brokers have done nothing to protect their database.”

Sales teams educated about trademark infringement are the best front-line defense because they deal up close and personal with the products, Polak said.

Jones cautioned that too few companies monitor the Internet for infringement, keep visitors away from confidential information, or force visitors and employees to sign confidentiality agreements. Even simple steps like stamping things “confidential” and using passwords to protect important databases help, he said. Sony has six levels of security access, but smaller businesses can use the same strategy effectively.

Carter said that, in addition to registering copyrights and trademarks with the U.S. Patent and Trademark Office, licensing gives companies control over how their intellectual property is used. However, companies need to be prepared to take action when a violation is spotted.

“In trademark law, for example, if you do not enforce your rights, over time you can lose them,” she said.•

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