Spy Versus Spy

To celebrate C&EN’s 90th anniversary, one Editor’s Page each month examines materials from C&EN Archives. Featured articles are freely downloadable for one month.

Revelations that the U.S. government keeps track of us have upset people. Surrendering privacy for convenience is a fact of modern life; I don’t like the trade-off, but I accept it. Theft of proprietary information, however, is different. Computers have vastly complicated the protection of trade secrets. It used to be simpler, although perhaps bloodier.

Consider the Jan. 20, 1969, story that begins thus: “Last August a pretty 22-year-old secretary to the marketing manager for Hoffmann-La Roche was working on a Saturday in the company’s medical library in Nutley, N.J. She was murdered. The case remains unsolved, but the local press has gone so far as to suggest that city and county police are not overlooking the possibility that she surprised someone in the act of stealing trade secrets and forfeited her life. Should industrial espionage lie at the root of the Nutley murder, it would mark a grisly chapter in the history of this type of crime in the U.S.”

Trade secret theft, historically, has been an inside job. As the 1969 story states: “It is again the opinion of police officers that a firm’s own employees are most suspect in industrial espionage cases.” Interestingly, according to the story, the chemical industry in the late 1960s was not concerned enough about industrial espionage to hire James Bond types to protect trade secrets. The reason: “Such a man would have controversial duties to say the least. He would have to follow the dating patterns of the boss’s secretary and the sex life and mores of key research chemists.”

Political correctness has changed since 1969. Meanwhile, trade-secret theft has intensified, in part because of changes in the employee-employer relationship, according to a Dec. 1, 1997, story. Layoffs and restructuring have forced employees to spend only a few years with any company and take a greater role in managing their careers, which “can manifest itself in small ways, in the misuse of company resources … or in more severe ways as an act of revenge.”

Another driver, according to the 1997 story, is the evolving nature of company assets, from physical to knowledge-based. Intellectual assets are more mobile, and their theft may not be immediately obvious. The story cites cases involving PPG Industries and Avery Dennison. In the PPG case, a contractor “stole diskettes, blueprints, and other confidential information and tried to sell them to a major competitor, Owens-Corning, which then called PPG.” In the Avery Dennison case, a company scientist sold proprietary adhesive formulation information to a Taiwanese company.

A March 15, 1965, story shows lawmakers responding to industrial espionage by passing laws making theft of trade secrets punishable by fines and imprisonment. New York passed such a law in 1964. In 1965, a bill was introduced in Congress “making it a crime to steal trade secrets or to transport stolen trade secrets in interstate or foreign commerce.”

These days, industrial espionage is frequently state sponsored and waged in cyberspace. According to the U.S. computer security company Mandiant, a group based in China and of which the Chinese government is aware has “systematically stolen hundreds of terabytes of data from at least 141 organizations, and has demonstrated the capability and intent to steal from dozens of organizations simultaneously.” Their loot includes “technology blueprints, proprietary manufacturing processes, test results, business plans, pricing documents, partnership agreements, and emails and contact lists.”

Industrial espionage now occurs on a mind-boggling scale, and that should be a serious cause for concern.