Protecting intellectual property can be crucial to a company's success. Without such protection, cheap imitations can eat up profits, muddy the brand in consumers' minds, and hinder securing licensing deals and venture capital in the future. For a company that wants to set itself apart from the competition, it is vital to secure patent, copyright, trademark, or trade secret protection, depending on the nature of the intellectual property.
But the battle against knockoffs doesn't end once that protection is secured. The market must be monitored for violators, and if a possible infringement is uncovered, it may be necessary to hire an engineering firm to do a reverse-engineering analysis - to dismantle the product to determine how it is made. According to Kirkland & Ellis partner Russell Levine, this process can cost "several thousand dollars to $50,000 or more." Finally, the company must evaluate whether to act or not, depending on the level of threat the couterfeiter poses and the chances of winning in court.
This article appeared in its entirety in the Spring 2005 Small Biz section of BusinessWeek.