R&D Pipelines Are Leaking Trade Secrets. Is Yours?

April 26, 2017

R&D Pipelines Are Leaking Trade Secrets. Is Yours?

Have you every considered why it is so difficult to invent and innovate in today’s fast-paced research and development environment? Despite the vast amount of effort, good intentions, and resources infused into R&D initiatives, including record-levels of direct cash investments that represent a serious percentage of annual gross revenues, the invention and innovation output from those R&D programs often do not meet stakeholder expectations. But why? Good ideas are hard to come up with, granted. But what if the very R&D teams that your company relies on for invention have decided to save the best ideas for themselves – or worse, for a competitor that will reward them for bringing the idea out of your company?

One alarming theory, the “Leaking R&D Pipeline Theory”, is emerging from the ranks of insider threat management professionals and is applicable to any organization that relies on invention and innovation as a strategic, competitive advantage. The theory applies to corporate, government and academic R&D environments and is based on the premise that your R&D pipelines have leaks — i.e., slow-dripping leaks where critical components of R&D know-how seep away from the pipeline and erode your invention and innovation strategic plan. The leaks are caused by your employees, contractors, and external partners who inadvertently, or sometimes even intentionally, misuse their access to your R&D information assets resulting in unauthorized disclosures of your organization’s trade secrets. The leaks can be small, such as an employee who puts too much information on a resume or a social media profile regarding his work on your R&D program. Over time, however, the accumulative affect of employees dripping trade secrets online, divested employees exceeding their briefs during job interviews, poster sessions that go beyond scripted disclosures at conferences, and your external partners discussing your project details with their potential clients that happen to also be your direct competitors can be devastating.

The Leaking R&D Pipeline Theory, developed by the insider threat and industrial counterespionage experts at Trust Farm, suggests that human-based insider threats are diverting key knowledge assets away from R&D programs for their own benefit — or even for the benefit of others (e.g., a Nation State threat or a less-than-ethical competitor). While we have investigative case study insights into how a single, massive trade secret theft incident can devastate a research program or even take down an entire commercial business unit, the phenomenon of dripping trade secrets over time should trigger alarms within corporate and academic research programs alike. It is equivalent to a leaking hull on a boat — you will sink, eventually.

Good ideas are difficult to develop and even harder to convert into something commercially tangible, especially in heavily-regulated operating environments that most industries must navigate. Your research and development programs are staffed by dedicated teams working around the clock to find answers to some of society’s most significant challenges — such as developing a new medicine to fight Alzheimer’s disease, or expanding genomics to create a new cancer biological therapy, or developing an innovative consumer product, or writing code for an industry-changing software application, or implementing effective driverless car technology, or even inventing something as simple as a new flavor of ice cream. But what happens if an individual, and sometimes an entire R&D team, decide that an idea is so valuable that they are willing to take the risk of misappropriating the idea?

The answer to that question is that the idea that your company paid for will never make it to commercialization — at least not for your organization. We have seen numerous individuals accept positions with competitors so that they can get the credit and reward for the invention or innovation by transferring trade secrets from their former employers to their new employer. We have also seen that R&D professionals will collaborate to form their own companies — usually small start-ups focused on one great approach to science or engineering based on the ideas collected while working for their current and/or previous employers. These start-ups can attract funding on own through venture capital and other fundraising, making them attractive acquisition targets down the R&D road for your competitors. Your good idea has essentially been “laundered” by the M&A process, your trade secrets have been pilfered, and your R&D program has been stalled because one or more individuals diverted the knowledge of the invention or innovation away from your organization.

Corporate and academic leaders often speak about the importance of invention and innovation in their business models and are motivating their workforces to rebuild organizational cultures focused on the process of invention and innovation. Unfortunately, most of these mission statements and strategic plans do not factor in the significantly probability that trade secret theft will undermine R&D initiatives if the organization lacks an effective Trade Secret Protection Program. Organizations must proactively manage the insider threat risks to R&D programs. The result will be fewer leaks and, hopefully, any remaining leaks in the R&D pipeline will be identified quickly so that remediation efforts can occur.

Organizations should consider implementing a Trade Secret Protection Program to build awareness of the importance of protecting sensitive, proprietary R&D plans and intentions. Safeguarding trade secret information through effective policy controls, training and awareness campaigns, compliance monitoring and incident management efforts, and timely investigation protocols will limit the damage caused by a leaking R&D pipeline.

At the individual level, R&D professionals should consider taking training courses related to protecting invention and innovation information as part of their professional development plans. For example, Trust Farm offers an Innovation Risk Management Certificate Training program designed to prepare R&D program personnel to protect sensitive information from unauthorized disclosure. Pushing trade secret protection efforts down to the individual contributor level is a great way to build a culture of trust and innovation protection.

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