It takes years to bring new technology to market, so competitors often use fair means—and occasionally foul—to steal trade secrets. This is known as industrial espionage.
Many spy agencies start out as government organizations, and some former spies work for private companies doing competitive intelligence. They may use undercover agents or hire cut-outs to collect information and transfer it to a case officer.
Trade Secrets
The theft of trade secrets is one of the fastest growing forms of espionage. Also known as industrial espionage, it involves the illegal and unethical theft of business information for use by a competitor. This is most often accomplished through an insider or a person who gains employment for the purpose of spying and stealing trade secret information for a competitor. Industrial espionage is most often seen in technology-heavy industries such as computer, biotechnology, aerospace, automotive, chemical, and energy.
However, any company with sensitive proprietary information is a potential target. This type of espionage has been on the rise due to the proliferation of internet access and lax security practices. The cost to the economy of this type of espionage is estimated in the billions.
In order to protect against the threat of corporate espionage, companies should consider a review of internal operations and policies. This could include a review of research and development compartmentalization, information security procedures, and human resource policies.
Moreover, it is important for companies to understand that trade secret misappropriation is a crime in both the federal and state jurisdictions. Successful trade secret litigation can result in injunctions preventing further misappropriation and monetary damages. Additionally, the Defend Trade Secrets Act of 2016 now makes it possible for companies to bring criminal charges against individuals who steal their trade secrets.
Industrial Espionage
The information a company has about its competitors is vital to its success. However, if someone else gets that information, it can level the playing field and even tip the scales in favor of one company over another. This is why stealing information from rival businesses is a crime under the Economic Espionage Act.
This kind of information can be anything from the design of a new car model to an innovative manufacturing process to a proprietary ingredient. It can be stolen by outsider perpetrators—such as foreign governments or a disgruntled employee who wants to get a job at a competitor—or it can come from inside the company itself. For example, a worker may illegally access confidential information on company computers and download it for their own use.
It can also happen through more traditional means, such as using comparative shopping to collect data on the prices and products of competitors. Some large retail chains, for instance, employ corps of employees who gather information on their competitors this way. Industrial espionage can also be committed by consulting companies or individuals who specialize in the activity. This includes the likes of Kroll, which recovers assets from corrupt regimes and turns activist groups against each other; Black Cube, founded by ex-Mossad agents who help Wall Street banks; and C2i International, which infiltrates organizations to spy on their members.
Government Espionage
A government can engage in economic espionage by illegally acquiring a company’s proprietary information. It can do this through bribery, blackmail and technological surveillance using different types of malware. This type of espionage has been around for a long time and governments are not immune from it. In fact, for a country to be competitive in the global marketplace, it needs access to information about the competition.
Government espionage can also be committed by private corporations that are looking to gain an edge in the global marketplace by stealing government secrets. This is more common in countries where businesses are state-owned and the regime sees economic development as an important national goal.
Spies engaged in this activity for a variety of reasons, including profit and ideological beliefs. In a recent analysis of spy cases, the FBI found that native-born Americans were responsible for 39.3 percent of commercial and industrial espionage prosecutions, foreign-born spies for 59.9 percent and spies of unknown origin for the remaining 26.4 percent (see Table 2). Spies from Mexico drop off the list entirely because most violated the Arms Export Control Act, while spying for personal gain or a belief in an ideology replaces it.
As the world’s most valuable information increasingly resides in cyberspace, the risks of espionage are growing. The United States must take steps to address this threat in a way that balances the costs and benefits of those actions.
Military Espionage
As a military strategy, countries employ spies to collect and share information about their rivals. These include enemy troops, weapons systems and research projects. Spies can also be used to steal military secrets or even engage in sabotage. This type of espionage can be particularly dangerous and is generally punishable by death in many countries.
The practice of collecting military information has long been a staple of international politics. Most governments maintain a priority list of important enemy capabilities to be monitored and analyzed on an ongoing basis. Spies can gather intelligence about the size of an enemy force or their armor and weaponry to plan for a counterattack.
To gather this type of information, some spies work within their own country under covert conditions. These spies are often called double agents or case officers. They may work in diplomatic and journalistic positions but have a secondary goal of spying for their nation’s intelligence services. Some western democracies encourage their citizens to “patriotically” pass on tidbits of information to the government.
In the United States, there are several federal and state laws governing espionage. The 1917 Espionage Act imposes harsh penalties for people who commit espionage against their home nation. This act was used to prosecute spies including Julius and Ethel Rosenberg and Jonathan Pollard. In the modern era, the National Security Agency and the Central Intelligence Agency oversee the collection of national security information.