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Industrial Espionage Prevention, Investigation and Awareness

For Executives, Supervisors and Employees

COUNTER-ESPIONAGE TRAINING PROGRAM OUTLINE

It’s vital that companies understand the perils of Economic Espionage. Through training, you’ll learn how to effectively identify early warning signs of industrial espionage before it happens.

Industrial or Economic Espionage is not something to be taken lightly and is very much a factor in today’s high-stakes competitive business world. Every organization possesses sensitive proprietary information (“trade secrets”) such as customer lists, research reports and financial information. Our training program addresses industrial espionage countermeasures, which help trade secret owners avoid costly data theft litigation, loss of business, downgrading of corporate value and negative publicity.

At stake are profits, countless jobs, our economy and damage due to loss of secret information essential to our national security and research projects. In the research and development phase of bidding on government projects, for instance, millions of dollars are spent determining the best manufacturing methods, costs of materials, and amount of labor necessary for the bid. If this information is unnecessarily lost, overseas business adversaries, including those in ally countries, will have a huge and unfair advantage. Because of the money involved, they continue to diligently spy on U.S. businesses here and abroad to obtain sensitive and crucial information. Frequently targeted industries are private and educational institutions that work on U.S. Government projects, along with those that conduct research on high-tech industrial applications, information technology and aerospace projects. Corporations that perform their own research and development and spend money on manufacturing process experiments are always at risk for espionage.

Over a decade ago, Congress put real teeth in the laws designed to protect your trade secrets. Industrial Espionage, theft of trade secrets, corporate or economic espionage—no matter you call it—is a federal criminal offense as defined by the Economic Espionage Act of 1996. There are two main sections of the Act: 18 U.S.C. § 1831(a) criminalizes the theft of trade secrets to benefit a foreign power, company or individual; 18 U.S.C. § 1832 criminalizes domestic theft for commercial or economic purposes. The statutory penalties are slightly different, but both definitions are nearly identical. These are serious crimes for which the stakes are high but for which the results of being caught can be crushing to the criminals, as follows:

Economic espionage (18 U.S.C. § 1831)
Under this section, a violation carries up to a 15-year prison term, a maximum $500,000.00 dollar fines (or both) on any person (§ 1831(a)) and a maximum ten million dollar fine on any organization (§ 1831(b)) that knowingly steals or receives a trade secret of value with intent to benefit any foreign power. Theft, unauthorized use, purchase and/or possession, attempting to commit the aforementioned, or colluding with more than one individual (conspiracy) are considered violations of this section.

Theft of trade secrets (18 U.S.C. § 1832)
Under this section, a violation carries a fine (no specific amount is listed), up to ten years in prison, or both on any person and a five million dollar fine to any organization that knowingly intends to convert a trade secret into economic benefit for anyone other than the legal owner. Theft, unauthorized use, purchase and/or possession, attempting to commit the aforementioned, or colluding with more than one individual (conspiracy) are considered violations of this section.

Two exceptions exist in the Economic Espionage Act of 1996: lawful activity conducted by a United States governmental entity or the reporting of a suspected violation of section(s) 18 U.S.C. § 1831 & 1832 are not considered violations.

Under the act, any property derived from ill-gotten gains is considered forfeitable, at the courts’ discretion. Civil actions are covered in the Act in the original jurisdictions where the violations were committed. The Act also takes great steps to carefully protect the confidentiality of trade secrets during an investigation into economic espionage. Without that provision, companies may fear reporting such violations could increase the loss of trade secrets through the prosecution processes. With that provision in place, any reference to your specific trade information would be redacted from viewable materials available to the media, the public, or anyone not directly involved in the prosecution or defense of your case.

The Economic Espionage Act of 1996 has led to a debate on the legality and ethics of the diverse forms of information gathering designed to provide businesses with competitive advantages, such as marketing, research and development, and negotiations. Most businesses compile and analyze publicly available information (such as from media, public data, and reporting by legally obtained third party intelligence or data services) for the purpose of improving their competitive edge. The extent to which they pursue this type of information and the level to which they exploit it has led to considerable debate on how close these activities border on economic espionage. As a result, several companies including ours, Diversified Risk Management, Inc., now provide compliance training which outlines for you the specific boundaries of the Economic Espionage Act in a practical and informative way.

Training Profile

Our training is highly interactive, involving small-to midsize group discussions using MS PowerPoint, long-distance Online webinar (when appropriate) and other visual aids. This provides an opportunity for uncomplicated assessment of Economic Espionage, proven methods for detecting and identifying the theft of confidential and highly susceptible information, and preemptive identification of situations most likely to lead to espionage. This module also addresses common myths and misconceptions about such espionage, to focus the attention of participants on the real nature of the problem.

Our qualified training provides an understanding of the adverse legal consequences associated with, and potential legal risks that arise from, Economic Espionage. Every successful business is in constant competition; avoid criminal and civil action by ensuring your organization is in compliance with the Economic Espionage Act of 1996. Lively discussions during training are stimulate meaningful interaction and critical thinking. Prepare to be challenged, to be educationally enthralled, and to gain usable insight in preparation for battle against the growing threat of espionage.

The first line of defense in conducting Industrial Espionage investigations is cognizance of potential warning signs of espionage, especially through the behavior of employees. A sample of issues addressed during the training is as follows:

  • An employee could have an abrupt change in ideology, developing a negative view of the organization, its key people or the U.S. Government.
  • Individuals seeking to gain unauthorized information may arrive for work early, work through lunch or stay late to gain access to information without raising suspicion.
  • Individuals involved in long-term espionage will not go on vacation in fear of their activities being discovered during their absence.
  • Money is the motivating factor in most espionage cases.
  • Revenge may motivate a disgruntled employee.
  • Blackmail is a possible factor when an executive is ensnared in an embarrassing or compromising position.
  • Romance and sexual relationships are almost cliché, but nonetheless very real methods employed to obtain sensitive information.
  • Addictions such as gambling, drugs, and sex can lead to compromising situations and, ultimately, the theft of confidential information.
  • Information loss takes place not only within the organization, but also through suppliers and customers who have regular access to your information systems.
  • Your Information Technology system should be designed to prohibit access to sensitive materials and to track and immediately report potential breaches of security.

Length: Training sessions of 2, 4 or 8 hours, depending on client needs.

The Problem of Industrial Espionage

  • Analyze the scope of Industrial Espionage and its financial impact on U.S. businesses.
  • Learn about economic espionage countermeasures, which help corporations avoid costly data theft lawsuits, loss of business, and negative publicity.

Defining, Identifying and Understanding Industrial Espionage

  • Myths vs. Facts – Separate the facts from the assumptions about Industrial Espionage
  • Review the major categories of Industrial Espionage
  • Understanding data theft, blackmail, and hiring away of personnel

Legal Ramifications for Committing Industrial Espionage

  • Review the major areas of statutory violations, criminal penalties and liabilities
  • Federal and state law relating to the Economic Espionage Act of 1996, (Title 18 UCS 1831, Title 18 USC 1832)

Preventing Corporate Espionage

  • Dealing with emergencies and managing workplace espionage
  • Discuss the best management practices and implementing your organization’s own policy to reduce the risk of industrial espionage
  • Identifying and averting potential espionage, learning the warning signs and risk factors, application of these functions in a continuous process which can be referred to as an early warning system.
  • With case studies, attendees will develop specific action plans.

We’ll also discuss the significance of the following:

  • The corporation must identify information to be protected, over what time frame.
  • A periodic review program should be implemented to determine whether protected information is current and needs to remain under special protection.
  • It is also important to determine the monetary or competitive value of the confidential information.
  • If information is stolen, for effective prosecution and recovery of damages, there must be a justifiable monetary assessment of losses sustained.
  • The National Industrial Security Program Operating Manual (NISPOM) provides baseline standards for the protection of classified information released or disclosed in connection with classified contracts under the National Industrial Security Program (NISP).
  • Ensure that confidential information is properly marked and that your staff, as part of your internal education program, understands this requirement.
  • Ensure the information is properly stored and secured in authorized, secure areas.
  • Proper disposal procedures as well as effective disposal equipment must be in place and utilized for shredding, deleting, and destroying potentially sensitive data when no longer needed.
  • Conduct pre-employment and periodic background investigations of those with access to company confidential information.
  • Screening of new employees, determining whether they are obligated under any confidentiality or non-disclosure agreements.
  • Obtaining non-disclosure agreements from your employees, vendors and others with access to confidential information.

By implementing an effective education program, you can proactively diminish the risk of the theft of confidential information and prevent espionage that can seriously impact the bottom line of your company.