Economic Espionage Act: 9 Ways to Protect Trade Secrets
When Walter Liew and a partner stole trade secrets from DuPont and sold the information to state-owned companies in China, his ‘white collar crime spree’ included violations of the Economic Espionage Act. Liew was found guilty in court last spring and had to hand over $27.8 million in illegal profits, pay over half a million dollars in restitution, and serve 15 years in prison.
The Economic Espionage Act was passed in 1996 and made spying on private companies and stealing trade secrets from them a federal offense. At the time, Louis Freeh, then director of the Federal Bureau of Investigation (FBI), warned that "economic espionage is the greatest threat to our national security since the cold war".
It’s still a huge problem. Last spring, a Subcommittee on Crime and Terrorism heard testimony from the FBI that the number of economic espionage and theft of trade secrets cases increased by more than 60% between 2009 and 2014.
American businesses own an estimated 5 trillion dollars of trade secrets with roughly $300 billion of that stolen per year, according to an article at Business Insider.
A trade secret can be any form of financial, business, scientific, technical, economic, or engineering information. Examples are plans, formulas, designs, prototypes, methods, and processes in physical, electronic, graphic, photographic or written form. There is always value associated with a trade secret from not being known. The owner has to take reasonable measures to keep the information secret.
That’s where it gets really tricky.
“Economic espionage and theft of trade secrets are increasingly linked to the insider threat and the growing threat of cyber-enabled trade secret theft,” said Randall C. Coleman of the FBI.
‘Employees' may steal information for personal gain or may be a spy for someone else. They use bribery, cyber attacks, theft, and dumpster diving for intellectual property or discarded prototypes.
Here are different ways a workplace can protect its trade secrets and other private information.
- Create a culture of security in the organization so that all levels of employees are working together to secure private information.
- Establish a comprehensive document management process with clear storage/retention and disposal schedules. The FBI's property protection recommendations include: identifying sensitive material as secret or proprietary information, and limiting access to employees who have a need to know.
- Use up-to-date software security.
- Emphasize information security in regular employee training and seminars. Be sure training includes how to avoid unintended disclosures.
- Have employees sign a non-disclosure agreement to not divulge company proprietary information.
- Provide a ‘Hot Line’ so employees can anonymously report any suspicious behavior such as working odd hours without authorization, taking home company proprietary information and installing personal software on company equipment. Here’s more information about the warning signs of insider threats.
- Partner with a document shredding company that provides a secure chain of custody including high security containers and secure on or off site paper shredding services. A shred-all policy is recommended.
- The shredding company should provide hard drive destruction as well (proprietary information and trade secrets are also stored on electronic devices).
- The FBI recommends evaluating internal operations and policies “to determine if current approaches are tailored to the types of risks and factors associated with trade secret misappropriation”.
Learn more about the Economic Espionage Act (EEA) and how you can ensure you are staying compliant.