But often, the mechanics are far more mundane: A former employee accepts a position with a competitor or directly competes with a former employer, using privileged knowledge of the former employer’s business to gain a competitive advantage. The dynamics of industrial espionage parallel that of the classic international spy’s game. They may be moles on the inside or defectors who trade information for money or residency. In classic espionage, spies are insiders who give one country’s secrets to another. Think those penalties are high? Check out the stakes: A 2013 report by the Commission on the Theft of American Intellectual Property revealed that intellectual property theft costs the U.S. If theft of the trade secret benefits a foreign government or agent, then the offender could face up to fifteen years in prison per 18 U.S.
Industrial espionage techniques code#
Code § 1832 of the Economic Espionage Act of 1996 makes the interstate misappropriation of trade secrets a criminal offense punishable by up to ten years in prison and a five million dollar fine. A secret recipe for fried chicken, a computer schematic, the blueprint of a manufacturing facility, a marketing strategy, or a list of clients could all qualify as trade secrets if their owners took pains to keep them secret.įederal law under 18 U.S. Trade secrets are an interesting species of intellectual property for several reasons: They have no statute of limitations their scope is quite broad and the law exacts significant sanctions for misappropriating them. Its economic value derives, in part, from “not being generally known to, and not being readily ascertainable.” In other words, a trade secret must be something that is not common knowledge or readily deducible from public sources.
The Universal Trade Secret Act, which has been adopted by most states, defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process” that the owner has taken steps to keep secret and which has potential economic value. Code § 1839, a trade secret is essentially any information that the owner (1.) takes reasonable measures to protect and (2.) has actual or potential economic value. Trade secrets enjoy one of the broadest definitions in intellectual property law.Īccording to 18 U.S. In order for industrial espionage to be a crime, business secrets must have legal protections-and they do. The reality of industrial espionage is usually much less glamorous.įirst, the definition: “Espionage” is the theft of secrets therefore, industrial espionage is the theft of business secrets, or trade secrets. The word “espionage” calls to mind some high-stakes theft of classified information, executed by shadowy agents versed in sophisticated spycraft. You’ve heard of industrial espionage but now you wonder: How real is the threat? Industrial Espionage Defined You wonder what would happen if the competition beat you to the development or knew your company’s strategy for introducing the improved product to the market. And your R&D department is on the verge of making your product more reliable and user-friendly-any breakthrough could be a real game changer. Year after year, your firm is taking a larger market share.
You’re not a giant in the field, but your company offers a viable alternative. You’re not the only company doing this, so you might also opt for savvy positioning, an extensive advertising campaign, an aggressive sales strategy, or some combination thereof. Your firm might achieve this by delivering a useful product or service that consumers feel is worth the price. Your goal is to outmaneuver the competition and snag a significant share of the market. Imagine you’re the CEO of a midsize company. How Corporate Spies Steal Trade Secrets Industrial Espionage: A Prologue
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