Paranoia and the Big Attention Gap

by Mike Hunter

The problem with industrial espionage is not only that is growing in volume and complexity every day, but that its threat is being used by rivals and governments to discredit perfectly honest and legitimate businesses that do not deserve the slur.

What is also curious is that the danger need not be only non-existent, but not even something an individual rival is greatly concerned about. All it takes is a Twitter from a deranged politician for the whole panoply of suspicion and distrust to be set in action.

The overall economic costs of espionage are considerable. Even back in 1997, the American Society for Industrial Security estimated that, in that year alone, U.S. industry lost US$300 billion through espionage targeting proprietary information. Worldwide, even then, it was near US$700 billion. Over the two decades since then, we can expect the total to have doubled or even trebled.

Given the colossal damage that this threat can have within a company how much executive attention is given to it and who should take the lead in executing counter measures?

To the extent that the weakest points are the direct infiltration by informers, paid informants, leaks from disaffected staff in situ, the poaching of key staff, inadvertent divulgence by staff when chatting to friends or colleagues in public places and variants of cyberattack, the natural lead must necessarily come from the Human Resources Department. However, how many companies have trade secret policies written and enforced by HR? How many HR departments have Commercial Confidentiality Managers who carry out pre-employment checks to identify candidates who are possibly working for a rival? How much ongoing monitoring for internal informers takes place — to the extent that it is lawful? How many companies have even closely defined what their trade secrets actually are and operate strict right-to-know policies?

In the UK, it is now established through common law precedent that if a company takes sufficient steps to protect its trade secrets then their loss is actionable by law. Since 2016, the EU has had a tough new Trade Secrets Directive in place. In the USA, most individual States have adopted the Uniform Trade Secrets Act, whilst the even tougher Economic Espionage Act makes it a criminal act to steal sensitive data for commercial or economic purposes. The Defend Trade Secrets Act is the latest Federal Measure that allows the courts to seize property to prevent the spread of a trade secret.

There is now more than ever a need for companies to put considerable resources into this field, especially where they operate in states with widespread corruption and a poor rule of law. —Federation of International Employers, a leading organization for multinational companies

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