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How IP Theft Can Destroy a Company from Within – Remember Nortel?

July 01, 2020

Posted in Uncategorized

IP Theft Concept — Howell, MI — The Patent Baron

Remember Nortel? It used to be a world leader in telecommunications. Then its IP was compromised and bankruptcy followed. Are you worried that could happen to you?

An article at (link below) by Natalie Obiko Pearson spurred me to write this post.

It is a fascinating and frustrating story about a tech giant that was destroyed from within by the theft of its most valuable asset – its Intellectual Property (IP).

Nortel was a global leader in telecom based in Canada, with a maximum market value of $250 billion. However, when you are the top of the hill there is only one way down and competitors are looking for ways to bring you down.

One way is to develop your own better and more desirable products and win over consumers.

Another way is to steal ideas, technology, and even people from the market leader – and then undercut the market leader with heavy financial support – driving the market leader out of business.

That’s what happened to Nortel and it is a cautionary tale that is still playing out in countries around the world as the next generation of telecommunications (5G) is evolving and rolling out.

Hacking Identified Yet Nortel Did Nothing

In the late 1990s, Canadian security officials became aware of Chinese-based hackers stealing IP from Nortel. These officials notified Nortel but the company didn’t do anything to bolster their IP security or computer networks. The hacking continued.

Destroyed from Within Using its Own IP

Years later, hackers had made their way to upper management at Nortel. Hundreds of documents were sent to China from an executive’s company account.

The emails weren’t actually sent to China by the executive, hackers had obtained his login and others from top IP researchers within the company. The hackers downloaded whole sections of company data, including product development, research and development, and other valuable IP.

This was the beginning of the end of Nortel, from the inside out. Nortel reportedly never tried to find out how the hackers got into the company’s network. They only changed passwords which were, predictably, futile as the hacking continued.

By 2009, Nortel was bankrupt.

The Bottom Line

Whether your company is the market leader or hopes to be one in the future, securing your IP goes beyond patent and trademark applications. It extends to how IP is secured in your network and used within your company.

Are you worried about your IP being stolen by hackers? I can help with that.


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