97 © Springer International Publishing AG 2017 I. De Leon, J. Fernandez Donoso, Innovation, Startups and Intellectual Property Management, DOI 10.1007/978-3-319-54906-4_6 Chapter 6 The Impact of IP Risk in the Development of IP Markets In December 2006, Xiang Dong Yu, an engineer hired at the Chinese branch of Ford Motor Co., stole 4000 proprietary documents from the company before tendering his resignation and leaving to work for a competitor. The value of the secrets con- tained in those papers was calculated at $50 million. Yu was sentenced to 70 months in federal prison and ordered to pay a fne of $12,500 after pleading guilty to two counts of theft of trade secrets (U.S. v. Yu, U.S. District Court, Eastern District of Michigan, No. 09-cr-20304). In another case from 2010, David Yen Lee, technical director in Valspar Corp.’s architectural coatings group since 2006, used his access to Valspar’s secure internal computer network to infltrate databases containing trade secrets and to download approximately 160 original secret formulas for paints and coatings. The employee was caught with the intent to hand them over to a competitor. An FBI study (2010) valued these formulas at $20 million. These two cases highlight how IP risk can have disastrous consequences for frms that now handle their IP portfolio with particular care. Usually, people associ- ate IP risk with the threat of becoming the victim of dispossession or theft by copy- right pirates, patent fouters, trade secret thieves or brand impersonators. The concept of risk involving IP management extends way beyond the danger of expo- sure to open vaults or hacking. We explored in the previous chapters how, in the event of uncertainty around the scope or enforceability of IP, traders confront three alternative strategies. The frst is commercializing their IPRs over new technology; second, seeking rent through liti- gation; and third, refraining from trading (and litigating) by keeping their technol- ogy secret. Selecting among these three options is a matter of risk assessment, where parties evaluate the costs and benefts of resorting to any of these three strate- gies. However, IP traders not only confront uncertainty regarding the scope or enforceability of IPRs. In addition to the “systemic” uncertainty, they also face uncertainty on the value of the innovation itself. In this chapter, we evaluate how businesses make efforts to control their stakes in the IP market through the valuation of their intellectual property, which may be