Intellectual Theft: What Is It?

Intellectual theft is stealing or using without permission someone else's intellectual property.

Intellectual property is any creative or commercial innovation, any new method that has economic value, or any distinctive mark which might include a name, symbol, or logo that's used in commercial practices. This type of property includes ideas and property protected by trade secret laws, trademarks, patents, or copyrights. Client lists, mechanical inventions, poems, logos, and other items can be covered under intellectual property.

Intellectual property is protected by patent for inventions, trademarks for commercial marks or branded products, and copyrights on creative pursuits such as music, photo, poems. Intellectual property is protected under state and federal laws. Intellectual property is commonly abbreviated as IP.

How to Know if Intellectual Theft Has Occurred?

Theft of intellectual property happens when someone knowingly uses, misappropriates, takes, or steals property that falls under the protection of laws around intellectual property. For example, if someone copies the logo that belongs to another company and knows that it belongs to someone else, this would be considered intellectual property theft. In order to qualify as theft, the intellectual property typically has to be used without the consent of the owner. Another example of IP theft is if an employee of a restaurant steals the secret recipe for a popular item on the menu and uses that recipe to make their own food item.

What to Do If You're the Victim of Intellectual Theft

If your intellectual property is used without your permission or is stolen, there are a few paths that you can go down.

Often, the first step to take is to ask the person who is using your intellectual property without permission to stop using your intellectual property. It's possible that the person committed intellectual theft without intending to do so. If this is the case, the person will likely stop using your intellectual property or agree to pay you for your intellectual property.

If asking the person who committed intellectual theft to stop doesn't work, you may have to resort to legal action. Even if you don't actually intend to sue the person who stole your intellectual property, the threat of a lawsuit can often be motivation enough for them to return or stop using the intellectual property.

IP theft is an extremely expensive problem that costs businesses in the United States billions of dollars annually, so the FBI has gotten more involved recently by making the investigation and prevention of this issue more of a priority.

The Purpose of Intellectual Theft

Intellectual theft is quick, easy, and cheap to commit. All that has to happen for a thief to steal intellectual property is to copy someone else's work, idea, or product. Often, the victim might not even know that something has happened.

Because someone else has done all the work, the thief benefits from that work without actually doing anything. It's possible for intellectual property thieves to financially benefit from their theft. This loss of profit can affect the owner of the intellectual property deeper than just a simple theft. It's possible the theft of their intellectual property will cause damage to their reputation or job, or even bodily harm.

Types of Intellectual Property

Because there are many different types of intellectual property, there are many different types of intellectual property theft. The type of intellectual property that has been stolen will also determine what rights you have in prosecuting the intellectual theft.

Copyrighted Material

Copyrighted material is material that is fixed in a tangible medium and is an expression of creativity. This would include poems, photographs, paintings, software, and books.

Trademarked Material

What can be trademarked is very limited. The only material that can be trademarked are words, symbols, phrases, or designs that identify a brand.

Patented Material

A patent is given to any new invention. There are three types of patents: utility, design, and plant.

Trade Secrets

A trade secret is any piece of information that is valuable to a business but is not generally known. This material is kept confidential to preserve economic value.

Variations of Theft

Many types of intellectual property exist, which leads to variations in the type of theft that occurs with IP.

Protection of Different Types of Intellectual Property

The protection of intellectual property from theft depends upon which type of intellectual property you're trying to protect. Each type has a differing level of protection under the law. Some infringement of intellectual property law is even considered criminal.

For any type of stolen intellectual property, the first step is generally to send a cease and desist letter. This letter is the first contact with the intellectual property thief and just lets them know they need to stop using and stealing your intellectual property. An IP attorney can send this letter for you.

The cease and desist letter should specify:

  • What intellectual property has been infringed upon
  • The type of infringement
  • The action necessary to fix the infringement
  • A time limit for their response and amendment of the situation

Protection of Copyrights

For copyright owners on digital material, you're protected under the Digital Millennium Copyright Act or DMCA.

This law allows the owner of the stolen copyrighted material to send a "takedown" notice to the person who is using the copyrighted material without permission. A takedown notice is similar to a cease and desist letter. The takedown notice can be sent to the owner who is using the material, search engines, and ad networks.

Identifying the owner of a website or the owner who is using the copyrighted material without permission can be very difficult. This may take a lot of research. You may want the help of an intellectual property attorney with experience in this area of copyright infringement.

A WHOIS search may help you to identify the website owner, but can still be complicated. Under the DMCA, an owner fighting copyright infringement may be able to compel a service provider to reveal the identity of the infringer.

Protection of Patents

A patent owner has the sole right to sell and use their patented invention. If someone uses or sells their invention without their permission, that's patent infringement. If you own a patent and believe that someone has been granted a patent that infringes upon yours, you can contact the United States Patent and Trademark Office or USPTO for a Request for Reexamination. The majority of patent infringement cases will be heard in federal court.

Other Intellectual Property Protection

Some trademarks are registered through the state system while others are registered with the federal government. If a trademark is registered with only one state, the case will be heard in a state court. If it is registered through the USPTO, the case will be heard in federal court.

If a cease and desist letter is ineffective, intellectual property cases can be handled in civil court. An intellectual property attorney can help the intellectual property owner decide if their case should be tried in criminal or civil court.

In civil court, an intellectual property owner fighting infringement can obtain:

  • An injunction commanding the person to stop using the intellectual property
  • Compensation for losses from the intellectual property infringement
  • Attorney's fees
  • Punitive damages

Intellectual Property Theft Through Piracy

Copyrighted material and trade secrets are the types of intellectual property that are most likely to be involved with cybercrime.

Piracy is a term used to describe digital intellectual property theft. Piracy might involve the theft of software, music, or digital images. Billions of dollars are lost every year to digital pirates and the theft of intellectual property online. This has a major effect on the U.S. economy every year.

When pirates steal intellectual property from companies and then give away or sell that intellectual property, the original creator or owner is losing out on the money from those sales.

Piracy of intellectual property has changed dramatically with the prevalence of technology and digital media. It is now easier than ever to steal or pirate digital intellectual property. Before computers, pirates had to spend time and money copying and distributing materials. With computers, this can now be done in minutes if not seconds. Streaming services and file-sharing networks make it easy for people across the globe to steal digital content.

Anything that can be digitized is now up for grabs for online pirates looking for intellectual property. This is especially a concern for companies who store their trade secrets online. Companies now need to consider how they protect their trade secrets that are online from pirates. The other major difference with sharing online is that anyone can share. Once a trade secret is shared, each person who it was shared with now has the ability to share it with others.

Prosecuting this type of crime is difficult for U.S. law enforcement not only because the perpetrators are hard to identify, but also because the laws are so new.

Also, it's not uncommon for online pirates to cross international lines. A company may have their trade secrets stolen by pirates in Southeast Asia or Russia. Crossing international lines with intellectual property theft can make prosecution of perpetrators more difficult.

Cyberstalking

Another concern in the realm of intellectual property theft online is cyberstalking. Stalking is nothing new, but it used to involve following a person around and stalking them to their home and business in the physical world. Cyberstalking is the stalking of someone online. It's not uncommon for a cyberstalker to find, take, and then release the personal information of the person that they are stalking online.

What Are the Legal Consequences of Intellectual Property Theft?

If you can identify the person who stole your intellectual property and bring them to court, there are some harsh penalties for the crime. The majority of intellectual property cases are tried as federal cases, making them federal crimes.

The possible consequences of intellectual property theft are:

  • Criminal fines
  • Imprisonment (the length of time depends on the nature of the charges)
  • Seizure of the stolen intellectual property
  • Civil charges (could include business profits lost due to the theft)
  • Suspension or loss of an operating license held by a business

The laws around intellectual property protection come with stiff, costly penalties for violation. In fact, many cases of IP theft and infringement of protection will be taken to federal court, which means harsher penalties.

Types of Intellectual Property Theft and Penalties

Intellectual property can be stolen in a number of ways.

  • Counterfeit trademarks: Using a counterfeit trademark could result in up to 10 years in prison and a fine of up to $2 million upon conviction. If a mark is used in trafficked services or goods, these penalties could apply.
  • Counterfeit drug trafficking: Trafficking counterfeit drugs or other counterfeit military services or goods has a potential penalty of up to $5 million in fines and 20 years in prison.
  • Counterfeit labeling: Trafficking counterfeit labeling of items that could be affixed to books, visual art, software, movies, books, music, and other related works could result in up to five years in prison and up to a $250,000 fine. In addition to these types of works, counterfeit labeling can also apply to the packaging or documentation of these items.
  • Criminal copyright infringement: Copyright infringement has become a more severe federal crime in the past few years. Violating copyright laws is a felony that could result in a $250,000 fine and up to three years in prison. If it is proven that the infringement offered private financial gain or a commercial advantage, the penalty could increase to 10 years in prison. However, the prosecution must be able to prove beyond a reasonable doubt that the perpetrator produced and/or distributed at least 10 copies of a work that is protected under a copyright. Those copies must hold a retail value of over $2,500 and must have been distributed within 180 days of the legal action taking place. If the retail value of the works is between $1,000 and $2,499, the charge drops to a misdemeanor.
  • Pre-release criminal copyright infringement: Material that hasn't yet been released to the public can be pirated, which violates the copyright protection. Music, software, and movies often build pre-release excitement by sharing snippets of the upcoming content. If found guilty of pre-release piracy, the offender could be convicted of a felony and face up to three years in prison and a $250,000 fine. The potential time in prison could be up to eight years if the offender is acting for private financial gain or commercial advantage. Pre-release copyright infringement is outlined in the U.S. Code, titles 17 and 18.
  • Recording a movie: If someone records a movie in a theater, also referred to as “camcording,” this action can become a federal felony. The penalties are up to a $250,000 fine and up to three years in prison.
  • Stealing trade secrets: Trade secrets help businesses maintain their competitive advantages by keeping certain aspects under wraps. The Economic Espionage Act outlines the penalties for stealing trade secrets when that action benefits a foreign agent, institution, or government. These harsh penalties include up to a $5 million fine and 15 years in prison, based on the U.S. Code, Title 18, Section 1831. Under section 1832, theft of trade secrets that benefits anyone other than the owner of those secrets is punishable by up to a $250,000 fine and 10 years in prison.

How is the U.S. Curbing Intellectual Property Theft?

Within the U.S., the National Intellectual Property Rights Coordination Center is working diligently to stop IP theft on a global basis. This center partners with more than 20 additional agencies located across the world to identify and curb IP theft as much as possible. Some of these agencies include the governments of Mexico and Canada, Europol, Interpol, and the FBI. These federal agencies are responsible for investigating any instances of IP theft and bringing perpetrators to justice.

If an agency locates a potential target of IP theft, the investigation could take months or years before it is complete. Federal defense attorneys must have extensive evidence of IP theft, along with expert witnesses that can verify what is being present in court.

Are There Any Defenses to Intellectual Property Theft?

If you are charged with intellectual property theft, there are a few defenses that may help you to not be charged with a crime.

Those defenses include:

  • Lack of intent: If the person accused of intellectual property theft did not intend or knowingly attempt to steal the intellectual property or use it for personal gain.
  • Lack of ownership rights: If the person who is accusing another of intellectual property theft didn't have ownership rights over the intellectual property, then they cannot sue for infringement. This would also apply if the material could not be protected under intellectual property laws.
  • "Unclean hands": This is considered wrongdoing on the part of the person bringing the lawsuit. If that person waited a long time after finding out about the intellectual property infringement before suing, it would be considered "unclean hands."
  • Fair use: In this defense, the accused intellectual property infringer could claim that the intellectual property was used under the fair use clause. The fair use clause allows for the use of intellectual property for educational purposes. A fair use defense can be very complicated and would benefit from the help of an intellectual property attorney.

There are other more technical defenses to intellectual property lawsuits, but for those, you'll likely need the help of a trained, experienced intellectual property attorney.

Intellectual Property Rights

Depending upon the type of intellectual property, you'll have different rights. If the rights listed down below are infringed upon, then you may have the right to bring a lawsuit.

Copyright

With a copyright, you have several rights. These include:

  • Right to reproduce the work
  • Right to display the work publicly
  • Prepare derivative work
  • Distribute copies of the work
  • Sell copies of the work

Trademark

The owner of a trademark has the right to stop others from using a similar or exact mark.

Trade Secrets

The owner of trade secrets has the right to:

  • Prevent others from using, copying, or benefiting from the secret.
  • Stop them from disclosing the secret if the other party has signed a nondisclosure agreement.
  • Others cannot steal the trade secret or use it if they know the information is protected.

Steps to Identify and Prosecute Intellectual Property Theft

We've discussed through this article what intellectual theft is and what to do, but here we'll identify the step-by-step process for identifying and prosecuting intellectual property theft.

Step 1: In order to prove that your intellectual property has been stolen, you need to establish that the person who stole the intellectual property had access to the material. If the intellectual property is online, it's easy to prove that virtually anyone had access to the intellectual property.

Step 2: Document. The next step if you believe your intellectual property has been stolen is to document the theft. Each time your intellectual property is used without your permission, document it. If the illegal use is online, take screen shots. Capture a screen shot for every day that the intellectual property is used illegally online.

If the intellectual property is being used offline, try to get a copy of the physical material that is being sold or distributed.

Make sure to take note of the date on which you see unauthorized use of your intellectual property.

Step 3: Check the WHOIS website. If someone is using your intellectual property online without your permission, this website can help you to identify who owns the website where your intellectual property is being illegally posted.

The WHOIS directory will hopefully be able to tell you who owns the website domain and provide you with their address, phone number, email address, and IP address.

Step 4: Consider if your intellectual property is being used under the "fair use" clause. The fair use clause allows for the use of intellectual property for educational purposes without the permission of the owner of the intellectual property.

This exception to the rules of intellectual property laws allows for the use of copyrighted works that are "limited and reasonable." To assess if the intellectual property use is protected under the fair use clause, consider these four factors:

  • The purpose and character of the use — If it was for a non-profit, educational use, it's likely protected. For commercial use or financial gain, it's unlikely to be protected. This also considers if it was used for parody or satire, which might be protected.
  • The nature of the copyrighted work — There is more leeway to copy from factual works than from creative works.
  • The amount and substantiality of the portion used — The use of one sentence out of 5,000 words may not be considered infringement, but using an entire photograph likely would be.
  • The effect of the use on the market where that work is used — If the intellectual property holder loses the ability to sell their work because of the theft and use, it's more likely to be infringement. If the copyright holder's sales aren't affected, it might not be infringement.

Step 5: Determine how much the theft of your intellectual property will cost you. The depth of the financial harm from the intellectual property theft will help to determine how vigorously you pursue the case. You can sue for lost sales even if your business doesn't show an actual decrease in sales.

Step 6: Send the intellectual property thief a cease and desist letter. If multiple people have stolen your intellectual property, send as many of them as you can identify a cease and desist letter commanding them to stop using your intellectual property.

If the thief doesn't stop using your intellectual property after you've sent the cease and desist letter, it's likely that the use of your intellectual property is intentional.

Step 7: Contact the police or other authorities. Report the theft of your intellectual property to the police. What qualifies as criminal theft will depend upon the type of intellectual property that has been stolen.

Some intellectual property theft situations are criminal while others are civil. Your case might be heard in state court or federal court, depending on where the intellectual property is registered.

Step 8: Hire an intellectual property attorney. If you're considering filing a lawsuit against the person who stole your intellectual property, you'll likely need the assistance of an experienced intellectual property attorney.

Step 9: Know what you have to prove. Once you've hired an intellectual property attorney, ask them what it is that you will need to prove. To win your lawsuit, you will likely have to provide proof that you own the intellectual property and that it has been stolen or illegally used. What you must prove in an intellectual property case will depend upon the type of intellectual property that has been stolen.

Step 10: If you have not already done so, register your intellectual property. If your intellectual property wasn't yet trademarked or copyrighted with the USPTO, you should do so immediately. The creator of material that is eligible for a trademark or copyright automatically holds the rights to that material even without registration. Registration makes ownership easier to prove even if it happens after the intellectual property theft or infringement.

List of Resources for Intellectual Property Theft

If you find yourself the victim of intellectual property theft, there are many resources out there that can help you to figure out what your next steps are. Those resources include:

  • Computer Crime and Intellectual Property Section, U.S. Department of Justice
  • National Intellectual Property Rights Coordination Center
  • National Intellectual Property Rights Coordination Center (Brochure: Reporting Allegations of Intellectual Property Theft)
  • National White Collar Crime Center

For theft or piracy of patented and copyrighted material such as videos, software, and sound recordings:

  • Local FBI Field Office
  • FBI's Internet Crime Complaint Center
  • National White Collar Crime Center
  • The Recording Industry Association of America
  • Intellectual Property Rights Information & Assistance: stopfakes.gov
  • U.S. Immigration and Customs Enforcement
  • U.S. Postal Inspection Service

For counterfeiting of trademark:

  • Local FBI Field Office
  • FBI's Internet Crime Complaint Center
  • U.S. Immigration and Customs Enforcement
  • U.S. Postal Inspection Service

For counterfeiting of drugs:

For theft of trade secrets:

Other places to report intellectual property theft:

h2>Frequently Asked Questions

Should I hire a lawyer to help with my intellectual property infringement?

The laws of intellectual property are complex, and there are strict penalties for violation of the laws. An intellectual property attorney can make identifying and prosecuting intellectual property theft much easier on you. An intellectual property attorney can also help you to decide whether it's worth taking your case to court.

Is theft of intellectual property a crime?

Yes. Under most circumstances, the theft of intellectual property is a crime. Theft might also be a civil crime or a criminal crime.

What are patent trolls?

Patent trolls are companies that don't produce anything but buy and sell patents for profit. For inventors, this might be a benefit as they get to make a profit by selling their patents. The problem with patent trolls is that some of them "troll" or sue small companies for patent infringement when the company has done nothing wrong and doesn't have the funds to defend themselves.

If you need help with theft of your intellectual property, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.