Unit V Assignment

DBA 7632, Business Ethics and Corporate Responsibility 1

Course Learning Outcomes for Unit V Upon completion of this unit, students should be able to:

2. Examine ethical issues in international business. 2.1 Analyze legal and ethical issues involved in theft of intellectual property. 2.2 Examine an organization’s handling of intellectual property. 2.3 Outline guidelines for preventing theft of intellectual property.

Course/Unit Learning Outcomes

Learning Activity

2.1 Unit Lesson Unit V REM Case Study Scenario Unit V Assignment

2.2 Unit Lesson Unit V REM Case Study Scenario Unit V Assignment

2.3 Unit Lesson Unit V REM Case Study Scenario Unit V Assignment

Reading Assignment Click here to access the Unit V REM Case Study Scenario.

Unit Lesson Much of the course has focused on unique aspects of ethics such as those found in the workplace, finance and accounting, and marketing. In this unit, we will look at the use of intellectual property within industry as well as within an organization. The approach is different in this domain as the risk in protecting intellectual property and information that belongs to the corporation has increased over the past generation. As we work through this unit, consider security issues as well as how ethical behavior within an organization influences the control and management of intellectual property. Intellectual property consists of information that is owned by the company. According to the World Intellectual Property Organization (n.d.), examples of intellectual property are trademarks, copyrights, patents, and other information that is considered as inside information within the organization. To take this a step further, during the 1960s, 90% of a Fortune 500 company’s assets were considered tangible (e.g., plant, property, equipment). By the 2010s, 90% of a Fortune 500 company’s assets were deemed intangible (e.g., intellectual property) (Chordas, 2018). What does this mean? Over the last 50 years, there has been a dramatic paradigm shift from owning real property to owning intellectual property. This has been the advent of the intellectual age. Between the development of intellectual property and the proliferation of data that can be accessed by anyone at any time, there is increased need for organizations across any industry to protect information that makes an organization unique such as client records, data collected from research and development, case notes, and future designs. How does an organization protect itself from issues of theft regarding intellectual property? Security can come in the form of physical and technological measures. Shawn Ram, Managing Director and National Technology Practice Leader of Aon Risk Solutions, states that information has become a primary

UNIT V STUDY GUIDE

Intellectual Property

DBA 7632, Business Ethics and Corporate Responsibility 2

UNIT x STUDY GUIDE

Title

asset as well as a major risk to corporations (as cited in Smith, 2018). As a result, corporations are developing methods to protect information that distinguishes them from their competitors (Smith, 2018). Primary assets, such as information, require increased security to protect the interests of the organization and those that they serve. Physical security equipment, personnel, and records have increased in value and necessity over the past several years. Enforcement of physical security protocols has increased. A disgruntled employee or an individual who does not secure information and equipment places additional risk on the organization for potential cyber security threats (Smith, 2018). Ethical issues may concern a potentially deliberate act as well as cyber security threats by malicious hackers, competition, or individuals. Information that can be made publicly available can have a severe financial impact on an organization. A third-party company that has acquired information through a “black hat” approach places additional risk and threatens the viability of the organization through intentional acts that could cause instability throughout the organization (Chordas, 2018). Ethics in dealing with intellectual property can create unique challenges. In today’s business environment, it can be difficult to operate as an isolated entity, independent of other businesses. Affiliation and integration of materials, products, and services requires the sharing of knowledge and information among parties. Companies that have chosen to outsource and offshore functions or processes have discovered that not all information, copyrights, and patents are held in the same regard globally. Companies in the 1960s such as RCA moved manufacturing offshore to lower the costs of manufacturing (Constantinos & Markides, 1988). The designs and components that RCA used to manufacture their products were protected by patents and trademarks in the U.S. Patent Office. RCA learned that other nations are not required to adhere to patents or trademarks registered in the United States. The contracted manufacturing companies used the design elements and electronic components to develop their own products for a lower cost. RCA gained foreign competition using the company’s patented designs (Shih-Fen, 2005). Target Stores in early 2014 experienced a significant data breach. According to Rosenblum (2014), the cyber thieves were able to continually enter Target’s corporate network to access records of credit cards, names, addresses, and phone numbers. Retail stores are held to a level of accountability by the payment industry members (e.g., Visa). The information entrusted to the company was not kept safe, and precautions were limited as to the protection against cyber theft. A disturbing thought is that the thieves were able to repeatedly access the corporate site for further information to harvest (Rosenblum, 2014) CNBC reported in 2017 on a data breach of over 18,000 individual client data records containing health information at Anthem (Coombs, 2017). The 2017 cyber theft was the third reported event for the health care provider, with the previous breach compromising data of almost 80 million people (Coombs, 2018). Anthem and Target are examples of how intellectual property entrusted to organizations is not being treated securely and is placing clients at risk. Anthem has paid over $115 million in damages for these attacks. The cost is a portion of the overall cost for improving security and restoring client confidence and integrity in the industry. Ethics relating to intellectual property can involve not only the theft and the intentional release of intellectual property, but it also concerns the protection of such information. Intellectual property is not tangible, but this information must be stored in a protected manner. Increasing security protocols also creates an ethical issue as to whether proper precautions are taken, implemented, and enforced on a consistent basis. As technology and security advances, additional steps must be taken to protect the information. For example, for many years, the original recipe of Coca-Cola was well guarded and locked in a combination safe, and only a few people had access to the recipe. Eventually, the information was leaked to the general public. The original recipe had strong intrinsic and monetary value for the product that has created billions of dollars in sales. An issue that we see in the news, for example, is the algorithms and data records of many social networking sites. The government is asking for access to these algorithms and proprietary information in order to prevent cyberattacks and increase homeland security. This has created a new realm of ethical questions regarding whether the information is protected under such a circumstance. An organization carefully considers who it will work with and under what circumstances. Two partnering organizations determine what information will be shared and under what conditions to generate a desired result. It is not unusual to have confidentiality agreements in place to protect each company’s intellectual property. An organization may withhold certain aspects of its intellectual property as well in order for a partner to only have access to the elements needed rather than giving the partner the complete story. It is through

DBA 7632, Business Ethics and Corporate Responsibility 3

UNIT x STUDY GUIDE

Title

these processes that steps are taken to ensure integrity of the intellectual property. Companies go to the extreme of not allowing any Internet access to the device in which the information is stored. Hard copies may be created and stored under lock and key to prevent any risk of a cyber threat. Steps can also be taken to ensure the ethical standard within the organization is supported. Without access controls, a disgruntled employee or partner who has lost a contract could potentially seek to do harm to the organization by leaking or selling the information. How a company chooses to perform under its ethical standards for protecting Internet, informational, and intellectual property that is uniquely proprietary to the organization requires continued assessment. Ethical behavior regarding intellectual property entails a clear plan for protecting as well as improving and continually developing the plan. Whether it is a design or an algorithm, steps are required to protect these items from unscrupulous actors. A company code of conduct is necessary to ensure that employees understand a company’s values and morals and to identify how employees are expected to provide proper security and protection of the unique elements within their organization. What an employee may take for granted can cause irreparable damage to an organization. The trust relationship between employer and employee is essential. If that is in some way compromised or jeopardized, steps must be taken to protect the organization and its property.

References Chordas, L. (2018). An analytical approach. Best's Review, 119(4), 60–63. Retrieved from

http://www.ambest.com/review/default.aspx Coombs, B. (2017). New Anthem data breach by contractor affects more than 18,000 enrollees. Retrieved

from https://www.cnbc.com/2017/07/31/new-anthem-data-breach-by-contractor-affects-more-than- 18000-enrollees.html

Constantinos, C., & Markides, N. (1988, September). Manufacturing offshore is bad business. Harvard

Business Review. Retrieved from https://hbr.org/1988/09/manufacturing-offshore-is-bad-business Rosenblum, P. (2014, January). The Target data breach is becoming a nightmare. Forbes. Retrieved from

https://www.forbes.com/sites/paularosenblum/2014/01/17/the-target-data-breach-is-becoming-a- nightmare/#3b629f41a359

Shih-Fen, S. (2005, February 15). The dire consequence of outsourcing—IBM's fall to Lenovo. IndustryWeek.

Retrieved from http://www.industryweek.com/public-policy/dire-consequence-outsourcing-ibms-fall- lenovo

Smith, K. (2018). Digital espionage. Best's Review, 119(4), 56–59. Retrieved from

http://www.ambest.com/review/default.aspx World Intellectual Property Organization. (n.d.). What is intellectual property? Retrieved from

http://www.wipo.int/edocs/pubdocs/en/intproperty/450/wipo_pub_450.pdf