Internet of Things Applications

While the rapid emergence of the Internet of Things has been well publicized in the area of consumer products, less attention has been given to one of the Internet of Things’ largest areas of growth—devices designed for businesses. These interconnected business devices, sometimes referred to as the “Industrial Internet of Things,” are revolutionizing the way businesses collect and use data. With all the promise of these new technologies come new risks to businesses—particularly in the area of protecting valuable trade secrets.

This article provides an overview of the Industrial Internet of Things, demonstrates how trade secrets can be put at risk by the Internet of Things, and provides practical guidance on how a business can protect trade secrets in this new industrial age of the Internet of Things.

What Is the Industrial Internet of Things?

Although consumer-facing devices—like wearable computers, personal health trackers, connected home security systems—have received the bulk of the Internet of Things hype[1], industry experts contend that “the vast majority of new uses of devices are by enterprises, not consumers.”[2] Indeed, in its 55-page Staff Report on the Internet of Things, the Federal Trade Commission devoted only a couple of sentences to the industrial use of the Internet of Things, recognizing that the Internet of Things “can include the type of Radio Frequency Identification (‘RFID’) tags that businesses place on products in stores to monitor inventory; sensor networks to monitor electricity use in hotels, and Internet-connected jet engines and drills on oil rigs.”

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How Does the Internet of Things Put Trade Secrets At Risk?

In a recent study at the University of California, Irvine, researchers were able to reverse engineer a 3D printed object just by listening to the sounds emitted by the 3D printer.[8] While this does not necessarily implicate the Internet of Things, this anecdote illustrates that with new technologies come new ways to steal intellectual property. Among intellectual property theft, trade secret theft is a large concern. One study estimates that economic loss attributable to trade secret theft is between 1% to 3% of U.S. Gross Domestic Product, representing hundreds of billions of dollars.[9] Moreover, several of the technologies most at risk for trade secret theft—information and communications technology, advanced materials and manufacturing, medical devices and pharmaceutical technology, and agricultural technology — are developed by the same companies leading the push into the Industrial Internet of Things. Reports of actual incidents of trade secret theft from U.S. companies have confirmed these fears.

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Conclusion

The business-to-business application of the Internet of Things presents new and exciting opportunities to improve efficiencies and generate revenue across industries. As the use of these technologies expands, the need to legally protect trade secrets is an important consideration that should be taken into account when contracting with other parties, classifying data, and implementing security controls.

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