Physical security is but one means of protecting data and user identity.  But if you need to protect Intellectual Property that must be physically moved from one place to another, devices like this are extremely helpful.  Just remember that the user must be able to remember the unlocking codes or procedures for decrypting them.

What happens if time passes or the device is legally and properly exchanged from one person to the next?

Interesting!  Huh?

USB “Ciphering Dongle” Offers Instant Full Disk Encryption for USB Drives | SecurityWeek.Com