Homeland Security

Protecting Against Economic Espionage

“Industries in the United States spend more on research and development than any other country in the world. The amount of effort and resources put into developing a unique product or process that can provide an edge in the business world is not unsubstantial. But what happens if someone comes in and steals that edge—a company’s trade secrets—for the benefit of a foreign country? The damages could severely undermine the victim company and include lost revenue, lost employment, damaged reputation, lost investment for research and development, interruption in production—it could even result in the company going out of business.

It’s called economic espionage, and it’s a problem that costs the American economy billions of dollars annually and puts our national security at risk. While it is not a new threat, it is a growing one, and the theft attempts by our foreign competitors and adversaries are becoming more brazen and more varied in their approach.
Historically, economic espionage has been leveled mainly at defense-related and high-tech industries. But recent FBI cases have shown that no industry, large or small, is immune to the threat. Any company with a proprietary product, process, or idea can be a target; any unprotected trade secret is ripe for the taking by those who wish to illegally obtain innovations to increase their market share at a victim company’s expense.

To raise awareness of the issue, the FBI, in collaboration with the National Counterintelligence and Security Center, has launched a nationwide campaign and released a short film aimed at educating businesses, industry leaders, and anyone with a trade secret about the threat and how they can help mitigate it. Based on an actual case, The Company Man: Protecting America’s Secrets illustrates how one U.S. company was targeted by foreign actors and how that company worked with the FBI to resolve the problem and bring the perpetrators to justice.

Case Examples

– In May 2015, two Chinese professors were among six defendants charged with economic espionage and theft of trade secrets in connection with their roles in a long-running effort to obtain U.S. trade secrets for the benefit of universities and companies controlled by the People’s Republic of China (PRC). Details

– In January 2015, a computer science engineer was sentenced for stealing sensitive trade secrets from a trading firm in New Jersey and a Chicago-based financial firm. Details

– In July 2014, a California man was sentenced to 15 years in prison on multiple economic espionage-related charges in connection with his theft of trade secrets from DuPont regarding its chloride-route titanium dioxide (TiO2) production technology and the subsequent selling of that information to state-owned companies of the PRC. Details

– In May 2014, five Chinese military hackers were indicted on charges of computer hacking, economic espionage, and other offenses directed at six victims in the U.S. nuclear power, metals, and solar products industries. Details

– In March 2013, a New Jersey-based defense contractor was sentenced for theft of trade secrets and exporting sensitive U.S. military technology to the PRC. Details

– In December 2011, a Massachusetts man was sentenced on a charge of foreign economic espionage for providing trade secrets to an undercover federal agent posing as an Israeli intelligence officer. Details

– In February 2010, a former Boeing engineer was sentenced to nearly 16 years in prison for stealing aerospace secrets for the benefit of the PRC. This was the first economic espionage trial in U.S. history.

The Bureau has provided more than 1,300 in-person briefings on the economic espionage threat to companies and industry leaders over the past year, using The Company Man as a training tool. But through this campaign, the FBI hopes to expand the scope of the audience to include a wider range of industry representatives, trade associations, and smaller companies and encourage them to come forward if they suspect they are a victim of economic espionage.

Understandably, companies are often hesitant to reach out for help when faced with a potential threat of this nature, usually because they don’t want to risk their trade secrets being disclosed in court or compromised in any way. But the FBI will do all it can to minimize business disruption and safeguard privacy and data during its investigation and will seek protective orders to preserve trade secrets and business confidentiality whenever possible. The Department of Justice also has a variety of protections in place to ensure that sensitive information is protected throughout any criminal prosecution.

Protect Your Trade Secrets

Any company that has invested time and resources into developing a product or idea needs to protect it. The FBI recommends the following methods for economic protection:

– Recognize the threat.

– Identify and value trade secrets.

– Implement a definable plan for safeguarding trade secrets.

– Secure physical trade secrets and limit access to trade secrets.

– Provide ongoing security training to employees.

– Develop an insider threat program.

– Proactively report suspicious incidents to the FBI before your proprietary information is irreversibly compromised.

Source: FBI — Economic Espionage

OODA Analyst

OODA Analyst

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