What is Intellectual Property Infringement, and How to Avoid It?
Table of Contents
- By Steven
- Published: Mar 26, 2024
- Last Updated: Apr 15, 2024
When we think of “property,” the first thing that comes to our mind might be tangible objects—items we’ve purchased, like cars and homes, or entitlements we’ve procured, like land, titles, or even honorifics. However, there is another type of property that includes intangible ownership, creations of the mind, and various assets of a nonphysical nature. These are intellectual property, fiercely guarded by organizations, backed by legal protections, and vital to innovation and economic growth.
An individual or organization can own intellectual property (IP), and IP rights ensure those owners get rewarded for their creative ingenuity. By extension, this means third parties cannot freely utilize IP that they do not own. Thus, the unauthorized use of IP assets is intellectual property infringement—a chargeable offense in the eyes of the law. This content provides a comprehensive understanding of IP and its infringement.
Understanding Intellectual Property Rights
Intellectual property rights come in many forms and subsequently have a range of influence. These rights are vital for the continued health of driven innovation, market shares, asset value, and the national economy. Moreover, IP rights are more than ownership calling cards; they are also the outcome of substantial time and resources—making some IPs incredibly valuable and a high-risk target for criminals of all types.
What is Intellectual Property?
As mentioned above, intellectual property (IP) refers to intangible assets created by human intellect. IP can have a physical manifestation, such as a book or music sheets, but not all IP must have a physical form. For example, IP can be a company’s “secret recipe” or specific design iconography, like the McDonald’s arches or the Starbucks’ mermaid. Logos and brands might own dozens of IP rights, all under a single trademark umbrella (more on that later).
IP theft, in comparison, is the unauthorized use of those registered IP assets. For example, suppose a rock band created a hot new single, and sports stadiums began playing the song during their intermissions. Unless the stadium obtained legal authorization from the brand to play the music, and at what capacity, the stadium organizers could be in legal hot water.
Importance of IP Rights
IP rights are vital, not only for the owners of the assets but also for the economy more broadly. On an individual scale, IP rights provide creators, writers, musicians, inventors, and many others a leg-up in the judicial arena - especially when the asset gets registered before entering a legal battle. These rights encourage innovation while ensuring the owner is rewarded for contributing to society.
Meanwhile, on a commercial scale, IP rights help to protect the integrity of a brand and niche market shares. They can contribute to an organization’s unique data enrichment, providing companies with a competitive edge. When IP rights are violated, it can cause confusion among consumers, opening the door for shoddy products to flood an otherwise stable marketplace. Even worse, the original IP owner can suffer financial and reputational losses, feeding into the infringing party’s schemes.
Types of Intellectual Property Infringement
There are many varieties of intellectual property; some protect the rights of IP creators, while others protect the rights of those who use IP, like organizations or commercial clients. Other IP rights restrict knowledge or original creations until a particular date has lapsed, such as public domain rights for characters like Winnie the Pooh or Betty Boop. Some IP rights extend the life of registered entitlements—pushing lapse ownership out multiple years, which guarantees exclusive use rights indefinitely.
Intellectual property violations are also called infringement, as they infringe upon another person’s or entity’s right to exclusive use of intangible property. Judicial officials recognize many types of infringement, but the main four are listed below
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Copyright Infringement
When someone creates music, literature, software, films, or other creative works, they are automatically granted copyright(s). Unless the creator sells or grants use of their product to another person or entity (entirely or partially), the creator may have legal recourse. Infringement upon copyright is one of the most commonly recognized IP violations, as it has countless examples, all centered around unauthorized use and distribution.
- Pirating software, films, or music
- Downloading paid media from “free use” websites
- Replicating literature for personal distribution
- Recording a movie, TV show, or radio show
- Using another person’s photos or media without permission
- Incorporating copyrighted music, texts, or logos into media
Trademark Infringement
“Trademarks” are typically groups of copyrighted IPs that work together to differentiate an organization from its potential competition. Trademarked rights include a corporation’s name, iconography, sounds, phrases, colors, quality, and more. When someone infringes upon a trademark, it is also called counterfeiting. Counterfeiting (or competitor “knockoffs”) can significantly damage the reputation of the authentic organization, causing confusion and feelings of being deceived among consumers.
- “Superhero” is trademarked by Marvel and DC Comics
- “Apple” is trademarked by Apple Corps (music) and Apple Computer
- HomeDepot’s orange color, theme music, and logos are all trademarked
- Costco paid $19.4 million to Tiffany & Co. after selling “Tiffany” rings without authorization
- Louis Viton Dak (restaurant) paid $14.5 million to Louis Vitton for name infringement
- Adidas (shoes) filed a suit against Forever 21 (clothing) over the use of stripes on products
Patent Infringement
Where copyright protects a creator’s mental property, patents protect mechanical IPs, like processes, designs, manufacturing items, and machines. Unlike copyright, courts can only enforce patents if the owner registers their IP before infringement occurs. Patents have a particular class of infringement, as cases of these violations typically appear with the offender attempting to poach consumers from their more successful victim; however, there are a variety of patent infringements, which include purposeful and indirect violations.
- The courts ordered Kodak to pay nearly one billion dollars to Polaroid over instant photography and associated technology patent infringements.
- Apple and Samsung have sued each other with 50+ patent-based infringements between them.
- The courts ordered Nintendo to pay Tomita Technologies $30 million for 3D technologies patent infringement (later overturned).
- Pharmaceutical company Moderna has sued its primary competitor, Pfizer, over potential vaccine-creation patent infringements stemming from COVID-19.
Trade Secret Violation
Unlike the IP rights above, trade secrets are IP not made public and considered a confidential element of an organization’s competitive advantage. These rights protect an organization’s use of economically valuable IP including “know-how” like formulas, recipes, design patterns, advantage processes, and computer programs. Non-disclosure agreements (NDAs) protect trade secrets; however, once the secret is made public, the organization loses its ability to obtain legal recourse through IP infringement.
- Coca-Cola’s recipe, Dr. Pepper’s formula, and KFC’s seasonings
- Google’s search algorithm and X/Twitter’s source code
- The New York Times’ definition of a best seller
- IBM’s corporate culture and Proctor & Gamble’s consumer research
- Hershey’s chocolate-making process, McDonald’s special sauce, and Nestle’s coffee recipe
Legal Consequences of IP Infringement
The theft of intellectual property has many consequences, from civil penalties to criminal prosecution. Depending on the circumstances of the infringement, a court may determine the offender to pay hefty fines for their unauthorized use of IP. In contrast, the courts may imprison offenders for their misuse. These determinations are partially determined by localized state laws (i.e., Wisconsin has particularly harsh criminal punishments) and informed by Supreme Court precedence cases.
Civil Penalties
- In 2018, Adidas sued fashion brand Thom Browne for trademark design infringement. They sought over $867,000 in damages and a further $7 million in profits—Thom Browne won the suit due to Adida’s initial silence on the matter.
- In 2007, Viacom sued YouTube for copyright infringement over the platform’s unauthorized use of TV clips. They sought $1 billion in damages—however, due to Viacom’s guerrilla marketing campaigns, they ultimately lost the suit.
- In 2009, Gucci sued Guess for stealing intellectual property from several of Gucci’s trademarks. Gucci claimed $221 million in damages and won the suit, but Guess only paid $4.1 million based on speculative evidence.
Criminal Prosecution
IP infringement can have personal repercussions alongside potential financial damages like those listed above. The US Department of Justice offers a downloadable guide of federal punishments for many infringement crimes, including:
- Camcording is punishable by up to 3 years imprisonment and a $250,000 fine.
- Trade secrets theft is punishable by up to 15 years imprisonment, with a $5 million fine, or 10 years imprisonment with a $250,000 fine.
- Pre-release piracy is punishable by up to 3 years imprisonment and a $250,000 fine or 5 years imprisonment with additional fines.
- Criminal copyright infringement is a felony, punishable with up to 3 years of imprisonment and a $250,000 fine, or 5 years imprisonment, depending on the damages.
- Counterfeit labeling is punishable by up to 5 years imprisonment and a $250,000 fine.
- Counterfeiting trademarks is punishable by up to 10 years imprisonment and a $2 million fine or 20 years imprisonment with a $5 million fine.
Monitoring and Detecting Intellectual Property Theft
IP rights exist to give the rightful owner of a product or creation the entitlements owed; this means there are two sides to preventing intellectual property theft—one side is that of organizations using IP to secure their place in the market, while the other is consumers, using IP to further their private projects. The prevention of intellectual property theft is nuanced but primarily comes down to organizations putting in work before a legal battle appears and consumers asking for permission before using IP they did not create.
For Creators and Businesses
Organizations can help prevent the theft of their IP by implementing proactive policies rather than reactive plans. For example, an organization registering a patent and trademark years before a competitor will likely fare well in a courtroom. By that same notion, companies can implement active preventive policies that limit or restrict the possibility of intellectual property theft; these policies might include data security protocols (i.e., cybersecurity incident response plans), employee activity monitoring (i.e., screen and keyloggers), and continued employee training and education about online threats.
For Consumers and Users
Consumers also have a role in preventing IP theft. Understanding fair use rights and using licensed or permission-given materials can strengthen an organization’s community; however, continued misuse can become a massive issue with cyber threats rising.
Suppose a consumer routinely violated an organization’s IP rights by using copyrighted music in their YouTube videos, and after being warned, they stopped using those sound clips. If a malicious actor were to commit account takeover or ATO fraud and resume the misuse of that copyrighted material, it may result in the consumer being charged with infringement penalties due to their historical misuse of the IP.
Navigating Intellectual Property Disputes
IP disputes go to the judicial arena for legal resolutions. Most often, courts determine the “winner” of a legal suit based on historical usage of the IP. Officials look at who potentially created the IP “first,” how the plaintiff and defendant have used it, and if one party is unfairly benefiting from the IP’s misuse.
In many cases, IP infringement suits are difficult to win because IP is somewhat nebulous. Consequently, many IP litigations are ended before they reach the courts through negotiations or out-of-court settlements. These out-of-court solutions account for the limited real-world examples of infringement cases—most offending parties would rather pay a settlement than be dragged through the courts to pay more on the other side.
Intellectual property is everywhere—created from our minds, purchased by organizations, and defended in the courts. IP rights are more than a right of ownership; they also reflect economic and reputational valuables, ensuring market shares for corporations and entitlements to innovators; however, they are also highly sought-after, particularly by competitors, malicious groups, and counterfeiting entities. Proactive approaches to IP protection and knowledge about IP legal compliance are the best ways to protect any intellectual property from misuse.
Looking for more information about data privacy and cybersecurity? Check out our other blogs on Sentinel; learn about the differences between IOA and IOC, zero-day vulnerabilities, ETL, data pipelines, data breaches, and more.
