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How to handle an information heist.

The entrepreneurial spirit is as American as apple pie, but an employee who steals his or her employer's secrets to start a competing firm can be deadly.

Don Greenwood, editor and publisher of Don Greenwood's Information Protection Advisor, spoke on investigating the start-ups brewing within an organization at the ASIS Conference on Safeguarding Your Competitive Edge in April in Palm Springs, CA.

Using a company in Silicon Valley as an example, Greenwood mapped out how one company unwittingly begets another. The example company had a unique technology and grew rapidly. After a few years, the company's founders learned that the manufacturing director, while on company time, was aggressively seeking backing for his own start-up.

Eventually the manufacturing director started his own business three blocks away from the original company. His product was made using the original company's unique technology and recruited personnel.

Once this process had begun, the original company fought to get compensation for the theft of its proprietary information. But this was both costly and time-consuming. "The time spent [preparing for litigation] was debilitating to the company," Greenwood said.

He went on to explain how a company can combat this situation and provided an outline for a successful investigation. He stressed that a security manager needs to develop working relationships with the research and development, human resources, and legal departments.

"When you're investigating start-ups," Greenwood said, "go to human resources and wait with bated breath for the first employee who wants his or her job back."

He explained that if security does not instruct human resources managers to welcome back people who had gone to work for the new competitor, those employees, who are now valuable sources of information, would never be hired back by the original firm.

External contacts are also important. Trade journalists, user groups and clubs, professional associations, and industry mentors are potential sources of information for the investigation.

Greenwood stressed that to avoid proprietary information leaks to competitor start-ups security managers must understand their companies' information protection environment; cover the "what ifs" with legal and human resources in advance; use awareness programs to improve reporting and cooperation; develop and maintain good press relations; hire intelligently; and use solid preventive measures.

The key is understanding what is going on in all the company's departments. Greenwood concluded his remarks by saying, "You need to intimately understand employee morale and the degrees of loyalty in your company."
COPYRIGHT 1992 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:theft of proprietary information
Publication:Security Management
Date:Jun 1, 1992
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