Intellectual property is one of the cornerstones of modern capitalism. It encourages entrepreneurial risk-taking by ensuring individuals, organizations, and businesses reap the rewards of their creative ingenuity.
However, intellectual property (IP) infringement robs IP owners of their legal protections, diminishing the innovation that fuels business growth, wealth generation, and productivity.
What Is Intellectual Property Infringement?
Intellectual property infringement is a violation or breach that erodes, weakens, or damages intellectual property rights.
As a result, a wide range of IP protections, such as trademarks, patents, copyright, and trade secrets, have been enshrined to ensure IPs aren’t stolen or violated through illegal malfeasance.
The Types of Intellectual Property Infringement
Intellectual property is one of the most significant assets a business possesses. However, different forms of IP infringements diminish the benefits accrued to IP owners from their innovations. While IP infringements can occur through outright theft of intellectual property, other methods find ways to circumvent the legal protections afforded to IP owners.
IP rights like trademarks, patents, and designs are only obtained after due registration. Therefore, their enforcement can only take effect when the agency responsible for their oversight has examined, granted, and duly certified them for IP protection.
Patents protect the fruits of innovation by granting the owner of an invention exclusive rights for a certain period. Patent infringements are actions that breach this confidence. This is typically done by appropriating, copying, or selling the invention without the express permission of the patent owner.
Patents cover things like processes, designs, machines, and manufactured items. Unlike copyrights, patents must be registered before they can come into effect.
Because they are covered by federal law, a patent owner who detects infringement must bring the case to federal courts. This must occur within six years from the date of infringement.
A typical example of patent infringement: Creating or manufacturing services or products with patent-protected items without obtaining the holder’s express permission.
Patent infringements typically fall under these distinctions:
- Direct infringement: This is a direct violation of patents, as straightforward as a patented product being manufactured without permission.
- Indirect infringement: This is aiding, abetting, and otherwise encouraging patent infringement by other parties.
- Contributory Infringement: This is a form of secondary infringement, holding someone liable for infringement for providing a direct infringer with an unauthorized IP. For instance, selling non-infringing components but accompanying them with instructions on how to utilize them in an infringing manner.
- Literal Infringement: When there is direct correspondence and every construed claim element is correspondingly found in the accused device. An example is the Polaroid Corp v. Eastman Kodak Co., a case where Eastman Kodak was accused of literally infringing on Polaroid’s “Instant camera technology.”
Original artistic work enriches society, and copyright is meant to protect this creativity. Copyright covers literature, songs, music, writings, and photos. Since copyright is tangible, copyright infringement is a more clear-cut violation.
A typical example of copyright infringement: Uploading a copyrighted picture or image to your website without any license or permission.
Trademarks offer brand protection, safeguarding their identifying features like their brand name and symbols like logos, including colors, sounds, and phrases associated with a business entity. Trademarks are vital for differentiating and distinguishing a business from its competition, thereby creating brand equity.
Hence, trademarks are commonly used where counterfeiting is a rampant problem. Accordingly, trademark infringements are the unauthorized use of a brand’s symbols in a way that creates confusion in the mind of consumers as to the source, affiliation, or actual ownership of the trademark.
A typical example of trademark infringement: As the most prevalent manifestation of trademark infringement, counterfeiters produce fake replicas and unauthorized equivalents of actual products.
Counterfeiting not only defrauds the bona fide IP owner of their rightful profits but also the consumer who is swindled into paying for subpar products in the guise of the real thing.
Unlike patents, trade secrets are part of a company’s IP that isn’t made public. Trade secrets represent a right to confidential information of a competitive nature.
This type of covert information only qualifies as a trade secret only if they have economic value. Trade secrets include know-how like formulas, recipes, design patterns, computer programs, and processes that uniquely provide a distinct, competitive advantage.
Companies typically use non-disclosure agreements (NDAs) to protect proprietary information.
A typical example of trade secret infringement: Potentially stealing Coca-Cola’s recipe or copying Google’s search algorithm. Or more recently, the illegal leaking and downloading of part of Twitter’s source code.
What are the consequences of intellectual property infringement?
Intellectual property fuels innovation and research while encouraging risk-taking, ingenuity, and creativity. IP benefits society by creating new markets, establishing national industries, and fostering areas of high competence and specialization.
A prime example of this is Silicon Valley in the United States.
As a result, governments typically frown upon IP infringement, imposing costs on violators in the form of penalties such as imprisonment and steep fines. The US Department of Justice victim’s guide on Reporting Intellectual Property Crime lists a plethora of criminal punishments, such as:
- Counterfeit Trademarks: Punishable by up to ten years of imprisonment and a $2 million fine.
- Counterfeit Labeling: Punishable by up to five years of imprisonment and a $250,000 fine.
- Criminal Copyright Infringement: Punishable by up to three years of imprisonment and a $250,000 fine.
- Pre-Release Criminal Copyright Infringement: Punishable by up to three years of imprisonment and a $250,000 fine.
These penalties have been summarized for space and brevity. Read the entire document to get a complete picture of the risks to which violators expose themselves.
However, beyond the rightful penalties imposed on IP infringement culprits, impacted organizations and IP owners also bear significant costs due to IP infringement.
IP infringement deprives innovators of the opportunity to fully profit from their legitimate efforts. It is estimated that IP theft costs the US alone between $225 billion and $600 billion each year.
Here are some of the costs and consequences of intellectual property infringement:
- Loss of revenue and profit
- Loss of competitive advantage
- Reputational damage from inferior goods
- Reduce government tax revenue
How to Avoid Intellectual Property Infringement
Avoiding IP infringement should always be top of mind for organizations so as to avoid the legal exposure of IP violations. However, even well-meaning entrepreneurs run the risk of violation if they don’t conscientiously follow certain practices, like these:
- Avoiding patent infringement: This is done by simply obtaining the proper and appropriate licenses, ensuring you have the rights to the products you use. Therefore, you should never use registered or protected material unless you get express written consent.
- Avoiding copyright infringement: The best way to avoid this type of infraction is by creating original images or using royalty-free images. Moreover, the latter is inexpensive, only requiring a gentleman’s agreement to give credit to the creator.
- Watch out for subsisting IP rights: An IP owner may have multiple claims and causes of IP infringement. This is common in artistic works where both copyright and trademark laws protect a design like a logo.
Learn How Fortra’s Vera Can Protect Your IP And Prevent IP Infringement
Fortra’s Vera ensures your hard-earned IP is rigorously protected and defended. We do this by protecting your sensitive data wherever it travels and by helping ensure your data protection strategies align with your plan for protecting your IP.
Watch this short video to learn more about how Vera can track, protect, and secure your information.