Strategic Thought Transformation - The IIPM Think Tank

I N D U S T R I A L E S P I O N A G E
Table 1 :
How efficient is prosecution of
industrial espionage
Factor Number Percent
Number of governments
organizing industrial
espionage
100
Number of investigations
relating to illegal export of
technology
Number of arrests resulting
from investigations
Number of criminal
indictiments
Number of criminal
convictions
2,500
146 5.84%
97 3.88%
79 3.16%
cases being investigated should have been
considerably higher, since these were cases
involving a foreign government or an organization
or individual sponsored by a
foreign government. As such, the number
excludes espionage activities that are conducted
by one corporation, foreign or otherwise,
against another, without support or
active collaboration with a foreign government.
Table 1 shows 2004 data compiled
by the Office of the National Counter-intelligence
Executive on industrial espionage.
17 The data appears to indicate that
if an industrial spy operation comes under
investigation 18 there is a 97% chance that
they will suffer no penalty.
Many observers report however that
crime statistics of this sort tend to grossly
underestimate criminal activity because
of reluctance on the part of companies [or
other organizations] that suffer to reveal
they have been subject to an attack. A conservative
estimate is that less than 15% of
organizations report. Using the reported
starting point of 2,500 investigations, and
assuming a optimistic reporting rate of
20%, then more realistic number of attacks
that match the reported data is 12,500, and
this assumes that all reports of industrial
espionage reported lead to an investigation
[another optimistic assumption].
Consequently, it is a realistic estimate that
if one engages in industrial espionage, the
chance of getting convicted is 0.632%, e.g.,
there is less than one chance in a hundred
of getting caught. Another way to say this is
that there is a 99% chance of success!
4. Implications for India
It is clear that India is becoming a world
leader in technology innovation. Consequently,
it is reasonable to expect that more
efforts will be made to steal Indian trade
secrets. This raises several questions that
might be addressed by Indian government
and industry circles:
In the Sansad: Are the laws on the
books adequate to protect trade secrets
For example, does the law clearly define
trade secrets, and spell out adequate punishment
In the Enterprise: What types of security
measures might be taken in enterprises to
protect against trade secret loss Should
company security awareness campaigns
be energized so employees know what to
look out for
In the CBI: What new investigative skills
are needed by Government to protect
against this new threat Are counterintelligence
personnel receiving adequate
training to track down agents engaged in
industrial espionage
In the Judicial Branch: Are the rules
of evidence sufficiently clear to prosecute
trade secret theft Are prosecutors sufficiently
trained to investigate and respond
References
[1] Chris Carr and Larry Gorman. The revictimization
of companies by the stock
market who report trade secret theft
under the Economic Espionage Act.
Business Lawyer, 57:25, 2001. Cite:
57 Bus.Law. 25.
[2] Marjorie Chan. Corporate espionage
and workplace trust/distrust. Journal
ofBusiness Ethics, 42:45–58, 2003.
[3] Michael T. Clark. Economic espionage:
The role of the united states intelligence
communnity. Journal of International
Legal Studies, 3:253–291, Summer
1997. Cite: 3 J.Int’l Legal Stud. 253.
[4] Jacob E. Cooke. Tench coxe, alexander
hamilton, and the encouragement of
american manufactures. The William
and Mary Quarterly, 32(3):369–392,
July 1975. 3rd Ser.
[5] Robin J. Enron. Secrets and spies:
Extraterritorial application of the
economic espionage act and the trips
agreement. New York University Law
Review, page 1475, October 2003. Cite:
78 N.Y.U.L.Rev.1475.
[6] Craig P. Ehrlich. Espionage turns economic:
Ligitation as counter-espionage
in the post-soviet era. Competitive Intelligence
Review, 8(3):38–52, 1997.
ehrlich@babson.edu.
[7] David Ensor. Televised interview. In
CNN: Live From. Transcript by FD-
CHeMedia, Inc., June 3 2005. Ensor
is the National Security correspondent
for CNN.
[8] George Grammas and Geo_rey M.
Goodale. The dangers of illegal technology
transfer and how to avoid them.
Mondaq, September 29 2005.
[9] Douglas A. Irwin. The aftermath of
Hamilton’s “report on manufacturers”.
The Journal of Economic History,
64(3):800–821, September 2004. douglas.
irwin@dartmouth.edu.
[10] David I. Jeremy. Damming the flood:
British government e_orts to check the
outflow of technicians and machinery,
1780–1843. The Business History Review,
51(1):1–34, Spring 1977.
[11] Scott Morrison. It fakes thought to
cost companies $100bn a year. Financial
Times, US Edition.:3, August 15
2005. 15
[12] Michael Mosier. Causes of action for
foreign victims of economic espionage
abroad by u.s. intelligence. Duke Journal
of Comparative and International
Law, 11:427–450, Spring/Summer
2001. Cite: 11 Duke J. Comp. & Int’l
L. 427.
[13] Dan Raviv and Yossi Melman. Every
Spy a Prince. Houghton Mi_in, New
York, 1991
Contact Information:
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New York, N.Y. 10022-4509
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Email: info@barracloughltd.com
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Edward M Roche is Director of Scientific
Intelligence, Information Policy
Institute, New York, USA;
all rights reserved.
An IIPM Intelligence Unit Publication STRATEGIC INNOVATORS 33