Sunday, October 20, 2002

white collar spies

On Friday, a New York man entered a plea in a federal court in Delaware to a charge involving a count of stealing trade secrets. The case is the first successful prosecution of an industrial espionage charge in Delaware. According to the article, only 35 cases have been prosecuted under the 1996 Economic Espionage Act (pdf).

How much money is involved in cases of industrial espionage? The prosecution above involved a contract estimated to be worth approximately $ 250 million. A Kansas City Star article from last year entitled SPY INC: In trying to be a biotech giant, KC must protect trade secrets supplies some startling numbers:
A 1995 survey of 325 companies by the American Society for Industrial Security found that almost half had experienced some form of trade theft in the previous two years. The FBI estimates that U.S. businesses lost as much as $100 billion last year alone from thefts of trade secrets.
Corporate espionage doesn't recognize national boundaries, and William S. Cohen's comments posted in an article on George Mason University's School of Law web site provides a number of examples. Here's one:
Another case in which we had a French national working for a U.S. fiber optics company sold trade secrets to the French intelligence, which then in turn passed it on to the French competitor. And in the case that Monsieur Marion was particularly proud of, the French intelligence acquired the pricing proposal from a U.S. aircraft manufacturer, which enabled its French rival to underbid it in a billion dollar contract.
The Computer Crime and Intellectual Property Section (CCIPS) of the US Department of Justice has a page summarizing prosecutions under the 1996 Economic Espionage Act. They issued a press release last week with details of the last successful prosecution under the act before Friday's. It involved a software engineer who offered competitors of his former company the source code for that company's proprietary software.

If you haven't been to the CCIPS' site, it's worth a visit. They cover a lot of legal and policy issues, and publish some interesting reading material, such as details regarding Operation Buccaneer, which involves "cybersmuggling" or "warez." In July, they also updated their publication Searching and Seizing Computers and Related Electronic Evidence Issues and include a Field Guidance memorandum on computer crime and electronic surveillance as influenced by the USA PATRIOT Act.

Their Intellectual Property Crimes manual section on Theft of Commercial Trade Secrets gives an interesting overview of the Espionage Act, and the Department of Justice's efforts to enforce it.

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