Who’s Minding Your Store?
Intellectual Property and Compliance in the Digital Age
The Internet age has been both a blessing and a curse for many companies. It has provided myriad opportunities for new revenue streams. But it has also posed challenging new problems for managing intellectual property and regulatory compliance.
How can you get the best value out of your assets while still protecting them? Especially when most of them are intangible, like patents — and in digital form?
And how can you possibly keep pace with the hundreds, possibly thousands, of laws and regulations governing your business?
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Digital trust is proving to be the likely solution for these challenges, and is explored in depth in two new CSC reports: Intellectual Property Protection: Minding Your Mind Power (PDF, 2.6MB) and Compliance Management: The Business of Keeping the Business in Business (PDF, 2.7MB).
Key findings in these latest volumes from CSC’s Leading Edge Forum Digital Trust series include:
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More assets are now intangible — and in digital form — than ever before. And the percentage is expected to grow. Organizations must change their tactics to protect these assets.
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Digital trust not only protects intellectual property, but also enables you to create new value from existing assets, generating completely new revenue streams.
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Rules are everywhere. The more rules you must comply with, the more important digital trust becomes.
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Digital trust makes compliance cheaper and easier. But the real payoff is compliance itself, which prevents lost trust and competitive disadvantage.
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Despite setbacks, businesses are winning the battle. The reports showcase technologies and solutions you can use to protect your organization.
Digitize, then "monetize" your IP
Today, by some estimates, 80 percent of the S&P 500’s value lies in intangible assets, a significant portion of which is intellectual property (IP). And, since 1999, more than 90 percent of all documents have been created in digital form. That’s a lot of pages floating around in cyberspace.
Digital trust is the best way to not only protect, but also capitalize on those assets.
A "bonanza" for businesses
"Digital trust is not just about confidentiality. It enables you to monetize the assets that are so valuable to you," says Ron Knode, CSC IT security expert and the reports’ lead researcher. "It doesn’t do you any good to have the best protected intellectual property, and not be able to sell it to authorized buyers for a good price on terms both sides understand and respect."
Digital trust gives companies the power to exploit these assets, often repackaging existing IP in new, marketable ways. Apple’s iTunes may be the most notable example, but there are others.
The U.S. National Basketball Association recently signed a TV agreement averaging $930 million per year, a 21 percent increase over the previous agreement. Despite declining ratings and escalating costs, this new deal justified an increase primarily because it included extensive digital media rights.
"This is a bonanza for people who can figure out how to use digital trust to create new value for intellectual property they already own," Knode says.
Losses in the billions
But many companies are still primarily concerned with protecting themselves. Insufficient digital trust is costly. Losses due to IP theft range up to $300 billion per year to U.S. companies alone.
The solution? So far, the report says, there is no comprehensive combination of IP protection techniques that can solve the entire problem. Like everything in the digital age, change is constant. And changes in criminal tactics demand changes in technologies.
But there have been notable successes. Content monitoring and filtering tools, along with data loss prevention tools, are gaining ground. Digital and enterprise rights management, which limits uses for downloaded material, has proven useful for music and media, despite some consumer complaints. Enterprise applications of rights management are becoming more popular for other data types, as well. Encryption, watermarking and fingerprinting are also showing promise.
"Digital trust for IP protection across the entire IP value chain is the rawest frontier of security technology today," Intellectual Property Protection concludes. "Yet, digital trust technologies for IP protection are being used to good effect in portions of the value chain, and a complete IP protection architecture is imaginable."
Rules, rules everywhere
Also imaginable, one would hope, is an easier way to navigate the quagmire of laws, rules and regulations governing today’s businesses. The digital age has made it easier to access and provide compliance proof to auditors, lawyers and government agencies. But there is so much information online and so many more regulations, it is difficult to really assure anyone that you have it all under control. The best solution? Again, digital trust.
"Digital trust technology in compliance management makes compliance more complete by implementing controls across all of the IT functions used in enterprise transactions and making it possible to generate confidence that those controls are in place," explains the Compliance Management report.
Without it, organizations can suffer real and perceived losses. "Bad digital trust in compliance management reduces your credibility. No one believes you anymore," adds Knode.
If businesses or government agencies have breaches, they cause long-term -- possibly irreparable -- harm. Take e-voting, for instance. By the 2006 U.S. midterm elections, complaints emerged from at least six states about "vote-flipping" (voters touching one electronic button and another button lighting up).
Trust in the digital voting machines was lost, and consequently citizen trust in the outcome of the election was damaged. Ironically, the report notes, in this case digital trust can probably only be restored with a paper trail (produced as a digital trust feature by a digital program, however).
Global privacy regulations are another area where public trust is crucial. Digital trust -- often in the form of encryption; content discovery, monitoring and filtering; and vulnerability management -- can help organizations master compliance.
Digital trust has double payoff
The report notes that digital trust in compliance management increases value as the number of compliance obligations grows. It makes compliance:
- Cheaper, by automating the collection, organization and reporting of compliance data
- Easier, and more transparent, by receiving and reinforcing digital trust functions in all key areas covered by compliance mandates
"In both cases, however, compliance itself (and the avoidance of trust penalties due to non-compliance) is the real return," the report says.
Volumes of the Digital Trust series will be published monthly, with the final two volumes due in November 2007.