Intellectual property (IP) theft costs U.S. companies up to $600 billion annually. While the headlines often focus on counterfeit goods or corporate espionage, many organizations face a quieter threat: accidental exposure of IP by employees who don’t recognize what they’re handling.
The compliance risk here is not just external—it’s internal. And it’s preventable.
The hidden gap in IP awareness
Many organizations assume their employees understand what intellectual property is and how to protect it—but in practice, that’s often not the case. Employees are typically better at responding to clear, high-risk situations—like reporting a suspicious request for confidential information—than they are at recognizing less obvious forms of intellectual property in their day-to-day work.
That’s where the real risk lies. If employees can’t confidently identify what qualifies as IP—whether it’s a product design, pricing model, or internal playbook—they’re far less likely to handle it with the necessary care. And if they don’t know something is valuable, they won’t think twice before sharing it in a presentation, dropping it into an external generative AI tool, uploading it to a public folder, or taking it with them when they leave the company.
Helping employees close that awareness gap is a critical step toward building a stronger, more proactive culture of IP protection.
More than just patents and logos
Most employees know not to copy a competitor’s branding or share company secrets on social media. But IP includes a wide range of non-obvious assets, like:
- Internal processes or methodologies
- Pricing strategies
- Draft marketing plans or product concepts
- Customer lists or software code
And while they may be familiar with IP that has more formalized or obvious protection, like patents, copyrights, and trademarks, they may be less familiar with how to recognize and protect IP like trade secrets, which can be equally–if not more–vulnerable and valuable.
Waiting to defend these assets through legal channels is risky and expensive—and certain behaviors can immediately and irrevocably invalidate protection, no matter what steps are taken later. Prevention is a far more effective (and affordable) strategy.
Empower employees with the right tools
When employees encounter sensitive information, they need more than gut instinct to guide them. That’s where a data classification matrix becomes essential.
Encourage employees to actively use your organization's data classification matrix whenever they create, handle, share, or store information. This matrix should clearly define categories such as public, internal, confidential, and strictly confidential, along with specific handling rules—such as where each type of data should be stored, who is allowed access, and when encryption or restricted sharing is required.
To operationalize the matrix effectively:
- Embed it into everyday workflows—include direct links in document templates, cloud storage platforms, and collaboration tools.
- Incorporate it into compliance training using realistic examples that show how to classify and protect different types of information that are relevant for your business and employees.
- Provide quick-reference tools, such as checklists or decision trees, to help employees make consistent, informed choices in real time.
This simple step can:
✅Prevent accidental data leaks
✅Reinforce good decision-making habits
✅Help employees feel confident navigating gray areas
While every employee should understand how to classify and protect information, those who manage systems and control access—such as IT admins, records managers, and data owners—need deeper, role-specific guidance. Ensure they receive tailored training that connects the matrix to permission settings, audit trails, and incident response plans. Regular communications and refreshers will help them maintain strong controls and uphold your organization’s data governance policies at a systemic level.
IP protection extends beyond your organization
Respecting intellectual property isn’t just about safeguarding your company’s assets. It's also about avoiding misuse of others’ IP. Whether intentional or accidental, an employee misuse of IP that belongs to others can lead to legal liability and reputational damage.
Intellectual property training should address both sides of the coin—protecting your own and respecting what belongs to others.
When IP walks out the door
Not all intellectual property risks come from cyberattacks or careless emails—some of the most significant losses occur when employees leave the organization, whether they’re poached by a competitor or make a voluntary career move. In many cases, these employees aren’t malicious—they’re simply unaware that the knowledge, documents, or templates they’ve created or used on the job are considered proprietary and cannot go with them or be used for another employer.
To reduce the risk of IP loss during transitions:
- Reinforce confidentiality obligations during both hiring and exit processes. New hires should be trained on what constitutes your organization’s IP and explicitly instructed not to bring over or use any IP from a former employer. Likewise, employees preparing to leave should be reminded—formally—of their duty to not take IP with them and to protect company information, even after they depart.
- Use your data classification matrix as part of onboarding and offboarding. Help employees understand how their work is categorized and what must remain within the organization. This is particularly critical for roles involving client data, innovation, or strategic planning.
- Conduct secure offboarding procedures, including revoking system access promptly, retrieving company devices and any IP an employee might have copies or control of, and reviewing recent downloads or file activity (especially from cloud platforms and file-sharing tools).
- Train managers and HR teams to recognize red flags—for example, if an employee (especially a departing one) suddenly accesses or exports large volumes of files, or if a new hire brings in suspicious documents from a former employer.
This proactive approach helps protect your organization’s most valuable ideas and reinforces ethical expectations from day one through an employee’s last day.
Compliance training that sticks
The most effective training programs create more than just awareness—they build instinct. Scenario-based learning allows employees to practice identifying and handling IP issues in context, rather than memorizing a list of rules.
Your training should help employees:
- Understand what qualifies as intellectual property
- Use the data classification matrix to determine how to handle sensitive information
- Recognize risky behavior and common mistakes
- Know when and how to report concerns
When training reflects real-life situations and decision points, employees are better prepared to respond confidently and correctly when it counts.
Measure what matters
Use training analytics to pinpoint where employees struggle—whether it’s identifying IP, choosing the right action, or applying classification standards. These insights can help you tailor follow-up messaging, reinforce policies, and spot emerging risks.
Beyond training data, track operational metrics like the number of reported IP incidents or potential breaches. A drop in substantiated issues following targeted training is a strong signal that it’s working.
The bottom line
Protecting IP isn’t just an IT or legal issue—it’s a day-to-day decision for every employee. Make sure they’re equipped with the tools, training, and clarity to do it well. A strong IP compliance program, reinforced with a practical data classification matrix, helps ensure your organization’s most valuable ideas stay exactly where they belong.
This post was updated on 26 April 2025 to reflect new insights and industry updates.
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Deborah Mercier, Senior Compliance Counsel, is a licensed attorney with over 13 years of experience in the compliance field, spanning a diverse range of sectors. She is deeply committed to developing engaging and effective ethics and compliance training programs and helping organizations align their business objectives with legal and regulatory requirements.
