IP theft – the risk to inventors and SMEs

Two items dealing with IP theft have appeared on the same day and in the same newspaper. Both are typical examples of the contempt many businesses show to owners of intellectual property, who of course include inventors. Sometimes it’s brazen theft, sometimes it’s more devious. There’s one example of each here, so you can decide for yourself which is the more reprehensible.

The first item is about internet gaming company Zynga, a dotcom darling whose stock is now nose-diving ($10 to $2.20 per share in under a year) because it was fundamentally a flash-in-the-pan business all along. The main drift of the Telegraph piece is the ‘toxic internal culture’ and a business model that gave advertisers – Zynga’s main source of revenue – a poor deal. But almost buried away is a paragraph worth quoting in full:

The kind of cheap and cheerful games Zynga produces – Farmville was their biggest hit – are exactly the sort of thing a small competitor can develop. This has led to several accusations of outright theft by Zynga and massive Intellectual Property issues. A local weekly in SF did interviews with several former Zynga workers, who said that stealing other companies’ game ideas and then using Zynga’s huge market share to drown out the people who originally came up with the game was business as usual. “I don’t f–––ing want innovation,” one ex-employee recalled his boss saying. “You’re not smarter than your competitor. Just copy what they do and do it until you get their numbers.”

So – a company gets successful by stealing IP from smaller companies run by creatives and inventors. It then uses its wealth and power to make it impossible for the creatives and inventors to sue. That business model is as old as the hills. It’s just sad that in an age when we’re constantly told that the internet has changed everything, it clearly hasn’t done much to reduce dishonesty. Will it ever? While there’s good money to be made from bad behaviour, probably not.

Next up is a piece about UK engineering innovator Dyson discovering a Chinese spy in its midst, feeding secrets back to German company Bosch.

The implications of this are unpleasant on several levels. The infiltrator (or just traitor?) allegedly worked for two years in the most top secret of Dyson’s departments, renowned for its security, so this was a lot more than just ‘rooting through the dustbins’ gamesmanship.

It’s claimed that the spy gave Dyson IP to the Bosch vice-president for engineering, Dr Hirschburger – so if true, at least one senior Bosch manager has been caught red-handed.

It’s further claimed that when challenged to return the IP and promise not to use it, Bosch refused. It will all go to court, where Dyson is big enough to take care of itself. But what does it say about Bosch, long one of the world’s most respected engineering brands? It basically says they’ll screw anyone out of their IP if doing that gives Bosch an advantage. Nice. Potential Bosch suppliers and competitors, take note.

And there’s an even more ugly side to this story. The mole is said to be Chinese. He – we’d guess it’s a he – was working in Britain, presumably because he had skills in short domestic supply. Now not all Chinese are dishonest and not all Brits are angels. But this guy’s behaviour does nothing to further the cause of those who think our immigration rules should be relaxed to let in the highly skilled people our economy needs.

The UK economy most definitely does not need its technology secrets syphoning off to China or anywhere else where they can be used against UK interests. (Stories from the USA suggest a similar problem there too.) But this is what will increasingly happen if we don’t rapidly encourage more UK young people into technology and design, so we can rely less on imported skills of questionable loyalty.

Until we get that aspect of our education system right, businesses like Dyson with a high demand for skills are caught between the devil and the deep blue sea. And historically, that’s never been a good place to be.

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