Protect Your Trade Secrets

Is your business at risk of having its customer list, internal procedures or even specialized product information stolen? Read about how one criminal stole his former employer’s trade secrets and get tips on preventing it from happening in your business.

You may imagine that espionage only takes place in exotic overseas cities and involves vital military and national defense secrets.

But in our current economic climate the process to build a better mousetrap and the formula of a popular soft drink are also targets of espionage. Proprietary information, also known as trade secrets, is a valuable commodity for large and small businesses and that information should be well-protected.

Your trade secrets may only be a list of your customers and suppliers, but the theft of that information by a competitor can negatively impact your business.

For many years I coordinated security programs for a Defense Department command in Philadelphia that oversaw defense contractors. We protected classified material that concerned national security, to be sure, but we also protected the contractor’s proprietary information.

We ensured that security procedures were in place to protect the information in our care. We also ensured that all of our employees understood the importance of proprietary information and that they followed the established security procedures.

Then and now both business competitors and agents of foreign countries are very interested in the trade secrets of American businesses.

Robert D. Grant, the Special Agent-in-Charge of the Chicago office of the FBI, warns that industrial espionage is a serious threat for the U.S. business community and it’s a growing problem for law enforcement.

Last month a man was indicted on federal charges for stealing trade secrets from his former employer. The defendant, David Yen Lee, was charged with five counts of theft of trade secrets in violation of the federal Economic Espionage Act.

According to the indictment, Lee began working as a technical director for Valspar in 2006. He was responsible for new paint coloring and manufacturing technologies at Valspar and Huarun, Ltd., a Valspar subsidiary in China.

Between September 2008 and February 2009, Lee allegedly discussed, negotiated and accepted employment with Nippon Paint in Shanghai, China, where he was to begin working on developing paint products and technologies on April 1, 2009.

Lee allegedly downloaded technical documents and materials, including Valspar’s trade secrets, from the company’s secure internal computer network. He also removed numerous documents and other materials from Valspar’s offices.

At the time of his resignation, Lee turned in both his company-issued laptop computer and his Blackberry. An examination of the laptop by Valspar network analysts discovered that all of the temporary files had been deleted, suggesting that Lee had taken steps to “clean” the computer’s history.

The analysts later discovered a hidden file on the laptop, which contained unauthorized software programs, including a data copying program. They also discovered that approximately 44 gigabytes of data, including Valspar trade secret information, had been downloaded to Lee’s computer without proper authorization.

The Valspar Corporation contacted the Chicago FBI and the FBI began a criminal investigation. The FBI conducted a court-authorized search of Lee’s home and they discovered further evidence that linked Lee to the theft of Valspar’s trade secrets.

According to the indictment Lee purchased a ticket to Shanghai for a flight scheduled to leave on March 27 and on March 16 he resigned from Valspar. The indictment alleges that Lee downloaded Valspar and Huarun data and trade secrets to two external thumb drives on various dates in March.

If convicted, Lee faces a maximum penalty of 10 years in prison and a $250,000 fine.

To help you avoid becoming a victim of economic espionage, the FBI identified the below methods of targeting or acquiring trade secrets:

  • Steal, conceal, or carry away by fraud, artifice, or deception;
  • Copy, duplicate, sketch, draw, photograph, download, upload, alter, destroy, photocopy, replicate, transmit, deliver, send, mail, communicate, or convey; and,
  • Receive, buy, or possess a trade secret, knowing the same to have been stolen or appropriated, obtained, or converted without authorization.

The FBI offers six steps to protect your business from espionage:

  1. Recognize there is a real threat.
  2. Identify and valuate trade secrets.
  3. Implement a definable plan for safeguarding trade secrets.
  4. Secure physical trade secrets and limit access to trade secrets.
  5. Confine intellectual knowledge.
  6. Provide ongoing security training to employees.

“The FBI has been aggressively working with businesses across the country to not only make them aware of this threat but to encourage them to report suspect thefts and intrusions to the FBI for investigation,” Grant said.

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