Friday, July 30, 2010

How Does Business Espionage Work?

By Remy Melina, Life's Little Mysteries Staff Writer,
Companies hire corporate spies, also known as industrial spies, to get valuable information from their competitors. Industrial espionage can also include former employees who go on to work for competitors and reveal their previous employer's secrets.

Company secrets can include information regarding flavor formulas (for example, the recipe for Coca-Cola), the kinds of equipment used, the amount of product being made, projected profit estimates and plans for future advertising campaigns.

For example, in 1965, Abbott Laboratories of North Chicago, Ill., filed a lawsuit against two of its former employees, claiming they memorized the formula for its highly successful artificial sweetener, Sucaryl, and duplicated it for a product belonging to Abbott's competition.

While corporate subterfuge is immoral, it's not exactly illegal. The Economic Espionage Act, which passed in 1996 and provides a way to deal with foreign agents stealing trade secrets from American companies, requires that companies prove that the stolen information was, in fact, a secret. For example, the source code for Microsoft Windows is a trade secret, but public filings, patents and annual reports technically are not.

This loophole allows employees to quietly collect information while working for a company and then secretly offer their business rivals corporate secrets for a hefty price. Others may flat out quit and take a better-paying job for the competition, using their prior knowledge as leverage when negotiating a salary.

Some companies even have special "competitive intelligence" (or C.I.) employees on staff. These workers' sole focus is on attaining information about their competitors' projects so that their company can always stay one step ahead of the competition. While not quite conducting C.I.A.-level espionage, these spies still do their fair share of snooping. (more)

Key phrase: "... requires that companies prove that the stolen information was, in fact, a secret."

The courts are tough. Companies must prove they took extra steps to protect their trade secrets before legal protection will be afforded to them.   

"So, how do I prove it?" I hear you say.

By segregating the really important stuff and giving it extra security protection. 

This extra protection comes in many forms. One primary protection are regularly scheduled TSCM inspections, with counterespionage security surveys. 

A well documented history of this elevated security is key evidence of due diligence. Continuity is also very important. Periodic inspection schedules (quarterly is most widely recognized) carry considerable weight in court; occasional sweeps do not. 

Whatever you do, don't start a TSCM program and then cut it for economic reasons. This false economy is viewed by the court that the information you were protecting is no longer a valuable business secret... by your own admission!

Last on the list, is the non-inspection. If you don't think your business secrets are valuable enough to afford some counterespionage security measures, why should the court?

"So, uh, what does TSCM cost?" 

It is the cheapest insurance you can buy. The company programs I run cost them less than $7.50 per hour when amortized annually, usually much less. ~Kevin