7 Business Best Practices for Protecting Intellectual Property

We frequently work with tech companies who need to protect confidential and proprietary information related to their research and development efforts. For these companies, data security policies and information technology (IT) infrastructure are critical for protecting their most valuable business assets.

Many businesses put significant resources into legal processes to protect their IP, for example, through legal agreements and patent filings. But of course, to be truly effective, your legal strategy needs to be backed up by other good business practices.

Why? One reason is, accidents happen. An employee might accidentally leave a sensitive document in a coffee shop, or a collaborator could accidentally publish something they weren’t supposed to. Another reason is bad actors. Hackers are always looking to exploit vulnerabilities in computer infrastructure, and corporate espionage is common in highly competitive industries.  

In this post, we’ll review three tools that are commonly used to provide legal protection for confidential information, and then we’ll take a closer look at seven business policies that work hand-in-hand with legal policies to protect your IP. The goal here is to help you implement good business practices to make sure your legal strategy isn’t compromised by accidents, bad actors or other risks outside the legal system.

3 Legal Strategies to Protect Your IP

Many companies use the following legal tools to protect their confidential information. If you’re running a tech company, your legal team should help you implement these and other tools that will provide a foundation for securing legal protection for your intellectual property assets.

1. Nondisclosure Agreements (NDAs) aka Confidentiality Agreements

Broadly speaking, NDAs restrict use and limit disclosure of your company’s protected information. NDAs offer you legally enforceable protection against accidental and intentional confidentiality breaches by third parties.

With that in mind, before you share confidential information with a third party, make sure to have all recipients sign an NDA first — yes, even if you think they are trustworthy!

2. Employment Agreements

If you’re engaging a new employee who might have access or contribute to the company’s IP, they should sign an employment agreement before they start work. The employment agreement should clearly define what IP is owned by the company, and how the employee is expected to handle confidential information and other IP during and after the course of their employment.

For more details on what the employment agreement should cover, check out our blog post about effective hiring practices.

3. Invention Disclosure Records (IDRs)

IDRs are the most effective way for your company to track IP created by your employees. Essentially, an IDR is used to internally document relevant details about company-related inventions.

All tech companies should have an IDR template that employees complete when they develop new, valuable innovations. The completed IDR can then be used as a starting point for obtaining patent or trade secret protection.

7 Business Best Practices to Protect Your Intellectual Property

Even if you perfect the legal tools and procedures, other risks—like employee mistakes and bad actors—that can threaten the value of your IP. Legal strategies must be deployed in concert with strong business practices and secure IT infrastructure to ensure that your confidential information won’t be compromised.

1. Offer Employee Training and Incentives

When confidential information is improperly disclosed, it’s typically through people — namely, your employees. But you can reduce the risk of disclosures resulting from employee negligence by periodically reinforcing your confidentiality policies.

For one, your employment agreement may formally define your company’s IP policy at the outset, but you should use training courses and written materials to continually refresh your employees’ knowledge of company policies and infrastructure over the course of their employment.

For another, while IDRs are effective tools for documenting your company’s IP, they also require a lot of work to fill out. Consider introducing incentives to encourage your employees to submit IDRs.

2. Use Data Encryption

If an unauthorized user gains access to a company device or network, and the data hasn’t been encrypted, that user can immediately steal all the information they find. Even worse, if the information becomes publicly available, you might lose trade secret status or other IP rights.

So be sure your data is encrypted, and when you share information with third parties, make sure they do the same. If employees are using personal devices for work, make sure their personal devices are also encrypted. In your NDAs, consider including a requirement that confidential information must be stored in a secure location and in encrypted format. 

There are many affordable software tools that you can use to encrypt your drives, files, and email. If you’re not sure where to begin, start with this list of recommendations.

Where necessary, you also need to enforce strong passwords across all your files and documents.

• Password integrity: Tools like LastPass and 1Password both offer enterprise or “team” access to globally manage passwords and other sensitive information within organizations. 
• Multifactor authentication: Even if an unauthorized user discovers your password, they’ll still need to provide additional  information before they can access your data.

3. Control Who Can Access Sensitive Information

Your company’s head of information security should have full visibility over where critical information is stored, and who is given administrative privileges and access rights to that information.

• Data controls: Use file management systems that allow you to set permissions by user and administrative group, and make sure the permissions are restrictive enough to protect your sensitive files.
• Physical controls: Physically secure rooms containing sensitive material, and set restrictions on who can gain access to these rooms. Keep an access log for your most critical trade secrets.

In your NDAs, consider including requirements for similar data and physical controls over information access. Also, require your collaborators destroy or delete your confidential information after a certain period of time, to further reduce the risk of accidental disclosure.

4. Choose the Appropriate Cloud-Based Solution

Over the last decade, almost all businesses have moved their data to cloud-based services like Google Drive, Dropbox, or Microsoft One Drive. However, make sure you pay attention to the data security features of the service you choose, and make sure you activate the right settings for your enterprise. Many cloud-based providers offer better security tools with higher subscription levels. For example, you might have to upgrade to a premium level subscription to get the highest level of protection for your data.

5. Regulate Use of Cloud-Based Systems

As cloud-based systems have become ubiquitous, the boundaries between personal and work devices have also blurred. But if your employees can sync company data to their personal devices, the risk of accidentally compromising confidential information increases.

Consequently, you should set data security policies and procedures that — at the very minimum — include file sharing guidelines.

If employees are using their personal devices to access company email or other systems in the cloud, make sure their personal devices comply with the company’s data security policies. For example, smartphones and laptops should be setup to require a passcode.  

6. Securely Back Up Important Files

Data loss can happen to any company — so back everything up with multiple redundancies. At the same time, it’s also important to keep those backups secure.

It’s all about balance:

• If you don’t back up at all and lose your data, you’re not only losing the hard work that went into producing it, you’re also losing valuable IP.
• If your backups aren’t stored as securely as your primary data, hackers (and, by extension, competitors) could easily access your IP through your backups.

7. Conduct Regular Tests and Audits

Make sure you’re regularly assessing your IT infrastructure — through penetration testing as well as network-security audits — to detect any security vulnerabilities that a hacker could exploit. We highly recommend working with a professional IT firm who can do periodic maintenance and testing to make sure your systems in good shape.

Protect Your IP With a Comprehensive Strategy

Combining a solid legal strategy with good business practices can go a long way towards protecting the confidentiality of your IP. Make sure you take the necessary precautions to minimize risks posed by accidents and bad actors, so that your legal strategy has a solid foundation for success!