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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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slide2

ECONOMIC ESPIONAGE

SABT Parker Shipley

Program Coordinator

Milwaukee Field Office

UNCLASSIFIED

slide3

Objectives

  • Importance of Intellectual Property (IP)
  • Threat Awareness
  • Signs of Economic Espionage
  • Protective Measures
fbi priorities
FBI Priorities

Protect the United States…

  • From terrorist attack.
  • Against foreign intelligence operations and espionage.
slide5

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

what is intellectual property theft
What is Intellectual Property Theft?

Protect your IP like your ID SM

what is intellectual property
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?
no matter what form
No Matter What Form
  • Tangible:
  • Intangible: No matter how stored or compiled:
  • physically, electronically, graphically, photographically, or in writing.
value of intellectual property
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
slide10

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, ”

slide11

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
examples in our time
Examples In Our Time

US F-22A

PRC J-20

Sukoi T-50

current threat
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
slide14

The Threat

CHINA

RUSSIA

IRAN

slide15

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
insiders are the biggest threat
Insiders Are the Biggest Threat

75% of reported cases

“The strongest castle walls are not proof against a traitor within”

- Ancient Proverb

targeted ip and technology
Targeted IP and Technology

Civilian Technologies

(Restricted or Proprietary)

  • Pharmaceuticals
  • Biometrics
  • Nanotech/Miniaturization
  • Manufacturing Processes
  • Public Safety Systems
  • Patent Rights
  • Biotechnology
what the threat is looking for
What The Threat is Looking For

Milwaukee Journal Sentinel 2/7/10

economic espionage act of 1996
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
slide21

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

victim companies
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
slide23

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

slide24

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
slide25

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.

slide26

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
what to do if you suspect ip theft
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
what not to do
What not to do?
  • Ignore the warning signs
  • Cover up a problem
  • Keep it quiet
  • Fire and forget

(leave the problem for someone else)

slide30

Super Vision Case Example

  • IP Theft by PRC Company
  • Used Insider
  • $ 5-6+ mil in loss
  • $42 Mil Judgment
  • (still trying to collect )
slide31

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
slide32

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
slide33

One Final Thought For You

Protect your IP like your ID SM

slide34

QUESTIONS?

SABT Parker Shipley

Milwaukee Field Office

FBI

414-276-4684