Corporate Espionage

and Global Security:

Protecting Your Business
ML KAULELA
084 673 8569
OR
083 635 9719
Mbuthok@gmail.com
Introduction
Basic Definitions
Scope of the Problem
Threat Assessment
Risk Management Strategies
Trade Secret Protection Planning
Basic Definitions
Intellectual Property, Patents, Trade Secrets,
Economic Espionage

Trade Secrets - any information, including a

formula, compilation, device or process, that
derives independent economic value from not
being generally known to, and not being readily
ascertainable by proper means by, others who can
obtain economic value from its disclosure, and is
the subject of efforts that are reasonable under the
circumstances to maintain its secrecy.

Economic Espionage - Same as Trade Secret

except: (1) required secrecy is from the “public,"
and (2) the effort requirement is phrased as
“reasonable measures to keep such information
secret”
Scope of the Problem
Magnitude of the problem – theft of trade secrets
continues to escalate;

Over 50% of RSA. businesses have reported

intellectual property losses;

Corporate spies’ preferred information types:

financial, manufacturing processes, customer
data;

From “street crime” to global, sophisticated threat.

Threat Assessment
Insider threats (predominant): Bribery, social
engineering, exploiting privileges, disgruntled
employee.

External threats: foreign countries, individual

hackers, dumpster divers.

High Risk Industries: High technology sector,

energy, military, financial and production sectors
where competition is the key.

Vulnerabilities: High volume of outsourcing and

foreign talent imported into companies and
research institutions.
Risk Management
Know your Employees, Business
Partners, Countries of Operation
Conduct Due Diligence
Identify Red Flags
Share Information with Government
Authorities
Design a Trade Secrets Protection
Plan
Trade Secret Protection - Risk Assessment
Identify which information should be protected
Apply classifications
Determine perceived risks
Outsider theft, departing employees, third parties,
natural disaster
Determine likelihood of each perceived risk
Determine potential loss associated with each risk
Identify and evaluate existing policies
Determine risk tolerance of company
Determine resource availability and costs of
solutions
Trade Secret Protection - Compliance
Best practices for “reasonable efforts” required:
Secure trade secrets physically, restrict visitor access
Educate employees – training essential
Strict requirement of “confidential” designation – no external
disclosure
Publish company policies for confidential information taken
off-site and for accessing company systems remotely
Develop guidelines for sharing confidential information with
customers, vendors, and business partners, require
nondisclosure agreements
Include procedures for internally restricting and monitoring
access to areas with confidential information include
encryption and passwords
Contractual terms in employment agreements and
compliance certifications
Divide sensitive tasks among employees to avoid
concentration of information
Trade Secret Protection - Framework

Gold Standard” for compliance programs

Risk assessment
Compliance Culture – Tone at the Top
Policies and procedures
Training
Auditing and reporting
Enforcement and discipline
Due diligence on employees, business
partners
Trade Secret Protection –
Policies/Procedures
Code of Conduct should refer to intellectual
property.
Every employee should sign a confidentiality
agreement.
Agreement should identify the trade secrets.
Every third party to whom trade secrets are
disclosed should sign a nondisclosure agreement.
Confidential materials should be marked as such.
Preserve integrity of “Confidential” designations.
Trade Secret Protection –
Policies/Procedures (Cont.)
Facilities measures:
Perimeter, building, room, visitor
security
Signage
Technology, personnel monitoring
distribution
Shredders
Exit interviews
Trade Secret Protection –
Policies/Procedures (Cont.)
Computer measures:
Firewall on network
Passwords
Encryption/Data Loss Prevention
(DLP) tools
Need to know access
Restrictions on printing, emailing
Trade Secret Protection –
Audit/Discipline
Review to make sure procedures are
being followed
Use technology as appropriate to
monitor
Incorporate trade secret compliance
into compensation decisions
Report results to decision makers
Implement sanctions in response to
noncompliance
Trade Secret Protection – Exit
Strategy
Have a plan in place beforehand
Identify the trade secrets in jeopardy
Review the employee’s confidentiality agreement
Explain your concern/employee’s obligations at
exit interview
Identify relevant trade secrets
Ask him to describe in writing his future
employment and
how he can perform while honoring his obligations
Remind employee of obligation to return all
materials
Trade Secret Protection – Exit
Strategy (cont.)
Consider whether to contact the new
employer
Ask for description of duties
Ask for plan re avoidance of trade secret
disclosure
Interview remaining employees to see if
they know anything
Consider litigation options: trade secret
theft, breach of contract
“Inevitable trade secret theft”
Conclusion
A weakened economy, reduced profits, cut-
throat global competition, massive layoffs,
and general financial distress create a
perfect storm of factors contributing to a
corporate environment ripe for espionage
by opportunistic employees and
competitors. The key to survival and
success? Effective risk management and
trade protection compliance.