The Costs of Corporate Espionage

An interesting article referenced on the Legal Infrastructure of Business Blog about corporate espionage and trade secrets.

According to the referenced article by Chris Warren, “the FBI places the losses to U.S. companies as the result of theft at somewhere between $25 billion and $100 billion. (…) The U.S. International Trade Commission estimates annual losses are closer to $300 billion, and the Office of the National Counterintelligence Executive reports that foreign countries are involved in efforts to collect sensitive information from U.S. companies.”

Corporate espionage is clearly a major issue confronting businesses today and a hard look at a company’s trade secret protection plan must be taken to ensure that its trade secrets are, in fact, adequately protected.

Professor Randal C. Picker says it best:

My major concern is that the huge value of estimated annual losses only means that something is wrong. Either companies are not being efficient in keeping their secrets (or maybe can´t due to the sophistication of “spying” methods), or maybe it means that additional regulation is required to help companies protect secrets (processes, methods, etc) that they decided not to protect via patents. Maybe this decision of not filing for a patent reflects the complexities or vulnerabilities of the process.

Even if a business does what is required under the relevant statutory scheme, it may be that the price tag on adequate trade secrets protection forces a change in how companies do business because of the high level of corporate espionage. In other words, it may not matter that you have done enough under the Uniform Trade Secrets Act, as drafted, to protect your trade secrets because the trade secrets are still being stolen, along with your competitive advantage. I think that the point that Professor Picker makes is that more proactive trade secret protection measures will be required by companies in the future to maintain a competitive advantage, regardless of whether the measures go beyond the types of measures required to initially attain statutory trade secret protection.  Of course, additional measures means additional expense for companies seeking to protect their trade secrets.

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