Israel As Cybersecurity Powerhouse Applies Knowhow To Intellectual Property

Israel has emerged as the world’s second-largest exporter of cyber security services behind the United States, as data attacks are increasingly becoming a threat to intellectual property ownership.

With a large talent pool hailing from the military and security branches of the Israeli government and elite research universities, Israeli firms export over $6 billion a year worth of cyber security services and products, according to the Cybersecurity Review. Israel’s share in the market has soared from two to three percent five years ago to 10 percent of the total market worldwide.

According to Cybersecurity Ventures, four Israel companies are among the research firm’s top-50 most innovative cyber security firms in the US-dominated list. Firms outside of Israel have also recruited Israeli talent, such as Amichai Shulman, CTO for US-based Imperva, a leading data security firm.

In an example related to intellectual property, Israeli-based Morphisec has developed a product that analysts say is widely used for advanced endpoint protection, a key tool in intellectual property protection when highly sensitive data is transmitted between two parties.

“Israeli-based security firms and Israeli-led innovation is providing a great boost to enterprise cyber defence,” Bob Gourley, an analyst for Cognitio Corp, told Intellectual Property Watch. “There are many reasons why, a key one being a culture that rewards innovation and continued pursuit of excellence.”

Demand for Israeli cyber protection services has skyrocketed in parallel with a surge in intellectual property theft, Dudu Mimran, who is CTO of Deutsche Telekom Innovation Labs in Beer Sheva, Israel and the Cyber Security Research Center at Ben-Gurion University, told Intellectual Property Watch. According the US Federal Bureau of Investigation (FBI), US businesses alone lose “billions of dollars” a year when intellectual property is stolen from data theft and that total is growing.

So far, 2016 has been a banner year in cyber theft of intellectual property, which accounts for a surge in demand for intellectual property protection over networks for services from mostly Israeli and US data security firms, according to the FBI.

“Technological advances continue at an even faster pace, dramatically increasing the threat posed by criminals who steal trade secrets, produce and/or traffic in counterfeit products, and infringe on copyrights,” the FBI said in a statement. “One important factor in this increase is the global expansion of online marketplaces, which aids international and domestic criminal organizations in trafficking in counterfeit goods.”

While difficult to quantity, Israeli firms, as leaders in the cyber security sector, are thus actively involved in the protection of intellectual property against data theft.

“I can say that many Israeli companies are protecting the assets of very large companies that have IP to protect and they do so by delivering general security products to protect their networks or end points,” Mimran said. “There are products which are considered ultra-secure and companies with IP to protect like to use them as the matter is highly sensitive.”

Israel sometimes uses its cyber defence capabilities to aggressively target possible military threats. It has been widely reported, for example, that Israeli researchers developed Stuxnet, a computer virus that crippled Iranian centrifuges before they were capable of producing nuclear arm-grade fuel in 2010.

Israeli cyber protection firms’ roots largely date back to the Yom Kippur War in 1973, when the loss of over 2,000 soldiers’ lives were largely attributed to intelligence failures. The Israeli military then began developing more advanced radio signal interception and telecommunications surveillance capabilities. Israeli monitoring capabilities evolved to also protect data networks over the decades, laying the foundation for cyber defences as internet protocols began to emerge in the years to come.

Given Israel’s geopolitical exposure surrounded by nation states hostile to its very existence and the number of cyber attacks consistently levied against the country, the Israel military has been actively engaged in providing cyber protection for its electric, banking, and other networks from government-sponsored attacks.

“From its inception, Israel has been a country that is on the edge of being crushed by nearly every country around it,” Clive Longbottom, an analyst for Quocirca, told Intellectual Property Watch. “It is essentially an island without the benefits that the UK has of a physical moat around it to keep those it fears at bay, so the country has nurtured any capability to apply security to its data assets that appears.  Combine this with the fact that all Israelis go through the military, and therefore have a better understanding of the need for security and the instilled belief in keeping the data secure.”

The Israeli military complex actively recruits researchers and scientists from its elite schools, such as the University of the Negev and Ben-Gurion University, to devote their skills to Israeli’s cyber defence as part of their mandatory military service. Many of the recruits remain in the military, join Israel’s largest security firms, or create their own companies in a country that fosters a startup culture after they have completed their mandatory military service.

Organizations that have valuable intellectual property that can be stolen during data attacks represent a significant percentage of their customer base, although confidentiality agreements usually prevent them from publicizing who their customers are.

“Israel has a unique talent pool coming from the army and defence organisations where people get there real deep experience in the most advanced cyber topics. That knowledge is being shared with the industry when these graduates go to the private sector and serve in different roles as domain experts or entrepreneurs,” Mimran said. “Today, the knowledge is spread widely as there are many hands-on programs in universities and other places, where the same experts teach there so the simple answer is a unique talent pool.”

Venture capital and investment spending are flush. “The Mossad will quite happily get involved and pump money into a company that shows promise,” Longbottom said. “The US has generally been friendly and will also pump money in to the right companies via VC and angel funding can also help.”

Indeed, a leading worldwide presence in the cyber security industry is one positive offshoot of Israel’s historical struggle to survive in a hostile geopolitical context.

“Going deeper into the question of why do we have such competence in the army and defence organisations then it is definitely due to the challenging environment Israel faces from a geo political standpoint,” Mimran said. “So something sweet is created out of the war’s bitterness.”