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ECONOMIC ESPIONAGE

ECONOMIC ESPIONAGE. SABT Parker Shipley Program Coordinator Milwaukee Field Office. UNCLASSIFIED. Objectives. Importance of Intellectual Property (IP) Threat Awareness Signs of Economic Espionage Protective Measures. FBI Priorities. Protect the United States…. From terrorist attack.

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ECONOMIC ESPIONAGE

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  1. ECONOMIC ESPIONAGE SABT Parker Shipley Program Coordinator Milwaukee Field Office UNCLASSIFIED

  2. Objectives • Importance of Intellectual Property (IP) • Threat Awareness • Signs of Economic Espionage • Protective Measures

  3. FBI Priorities Protect the United States… • From terrorist attack. • Against foreign intelligence operations and espionage.

  4. STRATEGIC PARTNERSHIP PROGRAM Partnership with public and private entities to protect the national and economic security of the United States through the exchange of information

  5. What is Intellectual Property Theft? Protect your IP like your ID SM

  6. All types of information: Financial Business Scientific Technical Economic Engineering information Patterns Plans Codes Compilations Designs Formulas & Recipes Prototypes Methods Techniques Processes Procedures Programs What is Intellectual Property?

  7. No Matter What Form • Tangible: • Intangible: No matter how stored or compiled: • physically, electronically, graphically, photographically, or in writing.

  8. Value of Intellectual Property • IP has value because of its: • Economic value, actual or potential • Not being generally known by and ascertainable to the public. • What stolen IP can cost you: • Research and development costs • Manufacturing and production costs • Proceeds from licensing the IP or trade secret

  9. Importance of Theoretical Research Letter from Albert Einstein to President Franklin D. Roosevelt, dated 8/2/1939 + = “ the element uranium may be turned into a new and important source of energy in the immediate future.” “ This new phenomenon would also lead to the construction of bombs, ”

  10. History of Economic Espionage: Silkworm Theft in the 6th Century • For centuries, making silk was an ancient Chinese secret. • 550 AD two Nestorian Monks stole silkworm eggs hidden in their hollow bamboo staves • Gave eggs to Byzantine Emperor, Justinians. • One of the earliest known examples of economic espionage

  11. Examples In Our Time US F-22A PRC J-20 Sukoi T-50

  12. Current Threat • More than 106 countries have targeted U.S. IP. • 92% of IP targeted was unclassified. • World economicand military pressures will force foreign countries to steal more U.S. IP. • U.S. losses = $200 Billion + a year

  13. The Threat CHINA RUSSIA IRAN

  14. Where’s The Threat ? COLD WAR VS. NOW • Military • Government • Intelligence Agencies • Big Defense Contractors • Larger Cities • Any IP or Technology • Small Companies • Small Cities • All the Former Targets Still Fare Game

  15. Threat to Corporate America USA Today 7/29/10

  16. Insiders Are the Biggest Threat 75% of reported cases “The strongest castle walls are not proof against a traitor within” - Ancient Proverb

  17. Targeted IP and Technology Civilian Technologies (Restricted or Proprietary) • Pharmaceuticals • Biometrics • Nanotech/Miniaturization • Manufacturing Processes • Public Safety Systems • Patent Rights • Biotechnology

  18. What The Threat is Looking For Milwaukee Journal Sentinel 2/7/10

  19. Economic Espionage Act of 1996 • Economic Espionage – 18 USC 1831 • Stealing IP for anyforeign government, foreign instrumentality or foreign agent. • 15 years prison & $500,000 Fine, Org. $10 Mil Fine • Theft of Trade Secrets – 18 USC 1832 • Stealing IP for purely economic advantage. • 10 years prison & $250,000 Fine, Org. $5 Mil Fine • Reasonable IP protection needed for prosecution

  20. Methods Used to Target Technology Unsolicited e-mails Researchers and facilities relocated overseas Front companies Liaison with universities that have ties to defense contractors Circumventing export control laws Recruitment by foreign intelligence services Visiting scientific and research delegations Exploiting Multi-National Conferences, Business exchanges or Joint Ventures Source: National Counterintelligence Center Annual Report to Congress on Counterintelligence and Industrial Espionage

  21. Victim Companies • IBM • Cleveland Clinic • Caterpillar • Motorola • Avery Dennison • PPG • Lucent Technology • Mastercard • 3M • L-3 Communications • Coca Cola • Bristol Myers • Kraft Foods • Gillette Company • Deloitte & Touche • Wilsonart Int’l • Idexx Labs • Sun Microsystems

  22. Signs You are an IP Theft Victim • Competition Suddenly Emerges • Market Share Decreases • Profit Margins Decrease • Revenues Decline • Management Confused • Management has Solution • -Leave the Market • -Sellout to Competition Source: Kevin Swailes, Global Sec Dir, GE Energy, 11/2009

  23. How to look for IP Theft? • Internet Searches • Conferences & Trade Shows • Ads or Brochures of Products • Trade Publications • Liaison w/ Others in Industry • Searches in Legal Databases • Media Reports of IP Theft

  24. Methods for economic protection How to Protect Your IP from the threat Recognize there is a threat. Identify and valuate trade secrets. Implement a definable plan for safeguarding trade secrets. Secure physical trade secrets and limit access to them. Confine intellectual knowledge. Provide ongoing security training to employees.

  25. Protective Measures • Lock up the information • Require confidentiality and Nondisclosure Agreements (NDAs) • Restrict access on sensitive information to need to know • Encrypt secrets kept in electronic files • Mark documents as proprietary, sensitive or restricted, etc. • Secure and shred garbage

  26. What to do if you suspect IP theft ? • Notify your mgt or security dept. ASAP. • Take internal steps to stop the loss. • Document the issue. • Call us we can help. Legal processes are available to us (Grand Jury Subpoenas, Search Warrants) • Economic Espionage is our responsibility • Running a successful business is yours

  27. What not to do? • Ignore the warning signs • Cover up a problem • Keep it quiet • Fire and forget (leave the problem for someone else)

  28. Super Vision Case Example

  29. Super Vision Case Example • IP Theft by PRC Company • Used Insider • $ 5-6+ mil in loss • $42 Mil Judgment • (still trying to collect )

  30. Chi Mak Case Example • Naturalized US Citizen from PRC • Worked Power Paragon of L-3 Comm • Quiet Elec Drive (QED) for US Navy • Stole QED Info for PRC • Admitted Sleeper Agent 20+ years • Arrested in 2005 • Convicted 5 Felonies in 2007 • Sentenced to 24 years in prison

  31. Coke Case Example • JoyaWillams, Exec Admin Asst. • 2 other co-conspirators • Sent Pepsi a letter in 2006 • 14 pgs of sensitive Coke IP to undercover agent • Wanted 1.5 mil for more IP • All Convicted in 2007 • Sentenced 8 Years in Prison

  32. One Final Thought For You Protect your IP like your ID SM

  33. QUESTIONS? SABT Parker Shipley Milwaukee Field Office FBI 414-276-4684

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