The Economics of Intellectual Property Protection

​“It depends” is the most likely answer one is likely to get from asking a security professional the question “how can we best protect our intellectual property against loss or compromise?”
 
Experts argue that the answer depends on what we are protecting, it’s value to us, to others, as well as the cost-to-effectiveness ratios of said solutions. While this is true, the issue runs much deeper than that, and this is something I refer to as the asymmetric economics of intellectual property protection.
 
To understand this issue, we first need to develop a basic framework to help us think through the dynamics involved in security decisions, and quantify our risk.

Cost of no security
 
Let’s say I own a car and this car has no anti-theft mechanisms installed, and let’s assume that the vehicle is worth $15,000 if I were to sell it. That is the market value of this vehicle.
 
Now, let’s assume someone is evaluating stealing my car. Would it be a worthwhile pursuit? To assess this, we need to view the issue from the attacker’s perspective because to an attacker, the theft of an asset has to yield some sort of positive return.
 
Let’s assume the thief can obtain $3,000 for the stolen vehicle, and feels confident that he can steal the car with a 90% probability if he invests two hours to steal and sell the vehicle, plus $50 in tools. In addition, let’s say that, were he not stealing cars, this thief would be able to work at a legitimate place making $10/hr. In other words, going out to steal this vehicle costs the $10/hr * 2 hr = $20 in what economists call “opportunity cost”.

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