A recent Computer World article laments how gadget makers can’t keep a secret.  In addition to the usual suspects (chatty or disgruntled employees and government sources) the article includes among the culprits digital cameras, globalization, blogs and anonymous messages boards for the steady drip, drip, drip of valuable new product data.

The article goes on to note:

While consumers may love all this leaking, it harms the ability of a company to extract maximum revenue from its intellectual property and hard work.

That’s an understatement.  Loose lips actually destroy intellectual property rights. 

A trade secret that is made public is no longer a secret.  At that point the organization has literally shared the wealth, so to speak.  The secret is no longer an exclusive asset of the company.  Some might argue that with a new product launch you’re going to go public eventually, so what’s the big deal.  But from a business perspective going public too soon destroys the element of surprise, or first-mover advantage.  A premature release also gives counterfeiters an opportunity to beat the real deal to market, confusing your customers and stealing your rightful market share.

From a legal perspective the loss of trade secret confidentiality starts the one year clock ticking for filing a U.S. patent application.  Miss that window of eligibility and your ability to secure U.S. patent rights shuts for ever.

What to do?  Improving the legal literacy of decision makers so they can recognize risky behavior and make more informed decisions is a start.  But education that is not backed up with the proper incentives, incentives that motivate employees to apply what they’ve learned, is nothing more than an intellectual diversion.

When it comes to stopping trade secret leaks Computer World says Apple Computers has hit upon a winning formula.  They “turn the screws on leakers with credible threats of legal action.”  That consequence creates an incentive that in turn improves accountability.

It just goes to show that sometimes the best defense is a good offense.

This entry was posted on Wednesday, November 8th, 2006 at 10:02 pm and is filed under Business Blind Spots, Costs, Knowledge Management, Leadership. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.