Business Espionage

Business Espionage


Our Other Corporate Investigation Services:

What is Industrial espionage?

Industrial espionage, economic espionage or corporate espionage is a form of espionage conducted for commercial purposes instead of purely national security. Economic espionage is conducted or orchestrated by governments and is international in scope, while industrial or corporate espionage is more often national and occurs between companies or corporations.

DEFINITION OF ‘INDUSTRIAL ESPIONAGE’

The theft of trade secrets by the removal, copying or recording of confidential or valuable information in a company for use by a competitor. Industrial espionage is conducted for commercial purposes rather than national security purposes (espionage), and should be differentiated from competitive intelligence, which is the legal gathering of information by examining corporate publications, websites, patent filings and the like, to determine a corporation’s activities.

EXPLAINATION OF ‘INDUSTRIAL ESPIONAGE’

Industrial espionage describes covert activities, such as the theft of trade secrets, bribery, blackmail and technological surveillance. Industrial espionage is most commonly associated with technology-heavy industries, particularly the computer and auto sectors, in which a significant amount of money is spent on research and development (R&D).

Competitive intelligence and economic or industrial espionage

Competitive intelligence” levels out two scenarios of description as the legal and ethical activity of systematically gathering, analyzing and managing information on industrial competitors becomes beneficial. It may include activities such as examining newspaper articles, corporate publications, websites, patent filings, specialised databases, information at trade shows and the like to determine information on a corporation. The compilation of these crucial elements is sometimes termed CIS or CRS, a Competitive Intelligence Solution or Competitive Response Solution. With its roots in market research, “competitive intelligence” has been described as the “application of principles and practices from military and national intelligence to the domain of global business”; it is the business equivalent of open-source intelligence. The difference between competitive intelligence and economic or industrial espionage is not clear; one needs to understand the legal basics to recognize how to draw the line between the two. Others maintain it is sometimes quite difficult to tell the difference between legal and illegal methods, especially if considering the ethical side of information gathering, making the definition even more elusive.

Forms of economic and industrial espionage

Economic or industrial espionage takes place in two main forms. In short, the purpose of espionage is to gather knowledge about (an) organization(s). It may include the acquisition of intellectual property, such as information on industrial manufacture, ideas, techniques and processes, recipes and formulas. Or it could include sequestration of proprietary or operational information, such as that on customer datasets, pricing, sales, marketing, research and development, policies, prospective bids, planning or marketing strategies or the changing compositions and locations of production. It may describe activities such as theft oftrade secrets, bribery, blackmail and technological surveillance. As well as orchestrating espionage on commercial organizations, governments can also be targets — for example, to determine the terms of a tender for a government contract so that another tenderer can underbid.

Target industries

During testing, automakers commonly disguise upcoming car models with camouflage paint patterns, padded covers, or deceptive decals.

Economic and industrial espionage is most commonly associated with technology-heavy industries, including computer software and hardware, biotechnology,aerospace, telecommunications, transportation and engine technology, automobiles, machine tools, energy, materials and coatings and so on. Silicon Valley is known to be one of the world’s most targeted areas for espionage, though any industry with information of use to competitors may be a target.

Information theft and sabotage

Information can make the difference between success and failure; if a trade secret is stolen, the competitive playing field is leveled or even tipped in favor of a competitor. Although a lot of information-gathering is accomplished legally through competitive intelligence, at times corporations feel the best way to get information is to take it. Economic or industrial espionage is a threat to any business whose livelihood depends on information.

In recent years, economic or industrial espionage has taken on an expanded definition. For instance, attempts to sabotage a corporation may be considered industrial espionage; in this sense, the term takes on the wider connotations of its parent word. That espionage and sabotage (corporate or otherwise) have become more clearly associated with each other is also demonstrated by a number of profiling studies, some government, some corporate. The United States government currently has a polygraph examination entitled the “Test of Espionage and Sabotage” (TES), contributing to the increasingly popular, though not consensus, notion, by those studying espionage and sabotage countermeasures, of the interrelationship between the two. In practice, particularly by “trusted insiders,” they are generally considered functionally identical for the purpose of informing countermeasures.

Agents and the process of collection

Economic or industrial espionage commonly occurs in one of two ways. Firstly, a dissatisfied employee appropriates information to advance their own interests or to damage the company or, secondly, a competitor or foreign government seeks information to advance its own technological or financial interest. “Moles” or trusted insiders are generally considered the best sources for economic or industrial espionage.Historically known as a “patsy,” an insider can be induced, willingly or under duress to provide information. A patsy may be initially asked to hand over inconsequential information and once compromised by committing a crime, bribed into handing over material which is more sensitive. Individuals may leave one company to take up employment with another and take sensitive information with them. Such apparent behavior has been the focus of numerous industrial espionage cases that have resulted in legal battles. Some countries hire individuals to do spying rather than make use of their own intelligence agencies. Academics, business delegates and students are often thought to be utilized by governments in gathering information. Some countries, such as Japan, have been reported to expect students be debriefed on returning home. A spy may follow a guided tour of a factory then get “lost”. A spy could be an engineer, a maintenance man, a cleaner, an insurance salesman or an inspector – basically anyone who has legitimate access to the premises.

A spy may break into the premises to steal data. They may search through waste paper and refuse, known as “dumpster diving”. Information may be compromised via unsolicited requests for information, marketing surveys or use of technical support, research or software facilities. Outsourced industrial producers may ask for information outside of the agreed-upon contract.

Computers have facilitated the process of collecting information, due to the ease of access to large amounts of information, through physical contact or via the internet.

Click on the below link to look at some of the Case Studies and type of Frauds that has taken place around the world.