Protecting Your Company's Intellectual Property Assets from Cyber-Espionage

ABSTRACTToday, spies might not be going after your military secrets. Instead, corporate spies might be attempting to steal your most valuable corporate secrets, often in the form of intellectual property. Even worse, corporate espionage attacks come from both domestic and foreign competitors. Corporate espionage could even be part of a foreign country 's deliberate efforts to undermine the U.S. economy. Whether the espionage attack comes from a domestic or foreign source, the resulting impact can financially cripple a company. The FBI estimates the cost of corporate espionage to be $100 billion per year (Kirby, 2007). Companies large and small utilize competitive intelligence to help shape strategic planning. But companies may cross the line, and venture beyond ethical and even legal boundaries. Sometimes well-meaning employees justify their actions as attempting to assist their employers in gaining market share and increasing corporate profits. In other cases, corporate spying might be a deliberate strategy to undermine competitors or even an entire industry. When a nation allows its companies to engage in corporate spying without punishment, it could be a menacing approach to undermine another country's economy.This paper presents an overview of competitive intelligence, including key examples of companies and individuals engaging in corporate espionage. The authors then offer a model for companies to consider as a means to defend against corporate spying, including specific counter-measures businesses could deploy in their defense.Keywords: competitive intelligence, corporate spying, trade secretsINTRODUCTIONSpying could be as old as the beginning of civilization. We find among the earliest examples of corporate spying dating back to about 300 A.D. China held a monopoly on silk production for hundreds of years until Nestorian monks smuggled silkworm eggs out of China hidden inside walking sticks (Podszywalow, 2012). Much later, in the early 1800's, Yankee industrialist Francis Cabot Lowell travelled to Scotland under the guise of ailing health. In fact, Lowell spent months studying the cotton- weaving mills and machinery for which Britain was well-known. The British textile industry replaced hand labor with water-powered looms that performed efficiently and effectively. Even in rural areas of England, the water-powered mills created personal fortunes for the owners as the mills could now be operated with only a handful of skilled workers (Fialka, 1997). Because this industry and the success of the water-powered mills served as the foundation for the British economy, the British government passed patent protection laws and banned the export of textile-related technology (Fialka, 1997). Factories became virtual fortresses with spikes and broken glass placed strategically along the roof in order to deter spies from breaking in to steal information. In addition, owners swore workers to secrecy so that no information regarding the technology would be leaked to potential competitors. Despite all attempts to protect the textile industry, Lowell memorized the plans for the Cartwright loom while touring factories and brought the stolen technology back to the United States (Rosner, 2001). Lowell's trip to the United Kingdom not only helped him become even more prosperous, the technology transfer fueled the Industrial Revolution in New England and elsewhere in the United States. By 1999, American Society for Industrial Security/PricewaterhouseCoopers (cited in Fitzpatrick, DiLullo, and Burke, 2004) estimated that 70 percent of U.S. firms' market value existed in intellectual property and trade secrets.How significant is corporate espionage? Estimates vary significantly as to how big a problem corporate espionage might be. According to the FBI, the cost of corporate espionage appears to be approximately $100 billion per year (Kirby, 2007). As far back as 1999, the Society of Competitive Intelligence Professionals membership began increasing at a rate of 25% per year (New York Times, 1999). …