Industrial espionage
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Industrial espionage, also known as economic espionage, corporate spying, or corporate espionage, is a form of
espionage Espionage, spying, or intelligence gathering, as a subfield of the intelligence field, is the act of obtaining secret or confidential information ( intelligence). A person who commits espionage on a mission-specific contract is called an ...
conducted for commercial purposes instead of purely
national security National security, or national defence (national defense in American English), is the security and Defence (military), defence of a sovereign state, including its Citizenship, citizens, economy, and institutions, which is regarded as a duty of ...
. While political espionage is conducted or orchestrated by
government A government is the system or group of people governing an organized community, generally a State (polity), state. In the case of its broad associative definition, government normally consists of legislature, executive (government), execu ...
s and is international in scope, industrial or corporate espionage is more often national and occurs between companies or
corporation A corporation or body corporate is an individual or a group of people, such as an association or company, that has been authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law as ...
s.


Forms of economic and industrial espionage

In short, the purpose of espionage is to gather knowledge about one or more organizations. Economic or industrial espionage takes place in two main forms. It may include the acquisition of
intellectual property Intellectual property (IP) is a category of property that includes intangible creations of the human intellect. There are many types of intellectual property, and some countries recognize more than others. The best-known types are patents, co ...
, such as information on industrial manufacture, ideas, techniques and processes, recipes and formulas. Or it could include sequestration of proprietary or operational
information Information is an Abstraction, abstract concept that refers to something which has the power Communication, to inform. At the most fundamental level, it pertains to the Interpretation (philosophy), interpretation (perhaps Interpretation (log ...
, such as that on customer datasets, pricing,
sales Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. A period during which goods are sold for a reduced price may also be referred ...
,
marketing Marketing is the act of acquiring, satisfying and retaining customers. It is one of the primary components of Business administration, business management and commerce. Marketing is usually conducted by the seller, typically a retailer or ma ...
,
research and development Research and development (R&D or R+D), known in some countries as OKB, experiment and design, is the set of innovative activities undertaken by corporations or governments in developing new services or products. R&D constitutes the first stage ...
, policies, prospective bids, planning or marketing strategies or the changing compositions and locations of production. It may describe activities such as theft of
trade secrets A trade secret is a form of intellectual property (IP) comprising confidential information that is not generally known or readily ascertainable, derives economic value from its secrecy, and is protected by reasonable efforts to maintain its conf ...
,
bribery Bribery is the corrupt solicitation, payment, or Offer and acceptance, acceptance of a private favor (a bribe) in exchange for official action. The purpose of a bribe is to influence the actions of the recipient, a person in charge of an official ...
, blackmail and technological
surveillance Surveillance is the monitoring of behavior, many activities, or information for the purpose of information gathering, influencing, managing, or directing. This can include observation from a distance by means of electronic equipment, such as ...
. As well as orchestrating espionage on commercial organizations, governments can also be targets – for example, to determine the terms of a tender for a government contract.


Target industries

Economic and industrial espionage is most commonly associated with technology-heavy industries, including
computer software Software consists of computer programs that instruct the Execution (computing), execution of a computer. Software also includes design documents and specifications. The history of software is closely tied to the development of digital comput ...
and hardware,
biotechnology Biotechnology is a multidisciplinary field that involves the integration of natural sciences and Engineering Science, engineering sciences in order to achieve the application of organisms and parts thereof for products and services. Specialists ...
,
aerospace Aerospace is a term used to collectively refer to the atmosphere and outer space. Aerospace activity is very diverse, with a multitude of commercial, industrial, and military applications. Aerospace engineering consists of aeronautics and astron ...
,
telecommunications Telecommunication, often used in its plural form or abbreviated as telecom, is the transmission of information over a distance using electronic means, typically through cables, radio waves, or other communication technologies. These means of ...
,
transport Transport (in British English) or transportation (in American English) is the intentional Motion, movement of humans, animals, and cargo, goods from one location to another. Mode of transport, Modes of transport include aviation, air, land tr ...
ation and engine technology, automobiles,
machine tools A machine tool is a machine for handling or machining metal or other rigid materials, usually by cutting, boring, grinding, shearing, or other forms of deformations. Machine tools employ some sort of tool that does the cutting or shaping. All ...
,
energy Energy () is the physical quantity, quantitative physical property, property that is transferred to a physical body, body or to a physical system, recognizable in the performance of Work (thermodynamics), work and in the form of heat and l ...
,
materials A material is a substance or mixture of substances that constitutes an object. Materials can be pure or impure, living or non-living matter. Materials can be classified on the basis of their physical and chemical properties, or on their ge ...
and coatings and so on.
Silicon Valley Silicon Valley is a region in Northern California that is a global center for high technology and innovation. Located in the southern part of the San Francisco Bay Area, it corresponds roughly to the geographical area of the Santa Clara Valley ...
is known to be one of the world's most targeted areas for espionage, though any industry with information of use to competitors may be a target.


Information theft and sabotage

Information can make the difference between success and failure; if a
trade secret A trade secret is a form of intellectual property (IP) comprising confidential information that is not generally known or readily ascertainable, derives economic value from its secrecy, and is protected by reasonable efforts to maintain its conf ...
is stolen, the competitive playing field is leveled or even tipped in favor of a competitor. Although a lot of information-gathering is accomplished legally through competitive intelligence, at times corporations feel the best way to get information is to take it. Economic or industrial espionage is a threat to any business whose livelihood depends on information. In recent years, economic or industrial espionage has taken on an expanded definition. For instance, attempts to
sabotage Sabotage is a deliberate action aimed at weakening a polity, government, effort, or organization through subversion, obstruction, demoralization (warfare), demoralization, destabilization, divide and rule, division, social disruption, disrupti ...
a corporation may be considered industrial espionage; in this sense, the term takes on the wider connotations of its parent word. That espionage and
sabotage Sabotage is a deliberate action aimed at weakening a polity, government, effort, or organization through subversion, obstruction, demoralization (warfare), demoralization, destabilization, divide and rule, division, social disruption, disrupti ...
(corporate or otherwise) have become more clearly associated with each other is also demonstrated by a number of profiling studies, some government, some corporate. The
United States government The Federal Government of the United States of America (U.S. federal government or U.S. government) is the Federation#Federal governments, national government of the United States. The U.S. federal government is composed of three distinct ...
currently has a polygraph examination entitled the "Test of Espionage and Sabotage" (TES), contributing to the notion of the interrelationship between espionage and sabotage countermeasures. In practice, particularly by "trusted insiders", they are generally considered functionally identical for the purpose of informing countermeasures.


Agents and the process of collection

Economic or industrial espionage commonly occurs in one of two ways. Firstly, a dissatisfied
employee Employment is a relationship between two party (law), parties Regulation, regulating the provision of paid Labour (human activity), labour services. Usually based on a employment contract, contract, one party, the employer, which might be a cor ...
appropriates information to advance interests or to damage the company. Secondly, a competitor or foreign government seeks information to advance its own technological or financial interest. " Moles", or trusted insiders, are generally considered the best sources for economic or industrial espionage. Historically known as a "patsy", an insider can be induced, willingly or under duress, to provide information. A patsy may be initially asked to hand over inconsequential information and, once compromised by committing a
crime In ordinary language, a crime is an unlawful act punishable by a State (polity), state or other authority. The term ''crime'' does not, in modern criminal law, have any simple and universally accepted definition,Farmer, Lindsay: "Crime, definiti ...
, blackmailed into handing over more sensitive material. Individuals may leave one company to take up employment with another and take sensitive information with them. Such apparent behavior has been the focus of numerous industrial espionage cases that have resulted in legal battles. Some countries hire individuals to do spying rather than the use of their own intelligence agencies. Academics, business delegates, and
student A student is a person enrolled in a school or other educational institution, or more generally, a person who takes a special interest in a subject. In the United Kingdom and most The Commonwealth, commonwealth countries, a "student" attends ...
s are often thought to be used by governments in gathering information. Some countries, such as
Japan Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...
, have been reported to expect students to be debriefed on returning home. A spy may follow a guided tour of a
factory A factory, manufacturing plant or production plant is an industrial facility, often a complex consisting of several buildings filled with machinery, where workers manufacture items or operate machines which process each item into another. Th ...
and then get "lost". A spy could be an
engineer Engineers, as practitioners of engineering, are professionals who Invention, invent, design, build, maintain and test machines, complex systems, structures, gadgets and materials. They aim to fulfill functional objectives and requirements while ...
, a maintenance man, a cleaner, an insurance salesman, or an inspector: anyone who has legitimate access to the premises. A spy may break into the premises to steal
data Data ( , ) are a collection of discrete or continuous values that convey information, describing the quantity, quality, fact, statistics, other basic units of meaning, or simply sequences of symbols that may be further interpreted for ...
and may search through waste paper and refuse, known as " dumpster diving". Information may be compromised via unsolicited requests for information, marketing surveys, or use of technical support or research or software facilities. Outsourced industrial producers may ask for information outside the agreed-upon
contract A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more parties. A contract typically involves consent to transfer of goods, services, money, or promise to transfer any of thos ...
.
Computer A computer is a machine that can be Computer programming, programmed to automatically Execution (computing), carry out sequences of arithmetic or logical operations (''computation''). Modern digital electronic computers can perform generic set ...
s have facilitated the process of collecting information because of the ease of access to large amounts of information through physical contact or the
Internet The Internet (or internet) is the Global network, global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a internetworking, network of networks ...
.


History


Origins

Economic and industrial espionage has a long history. Father Francois Xavier d'Entrecolles, who visited Jingdezhen,
China China, officially the People's Republic of China (PRC), is a country in East Asia. With population of China, a population exceeding 1.4 billion, it is the list of countries by population (United Nations), second-most populous country after ...
in 1712 and later used this visit to reveal the manufacturing methods of Chinese porcelain to Europe, is sometimes considered to have conducted an early case of industrial espionage. Historical accounts have been written of industrial espionage between Britain and
France France, officially the French Republic, is a country located primarily in Western Europe. Overseas France, Its overseas regions and territories include French Guiana in South America, Saint Pierre and Miquelon in the Atlantic Ocean#North Atlan ...
. Attributed to Britain's emergence as an "industrial creditor", the second decade of the
18th century The 18th century lasted from 1 January 1701 (represented by the Roman numerals MDCCI) to 31 December 1800 (MDCCC). During the 18th century, elements of Enlightenment thinking culminated in the Atlantic Revolutions. Revolutions began to ch ...
saw the emergence of a large-scale state-sponsored effort to surreptitiously take British industrial technology to France.
Witness In law, a witness is someone who, either voluntarily or under compulsion, provides testimonial evidence, either oral or written, of what they know or claim to know. A witness might be compelled to provide testimony in court, before a grand jur ...
es confirmed both the inveigling of tradespersons abroad and the placing of apprentices in England. Protests by those such as ironworkers in
Sheffield Sheffield is a city in South Yorkshire, England, situated south of Leeds and east of Manchester. The city is the administrative centre of the City of Sheffield. It is historically part of the West Riding of Yorkshire and some of its so ...
and
steel Steel is an alloy of iron and carbon that demonstrates improved mechanical properties compared to the pure form of iron. Due to steel's high Young's modulus, elastic modulus, Yield (engineering), yield strength, Fracture, fracture strength a ...
workers in Newcastle, about skilled industrial workers being enticed abroad, led to the first English
legislation Legislation is the process or result of enrolling, enacting, or promulgating laws by a legislature, parliament, or analogous governing body. Before an item of legislation becomes law it may be known as a bill, and may be broadly referred ...
aimed at preventing this method of economic and industrial espionage. This did not prevent Samuel Slater from bringing British textile technology to the
United States The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
in 1789. In order to catch up with technological advances of European powers, the US government in the eighteenth and nineteenth centuries actively encouraged intellectual piracy. American founding father and first U.S. Treasury Secretary
Alexander Hamilton Alexander Hamilton (January 11, 1755 or 1757July 12, 1804) was an American military officer, statesman, and Founding Fathers of the United States, Founding Father who served as the first U.S. secretary of the treasury from 1789 to 1795 dur ...
advocated rewarding those bringing "improvements and secrets of extraordinary value" into the United States. This was instrumental in making the United States a haven for industrial spies.


20th century

East-West commercial development opportunities after
World War I World War I or the First World War (28 July 1914 – 11 November 1918), also known as the Great War, was a World war, global conflict between two coalitions: the Allies of World War I, Allies (or Entente) and the Central Powers. Fighting to ...
saw a rise in
Soviet The Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...
interest in American and European
manufacturing Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of the secondary sector of the economy. The term may refer ...
know-how, exploited by Amtorg Corporation. Later, with Western restrictions on the
export An export in international trade is a good produced in one country that is sold into another country or a service provided in one country for a national or resident of another country. The seller of such goods or the service provider is a ...
of items thought likely to increase military capabilities to the
USSR The Union of Soviet Socialist Republics. (USSR), commonly known as the Soviet Union, was a List of former transcontinental countries#Since 1700, transcontinental country that spanned much of Eurasia from 1922 until Dissolution of the Soviet ...
, Soviet industrial espionage was a well known adjunct to other spying activities up until the 1980s. ''
BYTE The byte is a unit of digital information that most commonly consists of eight bits. Historically, the byte was the number of bits used to encode a single character of text in a computer and for this reason it is the smallest addressable un ...
'' reported in April 1984, for example, that although the Soviets sought to develop their own
microelectronics Microelectronics is a subfield of electronics. As the name suggests, microelectronics relates to the study and manufacture (or microfabrication) of very small electronic designs and components. Usually, but not always, this means micrometre ...
, their technology appeared to be several years behind the West's. Soviet CPUs required multiple chips and appeared to be close or exact copies of American products such as the Intel 3000 and DEC LSI-11/2.


"Operation Brunnhilde"

Some of these activities were directed via the East German Stasi (Ministry for State Security). One such operation, "Operation Brunnhilde," operated from the mid-1950s until early 1966 and made use of spies from many
Communist Bloc The Eastern Bloc, also known as the Communist Bloc (Combloc), the Socialist Bloc, the Workers Bloc, and the Soviet Bloc, was an unofficial coalition of communist states of Central and Eastern Europe, Asia, Africa, and Latin America that were a ...
countries. Through at least 20 forays, many western European industrial secrets were compromised. One member of the "Brunnhilde" ring was a
Swiss Swiss most commonly refers to: * the adjectival form of Switzerland * Swiss people Swiss may also refer to: Places * Swiss, Missouri * Swiss, North Carolina * Swiss, West Virginia * Swiss, Wisconsin Other uses * Swiss Café, an old café located ...
chemical engineer, Dr. Jean Paul Soupert (also known as "Air Bubble"), living in
Brussels Brussels, officially the Brussels-Capital Region, (All text and all but one graphic show the English name as Brussels-Capital Region.) is a Communities, regions and language areas of Belgium#Regions, region of Belgium comprising #Municipalit ...
. He was described by Peter Wright in Spycatcher as having been "doubled" by the Belgian Sûreté de l'État. He revealed information about industrial espionage conducted by the ring, including the fact that Russian agents had obtained details of Concorde's advanced electronics system. He testified against two Kodak employees, living and working in Britain, during a trial in which they were accused of passing information on industrial processes to him, though they were eventually acquitted. According to a 2020 ''American Economic Review'' study, East German industrial espionage in West Germany significantly reduced the gap in total factor productivity between the two countries.


Soviet system

A secret report from the Military-Industrial Commission of the USSR (VPK), from 1979–80, detailed how (, "special records") could be utilised in twelve different military industrial areas. Writing in the Bulletin of the Atomic Scientists, Philip Hanson detailed a system in which 12 industrial branch ministries formulated requests for information to aid technological development in their military programs. Acquisition plans were described as operating on 2-year and 5-year cycles with about 3000 tasks underway each year. Efforts were aimed at civilian and military industrial targets, such as in the petrochemical industries. Some information was gathered to compare Soviet technological advancement with that of their competitors. Much unclassified information was also gathered, blurring the boundary with " competitive intelligence". The Soviet military was recognised as making much better use of acquired information than civilian industries, where their record in replicating and developing industrial technology was poor.


Legacy of Cold War espionage

Following the demise of the Soviet Union and the end of the
Cold War The Cold War was a period of global Geopolitics, geopolitical rivalry between the United States (US) and the Soviet Union (USSR) and their respective allies, the capitalist Western Bloc and communist Eastern Bloc, which lasted from 1947 unt ...
, commentators, including the US Congressional Intelligence Committee, noted a redirection amongst the espionage community from military to industrial targets, with Western and former communist countries making use of "underemployed" spies and expanding programs directed at stealing information. The legacy of Cold War spying included not just the redirection of personnel but the use of spying apparatus such as computer databases, scanners for eavesdropping, spy satellites, bugs and wires.


Industrial espionage as part of US foreign policy

Former CIA Director Stansfield Turner stated in 1991, "as we increase emphasis on securing economic intelligence, we will have to spy on the more developed countries-our allies and friends with whom we compete economically-but to whom we turn first for
political Politics () is the set of activities that are associated with decision-making, making decisions in social group, groups, or other forms of power (social and political), power relations among individuals, such as the distribution of Social sta ...
and military assistance in a crisis. This means that rather than instinctively reaching for human, on-site spying, the United States will want to look to those impersonal technical systems, primarily satellite photography and intercepts". Former CIA Director James Woolsey acknowledged in 2000 that the United States steals economic secrets from foreign firms and their governments "with espionage, with
communication Communication is commonly defined as the transmission of information. Its precise definition is disputed and there are disagreements about whether Intention, unintentional or failed transmissions are included and whether communication not onl ...
s, with reconnaissance satellites". He listed the three reasons as understanding whether sanctions are functioning for countries under sanction, monitoring dual-use technology that could be used to produce or develop weapons, and to spy on bribery. In 2013 The United States was accused of spying on
Brazil Brazil, officially the Federative Republic of Brazil, is the largest country in South America. It is the world's List of countries and dependencies by area, fifth-largest country by area and the List of countries and dependencies by population ...
ian oil company Petrobras. Brazil's President Dilma Rousseff stated that it was tantamount to industrial espionage and had no security justification. In 2014 former US intelligence officer Edward Snowden stated that the National Security Agency (NSA) was engaged in industrial espionage and that they spied on German companies that compete with US firms. He also highlighted the fact the NSA uses mobile phone apps such as Angry Birds to gather personal data. According to a 2014 Glenn Greenwald article, "potentially sabotaging another country's hi-tech industries and their top companies has long been a sanctioned American strategy." The article was based on a leaked report issued from former U.S.
Director of National Intelligence The director of national intelligence (DNI) is a Cabinet of the United States#Current Cabinet and Cabinet-rank officials, cabinet-level Federal government of the United States, United States government intelligence and security official. The p ...
James R. Clapper's office that evaluated how intelligence could be used to overcome a loss of the United States' technological and innovative edge. When contacted, the
Director of National Intelligence The director of national intelligence (DNI) is a Cabinet of the United States#Current Cabinet and Cabinet-rank officials, cabinet-level Federal government of the United States, United States government intelligence and security official. The p ...
office responded, "the United States—unlike our adversaries—does not steal proprietary corporate information", and insisted that "the Intelligence Community regularly engages in analytic exercises". The report, he said, "is not intended to be, and is not, a reflection of current policy or operations". In September 2019, security firm Qi An Xin published report linking the CIA to a series of attacks targeting Chinese aviation agencies between 2012 and 2017.


Israel's economic espionage in the United States

Israel Israel, officially the State of Israel, is a country in West Asia. It Borders of Israel, shares borders with Lebanon to the north, Syria to the north-east, Jordan to the east, Egypt to the south-west, and the Mediterranean Sea to the west. Isr ...
has an active program to gather proprietary information within the United States. These collection activities are primarily directed at obtaining information on military systems and advanced computing applications that can be used in Israel's sizable armaments industry. Israel was accused by the US government of selling US
military technology Military technology is the application of technology for use in warfare. It comprises the kinds of technology that are distinctly military in nature and not civilian in application, usually because they lack useful or legal civilian application ...
and secrets to China in 1993. In 2014 American counter-intelligence officials told members of the House Judiciary and
Foreign Affairs ''Foreign Affairs'' is an American magazine of international relations and foreign policy of the United States, U.S. foreign policy published by the Council on Foreign Relations, a nonprofit organization, nonprofit, nonpartisan, membership or ...
committees that Israel's current espionage activities in America are "unrivaled".


Use of computers and the Internet


Personal computers

Computers have become key in exercising industrial espionage due to the enormous amount of information they contain and the ease at which it can be copied and transmitted. The use of computers for espionage increased rapidly in the 1990s. Information has commonly been stolen by individuals posing as subsidiary workers, such as cleaners or repairmen, gaining access to unattended computers and copying information from them.
Laptop A laptop computer or notebook computer, also known as a laptop or notebook, is a small, portable personal computer (PC). Laptops typically have a Clamshell design, clamshell form factor (design), form factor with a flat-panel computer scree ...
s were, and still are, a prime target, with those
travel Travel is the movement of people between distant geographical Location (geography), locations. Travel can be done by Pedestrian, foot, bicycle, automobile, train, boat, bus, airplane, ship or other means, with or without Baggage, luggage, a ...
ing abroad on business being warned not to leave them for any period of time. Perpetrators of espionage have been known to find many ways of conning unsuspecting individuals into parting, often only temporarily, from their possessions, enabling others to access and steal information. A "bag-op" refers to the use of hotel staff to access data, such as through
laptop A laptop computer or notebook computer, also known as a laptop or notebook, is a small, portable personal computer (PC). Laptops typically have a Clamshell design, clamshell form factor (design), form factor with a flat-panel computer scree ...
s, in hotel rooms. Information may be stolen in transit, in taxis, at
airport An airport is an aerodrome with extended facilities, mostly for commercial Aviation, air transport. They usually consist of a landing area, which comprises an aerially accessible open space including at least one operationally active surf ...
baggage counters, baggage carousels, on
train A train (from Old French , from Latin">-4; we might wonder whether there's a point at which it's appropriate to talk of the beginnings of French, that is, when it wa ... , from Latin , "to pull, to draw") is a series of connected vehicles th ...
s and so on.


The Internet

The rise of the Internet and
computer network A computer network is a collection of communicating computers and other devices, such as printers and smart phones. In order to communicate, the computers and devices must be connected by wired media like copper cables, optical fibers, or b ...
s has expanded the range and detail of information available and the ease of access for the purpose of industrial espionage. This type of operation is generally identified as state backed or sponsored, because the "access to personal, financial or analytic resources" identified exceed that which could be accessed by cyber criminals or individual
hacker A hacker is a person skilled in information technology who achieves goals and solves problems by non-standard means. The term has become associated in popular culture with a security hackersomeone with knowledge of bug (computing), bugs or exp ...
s. Sensitive military or defense engineering or other industrial information may not have immediate
monetary value In economics, economic value is a measure of the benefit provided by a goods, good or service (economics), service to an Agent (economics), economic agent, and value for money represents an assessment of whether financial or other resources are ...
to criminals, compared with, say,
bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...
details. Analysis of cyberattacks suggests deep knowledge of networks, with targeted attacks, obtained by numerous individuals operating in a sustained organized way.


Opportunities for sabotage

The rising use of the internet has also extended opportunities for industrial espionage with the aim of sabotage. In the early 2000s, energy companies were increasingly coming under attack from hackers. Energy power systems, doing jobs like monitoring power grids or water flow, once isolated from the other computer networks, were now being connected to the internet, leaving them more vulnerable, having historically few built-in security features. The use of these methods of industrial espionage have increasingly become a concern for governments, due to potential attacks by hostile foreign governments or terrorist groups.


Malware

One of the means of perpetrators conducting industrial espionage is by exploiting vulnerabilities in computer software.
Malware Malware (a portmanteau of ''malicious software'')Tahir, R. (2018)A study on malware and malware detection techniques . ''International Journal of Education and Management Engineering'', ''8''(2), 20. is any software intentionally designed to caus ...
and
spyware Spyware (a portmanteau for spying software) is any malware that aims to gather information about a person or organization and send it to another entity in a way that harms the user by violating their privacy, endangering their device's securit ...
are "tool for industrial espionage", in "transmitting digital copies of trade secrets, customer plans, future plans and contacts". Newer forms of malware include devices which surreptitiously switch on mobile phones
camera A camera is an instrument used to capture and store images and videos, either digitally via an electronic image sensor, or chemically via a light-sensitive material such as photographic film. As a pivotal technology in the fields of photograp ...
and recording devices. In attempts to tackle such attacks on their intellectual property, companies are increasingly keeping important information "off network," leaving an "air gap", with some companies building Faraday cages to shield from
electromagnetic In physics, electromagnetism is an interaction that occurs between particles with electric charge via electromagnetic fields. The electromagnetic force is one of the four fundamental forces of nature. It is the dominant force in the interacti ...
or cellphone transmissions.


Distributed denial of service (DDoS) attack

The distributed denial of service (DDoS) attack uses compromised computer systems to orchestrate a flood of requests on the target system, causing it to shut down and deny service to other users. It could potentially be used for economic or industrial espionage with the purpose of sabotage. This method was allegedly utilized by Russian secret services, over a period of two weeks on a cyberattack on
Estonia Estonia, officially the Republic of Estonia, is a country in Northern Europe. It is bordered to the north by the Gulf of Finland across from Finland, to the west by the Baltic Sea across from Sweden, to the south by Latvia, and to the east by Ru ...
in May 2007, in response to the removal of a Soviet era war memorial.


Notable cases


British East India Company

In 1848, the
British East India Company The East India Company (EIC) was an English, and later British, joint-stock company that was founded in 1600 and dissolved in 1874. It was formed to Indian Ocean trade, trade in the Indian Ocean region, initially with the East Indies (South A ...
broke
Qing China The Qing dynasty ( ), officially the Great Qing, was a Manchu-led imperial dynasty of China and an early modern empire in East Asia. The last imperial dynasty in Chinese history, the Qing dynasty was preceded by the Ming dynasty ...
's global near-
monopoly A monopoly (from Greek language, Greek and ) is a market in which one person or company is the only supplier of a particular good or service. A monopoly is characterized by a lack of economic Competition (economics), competition to produce ...
on tea production by smuggling Chinese tea out of the nation and copying Chinese tea-making processes. The
British Empire The British Empire comprised the dominions, Crown colony, colonies, protectorates, League of Nations mandate, mandates, and other Dependent territory, territories ruled or administered by the United Kingdom and its predecessor states. It bega ...
had previously run a considerable trade deficit with China by importing the nation's tea and other goods. The British attempted to rectify the deficit by trading
opium Opium (also known as poppy tears, or Lachryma papaveris) is the dried latex obtained from the seed Capsule (fruit), capsules of the opium poppy ''Papaver somniferum''. Approximately 12 percent of opium is made up of the analgesic alkaloid mor ...
to the Chinese, but encountered difficulties after the Daoguang Emperor banned the opium trade and the First Opium War broke out. To avoid further issues in trading tea with China, the East India Company hired Scottish
botanist Botany, also called plant science, is the branch of natural science and biology studying plants, especially Plant anatomy, their anatomy, Plant taxonomy, taxonomy, and Plant ecology, ecology. A botanist or plant scientist is a scientist who s ...
Robert Fortune to travel to China under the guise of a Chinese nobleman and obtain Chinese trade secrets and tea plants for replanting. Infiltrating Chinese tea-making facilities, Fortune recorded the Chinese process for creating tea and smuggled tea
leaves A leaf (: leaves) is a principal appendage of the stem of a vascular plant, usually borne laterally above ground and specialized for photosynthesis. Leaves are collectively called foliage, as in "autumn foliage", while the leaves, stem, ...
and
seed In botany, a seed is a plant structure containing an embryo and stored nutrients in a protective coat called a ''testa''. More generally, the term "seed" means anything that can be Sowing, sown, which may include seed and husk or tuber. Seeds ...
s back to the East India Company. The East India Company later introduced these methods to company-ruled India, using India to compete and surpass China in tea production.


France and the United States

Between 1987 and 1989,
IBM International Business Machines Corporation (using the trademark IBM), nicknamed Big Blue, is an American Multinational corporation, multinational technology company headquartered in Armonk, New York, and present in over 175 countries. It is ...
and Texas Instruments were thought to have been targeted by French DGSE with the intention of helping France's Groupe Bull. In 1993, U.S. aerospace companies were also thought to have been targeted by French interests. During the early 1990s, France was described as one of the most aggressive pursuers of espionage to garner foreign industrial and technological secrets. France accused the U.S. of attempting to sabotage its
high tech High technology (high tech or high-tech), also known as advanced technology (advanced tech) or exotechnology, is technology that is at the state of the art, cutting edge: the highest form of technology available. It can be defined as either the ...
industrial base. The government of France allegedly continues to conduct ongoing industrial espionage against American
aerodynamics Aerodynamics () is the study of the motion of atmosphere of Earth, air, particularly when affected by a solid object, such as an airplane wing. It involves topics covered in the field of fluid dynamics and its subfield of gas dynamics, and is an ...
and
satellite A satellite or an artificial satellite is an object, typically a spacecraft, placed into orbit around a celestial body. They have a variety of uses, including communication relay, weather forecasting, navigation ( GPS), broadcasting, scient ...
companies.


Volkswagen

In 1993, car manufacturer
Opel Opel Automobile GmbH (), usually shortened to Opel, is a German automobile manufacturer which has been a subsidiary of Stellantis since 16 January 2021. It was owned by the American automaker General Motors from 1929 until 2017 and the PSA Gr ...
, the German division of
General Motors General Motors Company (GM) is an American Multinational corporation, multinational Automotive industry, automotive manufacturing company headquartered in Detroit, Michigan, United States. The company is most known for owning and manufacturing f ...
, accused
Volkswagen Volkswagen (VW; )English: , . is a German automotive industry, automobile manufacturer based in Wolfsburg, Lower Saxony, Germany. Established in 1937 by German Labour Front, The German Labour Front, it was revitalized into the global brand it ...
of industrial espionage after Opel's chief of production, Jose Ignacio Lopez, and seven other executives moved to Volkswagen. Volkswagen subsequently threatened to sue for defamation, resulting in a four-year legal battle. The case, which was finally settled in 1997, resulted in one of the largest settlements in the history of industrial espionage, with Volkswagen agreeing to pay General Motors $100 million and to buy at least $1 billion of car parts from the company over 7 years, although it did not explicitly apologize for Lopez's behavior.


Hilton and Starwood

In April 2009, Starwood accused its rival
Hilton Worldwide Hilton Worldwide Holdings Inc. is an American multinational hospitality company that manages and franchises a broad portfolio of hotels, resorts, and timeshare properties. Founded by Conrad Hilton in May 1919, the company is now led by Chris ...
of a "massive" case of industrial espionage. After being acquired by
The Blackstone Group Blackstone Inc. is an American alternative investment management company based in New York City. It was founded in 1985 as a mergers and acquisitions firm by Peter G. Peterson, Peter Peterson and Stephen A. Schwarzman, Stephen Schwarzman, who h ...
, Hilton employed 10 managers and executives from Starwood. Starwood accused Hilton of stealing corporate information relating to its luxury brand concepts, used in setting up its Denizen hotels. Specifically, former head of its luxury brands group, Ron Klein, was accused of downloading "truckloads of documents" from a laptop to his personal email account.


Google and Operation Aurora

On 13 January 2010,
Google Google LLC (, ) is an American multinational corporation and technology company focusing on online advertising, search engine technology, cloud computing, computer software, quantum computing, e-commerce, consumer electronics, and artificial ...
announced that operators, from within China, had hacked into their Google China operation, stealing intellectual property and, in particular, accessing the email accounts of human rights activists. The attack was thought to have been part of a more widespread cyber attack on companies within China which has become known as Operation Aurora. Intruders were thought to have launched a zero-day attack, exploiting a weakness in the
Microsoft Microsoft Corporation is an American multinational corporation and technology company, technology conglomerate headquartered in Redmond, Washington. Founded in 1975, the company became influential in the History of personal computers#The ear ...
Internet Explorer Internet Explorer (formerly Microsoft Internet Explorer and Windows Internet Explorer, commonly abbreviated as IE or MSIE) is a deprecation, retired series of graphical user interface, graphical web browsers developed by Microsoft that were u ...
browser, the malware used being a modification of the trojan " Hydraq". Concerned about the possibility of hackers taking advantage of this previously unknown weakness in Internet Explorer, the governments of Germany and, subsequently France, issued warnings not to use the browser. There was speculation that "insiders" had been involved in the attack, with some Google China employees being denied access to the company's internal networks after the company's announcement. In February 2010, computer experts from the U.S. National Security Agency claimed that the attacks on Google probably originated from two Chinese universities associated with expertise in
computer science Computer science is the study of computation, information, and automation. Computer science spans Theoretical computer science, theoretical disciplines (such as algorithms, theory of computation, and information theory) to Applied science, ...
, Shanghai Jiao Tong University and the Shandong Lanxiang Vocational School, the latter having close links to the Chinese military. Google claimed at least 20 other companies had also been targeted in the cyber attack, said by the ''London Times'', to have been part of an "ambitious and sophisticated attempt to steal secrets from unwitting corporate victims" including "defence contractors, finance and technology companies". Rather than being the work of individuals or organised criminals, the level of sophistication of the attack was thought to have been "more typical of a
nation state A nation state, or nation-state, is a political entity in which the State (polity), state (a centralized political organization ruling over a population within a territory) and the nation (a community based on a common identity) are (broadly ...
". Some commentators speculated as to whether the attack was part of what is thought to be a concerted Chinese industrial espionage operation aimed at getting "high-tech information to jump-start China's economy". Critics pointed to what was alleged to be a lax attitude to the intellectual property of foreign businesses in China, letting them operate but then seeking to copy or reverse engineer their technology for the benefit of Chinese "national champions". In Google's case, they may have (also) been concerned about the possible misappropriation of source code or other technology for the benefit of Chinese rival Baidu. In March 2010 Google subsequently decided to cease offering censored results in China, leading to the closing of its Chinese operation.


''USA v. Lan Lee, et al.''

The United States charged two former NetLogic Inc. engineers, Lan Lee and Yuefei Ge, of committing economic espionage against TSMC and NetLogic, Inc. A jury acquitted the defendants of the charges with regard to TSMC and deadlocked on the charges with regard to NetLogic. In May 2010, a federal judge dismissed all the espionage charges against the two
defendant In court proceedings, a defendant is a person or object who is the party either accused of committing a crime in criminal prosecution or against whom some type of civil relief is being sought in a civil case. Terminology varies from one juris ...
s. The judge ruled that the U.S. government presented no evidence of espionage.


Dongxiao Yue and Chordiant Software, Inc.

In May 2010, the federal jury convicted Chordiant Software, Inc., a U.S. corporation, of stealing Dongxiao Yue's JRPC technologies and used them in a product called Chordiant Marketing Director. Yue previously filed lawsuits against Symantec Corporation for a similar theft.


Concerns of national governments


Brazil

Revelations from the Snowden documents have provided information to the effect that the United States, notably vis-à-vis the NSA, has been conducting aggressive economic espionage against
Brazil Brazil, officially the Federative Republic of Brazil, is the largest country in South America. It is the world's List of countries and dependencies by area, fifth-largest country by area and the List of countries and dependencies by population ...
. Canadian intelligence has apparently supported U.S. economic espionage efforts.


China

The Chinese cybersecurity company Qihoo 360 accused the Central Intelligence Agency of the United States of an 11-year-long hacking campaign that targeted several industries including aviation organizations, scientific research institutions, petroleum firms, internet companies, and government agencies.


United States

A 2009 report to the US government, by aerospace and defense company
Northrop Grumman Northrop Grumman Corporation is an American multinational Aerospace manufacturer, aerospace and Arms industry, defense company. With 97,000 employees and an annual revenue in excess of $40 billion, it is one of the world's largest Arms industry ...
, describes Chinese economic espionage as comprising "the single greatest threat to U.S. technology". Blogging on the 2009 cyber attack on Google, Joe Stewart of SecureWorks referred to a "persistent campaign of 'espionage-by-malware' emanating from the People's Republic of China (PRC)" with both corporate and state secrets being "Shanghaied". The Northrop Grumman report states that the collection of US defense engineering data stolen through cyberattacks is regarded as having "saved the recipient of the information years of R&D and significant amounts of funding". Concerns about the extent of cyberattacks has led to the situation being described as the dawn of a "new cold cyberwar". According to Edward Snowden, the National Security Agency spies on foreign companies. In June 2015 Wikileaks published documents about the National Security Agency spying on French companies.


United Kingdom

During December 2007, this was suddenly revealed that Jonathan Evans, head of the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Northwestern Europe, off the coast of European mainland, the continental mainland. It comprises England, Scotlan ...
's MI5, had sent out confidential letters to 300 chief executives and security chiefs at the country's banks, accountants and legal firms warning of attacks from Chinese 'state organisations'. A summary was also posted on the secure website of the Centre for the Protection of the National Infrastructure, accessed by some of the nation's 'critical infrastructure' companies, including ' telecoms firms, banks and water and electricity companies'. One security expert warned about the use of 'custom trojans,' software specifically designed to hack into a particular firm and feed back data. Whilst China was identified as the country most active in the use of internet spying, up to 120 other countries were said to be using similar techniques. The Chinese government responded to UK accusations of economic espionage by saying that the report of such activities was ' slanderous' and that the government opposed hacking which is prohibited by law.


Germany

German counter-intelligence experts have maintained the German economy is losing around €53 billion or the equivalent of 30,000 jobs to economic espionage yearly. In Operation Eikonal, German BND agents received "selector lists" from the NSA – search terms for their dragnet surveillance. They contain IP addresses, mobile phone numbers and email accounts with the BND surveillance system containing hundreds of thousands and possibly more than a million such targets. These lists have been subject of controversy as in 2008 it was revealed that they contained some terms targeting the European Aeronautic Defence and Space Company (EADS), the
Eurocopter Airbus Helicopters SAS (formerly Eurocopter S.A., trade name, trading as Eurocopter Group) is the helicopter manufacturer, helicopter manufacturing division of Airbus. It is the largest in the industry in terms of revenues and turbine helicopte ...
project as well as French administration, which were first noticed by BND employees in 2005. After the revelations made by whistleblower Edward Snowden, the BND decided to investigate the issue whose October 2013 conclusion was that at least 2,000 of these selectors were aimed at Western European or even German interests which has been a violation of the Memorandum of Agreement that the US and Germany signed in 2002 in the wake of the 9/11 terror attacks. After reports emerged in 2014 that EADS and Eurocopter had been surveillance targets the Left Party and the Greens filed an official request to obtain evidence of the violations. The BND's project group charged with supporting the NSA investigative committee in German parliament set up in spring 2014, reviewed the selectors and discovered 40,000 suspicious search parameters, including espionage targets in Western European governments and numerous companies. The group also confirmed suspicions that the NSA had systematically violated German interests and concluded that the Americans could have perpetrated economic espionage directly under the Germans' noses. The investigative parliamentary committee was not granted access to the NSA's selectors list as an appeal led by opposition politicians failed at Germany's top court. Instead the ruling coalition appointed an administrative judge, , as a "person of trust" who was granted access to the list and briefed the investigative commission on its contents after analyzing the 40,000 parameters. In his almost 300-paged report Graulich concluded that European government agencies were targeted massively and that Americans hence broke contractual agreements. He also found that German targets which received special protection from surveillance of domestic intelligence agencies by Germany's Basic Law (Grundgesetz) − including numerous enterprises based in Germany – were featured in the NSA's wishlist in a surprising plenitude.


Competitive intelligence and economic or industrial espionage

" Competitive intelligence" involves the legal and ethical activity of systematically gathering, analyzing and managing information on industrial competitors. It may include activities such as examining newspaper articles, corporate publications, websites, patent filings, specialised databases, information at trade shows and the like to determine information on a corporation. The compilation of these crucial elements is sometimes termed CIS or CRS, a ''Competitive Intelligence Solution'' or ''Competitive Response Solution'', with its roots in
market research Market research is an organized effort to gather information about target markets and customers. It involves understanding who they are and what they need. It is an important component of business strategy and a major factor in maintaining com ...
. Douglas Bernhardt has characterised "competitive intelligence" as involving "the application of principles and practices from military and national intelligence to the domain of global business"; it is the commercial equivalent of
open-source intelligence Open source intelligence (OSINT) is the collection and analysis of data gathered from open sources (overt sources and publicly available information) to produce actionable intelligence. OSINT is primarily used in national security, law enforceme ...
. The difference between competitive intelligence and economic or industrial espionage is not clear; one needs to understand the legal basics to recognize how to draw the line between the two.


See also

* American Economic Espionage Act of 1996 *
Business intelligence Business intelligence (BI) consists of strategies, methodologies, and technologies used by enterprises for data analysis and management of business information. Common functions of BI technologies include Financial reporting, reporting, online an ...
* Corporate warfare * Cyber spying *
FBI The Federal Bureau of Investigation (FBI) is the domestic Intelligence agency, intelligence and Security agency, security service of the United States and Federal law enforcement in the United States, its principal federal law enforcement ag ...
* * History of tea in India * Labor spying in the United States *
Reverse engineering Reverse engineering (also known as backwards engineering or back engineering) is a process or method through which one attempts to understand through deductive reasoning how a previously made device, process, system, or piece of software accompl ...


Notes


References


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Further reading

* * * * * * * * * * * * * * * * {{DEFAULTSORT:Industrial Espionage Cyberwarfare Cyberpunk themes Security breaches