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And the SPI survey says....

EARLIER THIS YEAR THE ASIS Standing Committee on Safe-guarding guarding Proprietary Information conducted a survey to determine the level of proprietary information theft; identify the types of entities-foreign and domestic-seeking to acquire information; indicate what types of technology were targeted; and ascertain what methods were used to acquire this information.

The group surveyed consisted of approximately 1,700 members of ASIS who bad indicated interest in safeguarding proprietary information or whose job responsibilities include this function. The list of members was limited to the responsible individual in charge at each company and included a cross-section of both large and small companies. One hundred sixty-five companies responded.

The first question asked respondents if their company had experienced a theft or attempted theft of proprietary information or unauthorized use of the company's technology by domestic or foreign entities. Of the 165 replies, 61 (37 percent) responded yes, while 104 responded no or that they did not know.

From that question, the survey pressed deeper with those who responded affirmatively. The survey broke down the information-gathering incidents into four categories of perpetrators: foreign entities, foreign-owned US entities, US-owned entities, and unknown entities. Time periods for these incidents were also broken down into the past two years, three to five years ago, and six to 10 years ago.

Those who replied that they had had a theft or attempted theft of proprietary information indicated that these incidents were numerous, especially in the last few years.

For example, respondents indicated that in the last two years alone 47 incidents had been perpetrated by US-owned entities. This number is up from three to five years ago (65 incidents) and six to 10 years ago (40 incidents).

Attempts by foreign entities to gain proprietary information have also been on the increase, and again, the noted increase has taken place in the last two years. According to respondents, 38 incidents occurred in the last two years alone. In the period from three to five years ago, 31 such incidents occurred, and in the period from six to 10 years ago, 14.

Foreign-owned US entities have perpetrated nine incidents in the last two years, 14 from three to five years ago, and just seven from six to 10 years ago, according to respondents.

Most of these thefts or attempted thefts occurred right here on home soil. Respondents indicated that the majority of incidents took place in the respondents' offices, followed by respondents' offices overseas. The third major area where intrusion occurred involved communications between offices; the fourth involved theft of secrets from employees traveling between offices.

Respondents were asked what type of information was the target of this theft or unauthorized use. The majority of the incidents involved product development, followed by manufacturing technology, sales and marketing, business development, and basic research.

The types of targets varied. The respondents listed the following categories of information as targets of theft:

semiconductor design

software development

chemical process technology

integrated circuits

security

medical technology

new product development

aerospace

electronic banking

pharmaceutical

electromechanical

optics technology

packaging technology

telecommunications

Another interesting fact discovered through this survey involved who was actually involved with the attempted theft or unauthorized use of technology. The respondents noted that 40 percent of the incidents involved outsiders to the company, which included former employees. Insiders accounted for 12 percent of the incidents. Outsiders and insiders acting together accounted for 48 percent.

Persons involved in these thefts or attempted thefts of proprietary information held a range of jobs. They were supervisors, programmers, marketing personnel, engineers, consultants, clerks, and agents of foreign governments. In their relationship to the company, they were employees, ex-employees, vendors, subcontractors, and consultants.

The survey continued to probe deeper, asking respondents what methods were used to acquire the company's technology. The responses included typical methods of espionage:

* removal of information from offices

* theft of customer lists

* theft of technical data

* theft of trash

* installing eavesdropping transmitters and microphones

* unauthorized reproduction of documents

* bribery

* interception of fax and telephone communications

* replacement of foreign workers to be trained in the United States with engineers who then looted materials and information

* theft by employees who took information when they left the company and then contacted competitors

* break-ins

* theft of executives' luggage

* Respondents were asked what action they thought needs to be taken by the federal government, including Congress, to combat the acquisition or unauthorized use of sensitive business and technical information. The responses varied:

* Assign an active task force to address theft in the private sector.

* Provide better trade agreements in the world market.

* Make industrial espionage a federal crime.

* Urge industry to accept more responsibility and develop internal protection.

* Provide more protection for high-technology companies from foreign companies and more effective export and import quotas.

* Provide realistic oversight, guidance, and information concerning theft.

* Pass specific laws preventing disclosure of proprietary data.

* Mandate a tighter watch over government contractors that are more interested in profit than confidentiality.

Respondents were also asked how US intelligence agencies could help US industries prevent theft of information and better understand the competitive capabilities of foreign competitors. They replied that the government agencies should work with private industry to publicize risks of exposure to theft and provide information concerning foreign government sanctions on US and other businesses.

Finally, respondents were asked how they thought ASIS could help them address this problem at their own organizations. Answers to this question were well-rounded. Respondents suggested that the Society

* publish more articles on safeguarding proprietary information as well as provide more education on it;

* lobby for legislation;

* report on actual incidents;

* encourage ongoing communications among the Society, government agencies, world trade organizations, and private industry; and

* develop better awareness among business executives as to the extent of the problem.

This survey indicates a much increased reliance on the theft of proprietary information. The areas of particular concern include the following:

Product development information. Product development is where proven technologies are developed and brought to market. This is an area where the compromise of sensitive information can have a drastic effect on the financial rewards a company may realize from its research and development efforts.

introductory phase. Information theft during the introductory or product development phase shortens or eliminates the introductory phase of the product's marketing life, where the company should have the lion's share of the market.

Competitive marketing phase. The competitive marketing phase is now entered into due to competing products entering the market place.

Manufacturing technology. There is an increased interest in the technology for manufacturing all types of items, from integrated circuits to pharmaceuticals and biotechnology products.

In addition, the worldwide marketplace clamors for more and higher quality consumer products. Others worldwide can grow foodstuffs and have a wealth of raw materials and a vast labor pool. But it's the technology to convert the raw materials into high-quality finished products that they often lack.

Of particular interest is the fact that more technical means are being used to gather information, including computer penetration, telecommunications interception, and installation of audio and video transmitters and microphones.

We must guard our companies' proprietary information against theft and misappropriation by others or we will be in competition with our own techology-technology that we paid to develop. Our companies must develop a competitive awareness; we must know the players and the playing field.
COPYRIGHT 1991 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

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Title Annotation:American Society for Industrial Security Standing Committee on Safeguarding Proprietary Information survey on theft of trade secrets
Author:Heffernan, Richard J.
Publication:Security Management
Date:Oct 1, 1991
Words:1212
Previous Article:I spy a myth.
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