What To Do When a Competitor Steals IP or Trademarked Information

A company’s intellectual property (IP) is one of its most valuable assets. Trademarked, copyrighted, or patented information is often key to a company’s innovations—and they can experience direct economic losses when competitors attempt to use that intellectual property. 

Business owners that suspect IP theft must act quickly to protect their IP rights and avoid long-term damage to their company. 

Read on to learn when and how to respond to (and resolve) IP or trademark infringement.

Before taking action, you’ll need to assess whether an instance of IP theft has actually occurred or not. IP theft can happen when a competitor uses your trade secrets or other protected information, from client lists to slogans. Each case of IP theft has its own nuances, so it’s important to consult with a legal expert who has a clear understanding of the situation to determine if infringement has taken place. 

Some forms of intellectual property, such as copyrights and trademarks, automatically have access to legal protection upon their use and creation. Others, like patents, must be officially registered. Regardless of the type of intellectual property, businesses must have some sort of claim over it to pursue legal action.

Below are several scenarios to consider before taking action on a potential instance of stolen IP.

Is the IP Unique and Covered Under Copyright Law?

Not all of the intellectual assets you use are covered under copyright law. Information that’s in the public domain or related to industry standard practices may not be protected because it’s so widely used. Additionally, some forms of intellectual property may not be deemed unique enough to be copyrighted.

This is especially common in the music world, where a few simple notes can make the difference between inspiration and plagiarism. For example, musician Marcus Gray famously sued Katy Perry over a melody that she allegedly stole from one of his tracks. However, he lost the case when a judge deemed that the eight-note tune lacked the originality required to qualify for legal protection. 

Each industry has its own standards for what qualifies as unique, protectable designs and ideas. For example, in the fashion industry, logos and textile designs are eligible for copyright protection, while the cut and color of a garment are not. Before pursuing any type of legal action, businesses should confirm that the potential instance of IP theft actually involves a unique creation that they own. 

Who Was Using the Intellectual Property First?

It’s possible for multiple businesses to independently create similar designs and ideas. In these situations, the date of creation can influence who has ownership of the IP. Because copyright law covers a work immediately after it was created, it often functions on a first-come, first-serve basis. 

To have a valid claim over their IP, business owners should ensure that they were the first to debut their creation. If the competitor was using the creation first, they may have ownership over the idea.

How is the Competitor Using the Intellectual Property?

Businesses can have similar intellectual property without infringing on one another’s rights if they’re using the IP in different ways. Issues with similar trademarks typically occur if two businesses in the same industry are using the IP in a way that could confuse customers. 

 

For example, Polaroid sued the electronics company Polarad in 1961 due to the similarity of the companies’ names. But because of the differences between their products and other distinguishing factors, Polaroid lost the case. Based on this precedent, businesses typically only have trademark infringement cases with competitors in their industry that could directly detract from their business. 

What are the Potential Impacts of the IP Theft?

Because of the potentially costly and time-consuming nature of legal disputes, small businesses may be reluctant to enforce their intellectual property rights. However, promptly addressing IP theft can help small businesses avoid larger issues down the line. If a business allows other companies to use its IP for an extended period of time, it could become at risk of becoming genericized and losing its trademark. 

As competitors continue using a business’s intellectual property, they also have the potential to cut into the original business’s consumer base and profit from their innovations. Companies can lose out on future profits and find it more difficult to differentiate themselves from competitors using the same IP.

After discovering a potential IP violation, business owners can take several steps to rectify the situation. The best course of action largely depends on the damages caused by the IP violation and the competitor’s willingness to stop using the protected creation. 

Send a Cease and Desist Letter 

Cease and desist letters are typically the first step companies take to inform competitors that they’re violating their IP rights. A cease and desist letter outlines the violation and firmly requests that the competitor stops using the IP. It can also include potential consequences of continuing to use the IP. 

Sending a cease and desist may be the only action you need to take to resolve the IP theft issue. Companies are often willing to comply with cease and desist letters, especially if they were unaware of the infringement. Even if your competitor doesn’t cooperate with the cease and desist, sending one can help you build your case for a potential lawsuit because it offers clear documentation that the competitor was purposefully using your IP.

File a Lawsuit

If the competitor isn’t amenable to ADR, filing a lawsuit may be the best way to protect your IP rights. You may also decide to escalate to a lawsuit if you’re incurring serious damages due to the stolen IP. Determine the type of IP that’s been stolen and look for legal counsel that specializes in that type of IP protection. 

As you prepare for the lawsuit, you may consider taking other steps such as ensuring your trademark is officially registered or submitting a letter of protest to another company’s trademark application. An experienced intellectual property lawyer can help you explore all potential avenues to protect your rights and prevent competitors from encroaching on your IP.

Well-defined intellectual property is one of the foundations of a successful business. Business owners must be proactive about keeping their proprietary information private and dealing with threats as they occur. By actively enforcing their IP rights, business owners can ensure that their IP remains distinct and unique to their business—ultimately allowing them to innovate freely and build a strong brand.

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