- Impacts
- General Patterns in Insider Theft of Intellectual Property Crimes
- The Entitled Independent
- The Ambitious Leader
- Theft of IP inside the United States Involving Foreign Governments or Organizations
- Mitigation Strategies for All Theft of Intellectual Property Cases
- Mitigation Strategies: Final Thoughts
- Summary
This chapter is from the book
This chapter is from the book
This chapter is from the book
Theft of IP inside the United States Involving Foreign Governments or Organizations
This section focuses on cases of malicious insiders who misused a company’s systems, data, or network to steal intellectual property from an organization inside the United States for the benefit of a foreign entity—either an existing foreign organization or a new company that the insiders established in a foreign country.13 These cases fit the problem described in the Annual Report to Congress on Foreign Economic Collection and Industrial Espionage, FY07 prepared by the Office of the National Counterintelligence Executive.
- The United States remains the prime target for foreign economic collection and industrial espionage as a result of its worldwide technological and business leadership. Indeed, strong US international competitiveness underlies the continuing drive by foreign collectors to target US information and technology.14
These cases also include activities defined by the Office of the National Counterintelligence Executive as economic espionage or industrial espionage.
- Economic Espionage—the conscious and willful misappropriation of trade secrets with the knowledge or intent that the offense will benefit a foreign government, foreign instrumentality, or foreign agent.15
- Industrial Espionage—the conscious and willful misappropriation of trade secrets related to, or included in, a product that is produced for, or placed in, interstate or foreign commerce to the economic benefit of anyone other than the owner, with the knowledge or intent that the offense will injure the owner of that trade secret.16
Cases that involve foreign beneficiaries can differ from other theft of IP cases because the insiders may have a sense of duty or loyalty to their countries of origin that overrides any loyalty to their employer. Moreover, some of these cases suggest that some foreign entities appear to be interested in recruiting insiders to steal IP to advance businesses in that particular country. Competing loyalties, coupled with recruitment of employees in U.S. businesses by foreign nations or organizations, make this type of crime a potent threat for organizations that rely on IP for competitive advantage.
There are several reasons for heightened concern about this kind of crime. The impact of a crime that extends outside the jurisdiction of U.S. law enforcement on an organization can be substantially greater than a case that remains within U.S. jurisdiction. Insiders who leave the United States may be difficult or impossible to locate and arrest. And even if the insider were located and arrested, extradition to the United States would be required. Therefore, there can be more risk from an employee who intends to leave the United States following the theft than from employees contemplating criminal acts against their employer who remain in the United States.
In addition, it can be very difficult to recover stolen IP once it leaves the United States. In cases within U.S. borders, companies that receive the stolen IP can suffer similar consequences under the same laws as the insiders if they use the stolen IP for their own advantage. Thus, domestic organizations are under greater obligation to cooperate with authorities and return all stolen IP than foreign organizations might be.
Who They Are
The majority of the insiders worked as either a scientist or an engineer. Males committed most of the incidents. Of the cases that identify citizenship, about half were foreign nationals, about 40% were naturalized U.S. citizens, two were U.S. citizens, and the rest were resident aliens or had dual citizenship.
The insiders’ countries of origin, for cases in which the information was available, are shown in Table 3-1.
Table 3-1 Countries of Origin (When Known)
|
Country |
Number of Cases |
|
China |
13 |
|
United States |
2 |
|
Taiwan |
2 |
|
Canada (naturalized citizen from China) |
2 |
|
South Korea |
1 |
|
Germany |
1 |
|
Russia |
1 |
|
Iran |
1 |
|
Ecuador |
1 |
|
India |
1 |
|
Dual citizenship, China and United States |
1 |
About one-fourth of the cases involved at least one accomplice who was also an insider. Some of those involved multiple insiders; one case involved 14 insiders in all! Almost 40% had at least one external accomplice.
Note that when multiple insiders are involved in a case we only code it as a single case, and code details for the primary insider. Additional information about conspirators is also coded for the case. If you are interested in a detailed description of the information coded for each case, please see Appendix D, Insider Threat Database Structure.
What They Stole
All of these insiders stole intellectual property in digital form, physical form, or both. The methods used were consistent with those described elsewhere in this chapter.
Table 3-2 contains the details known for these cases. Damage amounts are supplied when they were available. We only used the term trade secrets when that term was used in the case file; otherwise, we used the description supplied in the case file.
Table 3-2 Breakdown of Cases 17
|
Sector |
Number of Cases |
Damages 17 |
What Was Stolen |
|
Information and telecommunications |
11 |
1 case, $1 billion |
Trade secrets (4 cases) |
|
1 case, $600 million |
Source code (3 cases) |
||
|
1 case, $1 million |
Confidential product |
||
|
1 case, $100,000 |
information (3 cases) |
||
|
1 case, $5,000 |
Confidential manufacturing |
||
|
6 cases, Unknown |
information (1 case) |
||
|
Proprietary documents and source code (1 case) |
|||
|
Chemical industry and hazardous materials |
7 |
1 case, $400 million |
Trade secrets (5 cases) |
|
1 case, $100 million |
Sensitive product information |
||
|
1 case, $50 million to $60 million |
(1 case) Confidential documents |
||
|
4 cases, Unknown (1 case) |
|||
|
Manufacturing |
3 |
1 case, $40 million |
Trade secrets (2 cases) |
|
1 case, $32 million |
Confidential documents (1 case) |
||
|
Banking and finance |
1 |
$5,000 |
Source code |
|
Commercial facilities |
1 |
Unknown |
Trade secrets |
|
Defense industrial base |
1 |
Unknown |
Source code |
|
Education |
1 |
$3 million |
Patentable proprietary information |
|
Energy |
1 |
Unknown |
Sensitive software |
|
Government-Federal |
1 |
Unknown |
Government restricted information |
|
Public health |
1 |
$500 million |
Trade secrets |
|
Water |
1 |
$1 million |
Trade secrets and source code |
Why They Stole
The specific motives fall into several categories.
- To form a new competing business: One-third of the insiders stole the IP to establish a new business venture in a foreign country that would compete with their current employer. In all of these cases, the insiders had at least one accomplice who assisted them with their theft, with forming and/or running the new business, or with both. All but one of these insiders had already started their business before they left the victim organization; in fact, some of them had already established the business and had made money for quite some time.
- To take to a new employer in a competing business: More than 40% of these insiders stole IP to take to their new employers, businesses located outside the United States that competed with their current employer. In all but two of these cases, the insiders had already accepted jobs with the competitors before leaving the victim organization.
- To take to their home country: In three of the cases, this was the somewhat vague reason they gave for their theft. In another case, the insider stated he wanted to “benefit the homeland.”
- To sell to a competitor: In two cases, the insider stole the information to sell to a competitor in another country outside the United States.
Mitigation strategies for these cases are the same as for any other cases of insider theft of intellectual property, which is covered in the next section.