economic espionage


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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. - PowerPoint PPT Presentation


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ECONOMIC ESPIONAGEUNCLASSIFIEDSABT Parker ShipleyProgram CoordinatorMilwaukee Field Office

2 Objectives

Importance of Intellectual Property (IP)Threat AwarenessSigns of Economic EspionageProtective Measures3FBI PrioritiesProtect the United States From terrorist attack.

Against foreign intelligence operations and espionage.

75+% of IP lost is a physical loss of the IP from the org that has the IP.Very little is lost by pure cyber means from afarMISCONCEPTION- Its ALL being done by hackers over the internet!!!

FBI has 8 priorities, these are the top two.

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

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

What I want you to think about when you deal with your IP or trade secrets6What is Intellectual Property?All types of information:Financial BusinessScientific Technical EconomicEngineering informationPatterns Plans Codes

Compilations DesignsFormulas & RecipesPrototypes Methods Techniques ProcessesProcedures Programs

1.IP is umbrella term covering: Trade secrets, patents, trademarks & copyrights. We are concerned with Trade secrets. Patents, trademarks & copyrights have many laws that govern them and & Govt. offices that issue them. YOU issue a trade secret and you must protect it!!!!

2.KFC-11 herbs & spices not a trade secret but how mixed and used in recipe is. This has been targeted.Formula for New Coke -Targeted7Tangible:

Intangible: No matter how stored or compiled:

physically, electronically, graphically, photographically, or in writing.

No Matter What Form

-1793-Cotton Gin by Eli Whitney, may have got idea from woman who got no mention or credit.

-1811, Francis Cabot Lowell (US Cit) went to UK, toured textile mills for 1 yr, collected industrial intel, brought intel back to US. Lowell only observed UK factories, no notes, diagrams or samples were allowed. Reproduced the Cartwright power loom from memory and improved upon it. Opened Boston Manufacturing Company in 1814 and we soon led world in textile for approx 150 yrs til 1960s.

-Format IP stolen:1-Paper2-DVD/CDs3-Thumb Drive4-EmailNote- Thumb drive overtaking discs prob in 2010-2011(Source Kevin Swailes, Sec Dir GE Energy)8Value of Intellectual Property IP has value because of its:Economic value, actual or potentialNot 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

-ASIS predicted losses more than $250 bil/year by 2010.-Dir Mueller, EE costs US >= 200 Bil /year from 03 speech to National Press Club

9Importance of Theoretical ResearchLetter 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,


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

US F-22APRC J-20

Sukoi T-50US F-22 1st flt 97Operational 2005

PRC J-20 1st flt 1/11/11

Russ Sukoi T-50 1st flt 1/29/1012Current ThreatMore than 106 countries have targeted U.S. IP.

92% of IP targeted was unclassified.

World economic and military pressures will force foreign countries to steal more U.S. IP.

U.S. losses = $200 Billion + a year

-U.S. losses from EE= $200 Billion + a year, from Director Robert Mueller speech to Nat Press Club 2003.-$200Bil = >200 B-2 stealth bombers, Approx. 44 USS Ronald Reagan Super Carriers, 200 bil dollar bills =100 Bil feet=189,179 miles, approx 80% of dist. to moon or more than 7.5 time around earth.

13The ThreatCHINA



-More spying against the US now than during the cold war.-Russians have as many or possibly more spys in the US now than during the cold war.14Wheres The Threat ?MilitaryGovernmentIntelligence AgenciesBig Defense ContractorsLarger CitiesCOLD WAR VS. NOWAny IP or TechnologySmall CompaniesSmall CitiesAll the Former Targets Still Fare Game

15Threat to Corporate America

USA Today 7/29/10

-Sapphire Marketing, vs AMX, Sub- David Goldenberg, Mar 08, AMX bugged Sapphires emails and beat them to AV deal Valued $134,000.-09 circa survey, 92% employees thought about taking IP/Trade secrets, 59% of employees let go took IP, 25% remaining employees collected IP just in case-Customer lists #1 item taken, followed by key tech info on products , svc or future business plans16Insiders Are the Biggest ThreatThe strongest castle walls are not proof against a traitor within- Ancient Proverb

75% of reported cases

Why is the Insider the biggest threat? Because they may already have access. Espionage isnt like the movies. James Bond would make a horrible spy, because he draws too much attention to himself.

Other 25% are Outsiders.

Who are the insiders targeted to take IP. Those who:

1.Have access to R&D information and material

2.Know or can get computer encryption codes or passwords

3.Routinely travel internationally

4.Have keys, combinations or codes

5.Possess certain technical skills

Trash man case example

Targeted IP and Technology

Civilian Technologies(Restricted or Proprietary) Pharmaceuticals Biometrics Nanotech/Miniaturization Manufacturing Processes Public Safety Systems Patent Rights Biotechnology

Get new photos18What The Threat is Looking ForMilwaukee Journal Sentinel 2/7/10

Opening in Dec 201019Economic Espionage Act of 1996Economic Espionage 18 USC 1831 Stealing IP for any foreign government, foreign instrumentality or foreign agent. 15 years prison & $500,000 Fine, Org. $10 Mil Fine Theft of Trade Secrets 18 USC 1832Stealing IP for purely economic advantage. 10 years prison & $250,000 Fine, Org. $5 Mil FineReasonable IP protection needed for prosecution

Methods Used to Target TechnologyUnsolicited e-mailsFront companiesRecruitment by foreign intelligence servicesLiaison with universities that have ties to defense contractorsExploiting Multi-National Conferences, Business exchanges or Joint VenturesVisiting scientific and research delegationsCircumventing export control laws

Researchers and facilities relocated overseasSource: National Counterintelligence Center Annual Report to Congress on Counterintelligence and Industrial Espionage

Victim CompaniesL-3 CommunicationsCoca ColaBristol MyersKraft FoodsGillette CompanyDeloitte & ToucheWilsonart IntlIdexx LabsSun MicrosystemsIBMCleveland ClinicCaterpillarMotorolaAvery DennisonPPGLucent TechnologyMastercard3M

-Bristol Myers Squib- Nov 2010, 30 yoa Indian National, male, Shalin Jhaveri was convicted, theft trade secrets. -PhD from Cornell in Chem, Tech assistant for BMS.-Stole formula for new Skin Cancer meds to set up competing bus in India w/ dad.-Arrested in Feb 2010.-18-24months jail, automatic deportation forever-----------------------------------------------------------------------------------------------------Kraft vs Schwanns

-----------------------------------------------------------------------------------------------------Gillette-96 Steve Davis, Wright Ind, design eng for Mach 3 razor, -Signed confidentiality agreement-Sent tech drawings of razor to Bic, Am Safety Razor, Wraner-Lambert Co.-Convicted Theft of Trade Secrets-served fed prison camp 2yrs, 3mo-----------------------------------------------------------------------------------------------------PPG - Insulation technologies stolen for competitor Owens Corning-----------------------------------------------------------------------------------------------------Lucent 2001, Newark, New Jersey, 3 PRC nationals (2- Lucent employees +1 other) stole Pathstar system for Chinese company. Pathstar is S.W. enables low cost voice and data services over the internet.-----------------------------------------------------------------------------------------------------3M-94 Tgtd by French DGSE for abrasives technology, 3M was world leader-Abrasives technology for making computer chips, missile nose cones, auto engines-DGSE had 20 agents world wide working against 3M22Signs You are an IP Theft VictimCompetition Suddenly EmergesMarket Share DecreasesProfit Margins DecreaseRevenues DeclineManagement ConfusedManagement has Solution -Leave the Market -Sellout to CompetitionSource: Kevin Swailes, Global Sec Dir, GE Energy, 11/2009

How to look for IP Theft?Internet SearchesConferences & Trade ShowsAds or Brochures of ProductsTrade PublicationsLiaison w/ Others in IndustrySearches in Legal DatabasesMedia Reports of IP Theft

Methods for economic protectionHow to Protect Your IP from the threatRecognize 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.

Protective MeasuresLock up the informationRequire confidentiality and Nondisclosure Agreements (NDAs)Restrict access on sensitive information to need to knowEncrypt secrets kept in elect