Michael D. Moberly July 12, 2014 ‘A long form blog where attention span really matters’.
Economic Espionage Act of 1996…
I have been consistently engaged in studying, conducting investigative research, publishing, and consulting on a variety of ‘open source’ matters related to economic espionage beginning well in advance of the passage of the Economic Espionage Act in 1996. Admittedly, while my interest in economic espionage issues are broad based, having served fulltime in academia for 20+ years, much of my interest has been directed toward the targeting and victimization of university-based research and corporate-university research alliances by insiders, competitor intelligence, data miners, information brokers, and foreign (independent and state-corporate sponsored) entities, and now ‘legacy free players’.
A distinctive aspect of my work in this arena is that I began to characterize these entities as ‘economic and competitive advantage adversaries’ as a more relevant descriptor of…
- the variants of economic espionage that exist today
- the range of domestic and international parties engaged.
Admittedly, this descriptor reaches beyond the definitions (precise requisites) codified in the federal Economic Espionage Act (18 U.S.C. § 1831-1839) statute. Doing otherwise, in my judgment, is limiting, and does not begin to convey the currency, depth, and breadth of this persistent and extraordinarily predatorial risk.
Capturing diversity and methodology of global players…
Too, I believe the phrase ‘economic and competitive advantage adversaries’ better captures the diversity of global players in terms of what and why particular assets are targeted, adversary’s motivations, as well as a testament to the ‘layered methodologies’ which are challenging to unravel with respect to those actually engaged in the acquisition initiative and the ultimate and/or primary (end) beneficiary of the acquisition.
My intent for re-phrasing the time honored (economic espionage) language are that it…
- brings greater relevance to businesses and companies and elevates their recognition that the theft or acquisition of their proprietary information, ala trade secrets, has many more dimensions and facets today compared to when the EEA became Federal law in October, 1996.
- indicates the targets are not exclusively national security and/or defense related.
Ultra sophisticated data mining…
The product, i.e., intangible asset acquisition, analysis, and insight, etc., capable of being delivered to an end user(s) through the application of sophisticated and frequently ‘off the shelf’ data mining technologies by economic and competitive advantage adversaries today is phenomenal by any standard or metric.
Determining who the ultimate end user or beneficiary is…?
Of the countless global entities, independent operators, and legacy free players engaged in some aspect of business, competitive intelligence, and/or information brokering today whether it be legitimate or illegal, believe me, it’s not necessarily a simple task to identify precisely who the real end user (beneficiary) of the work product will be or actually is.
Absent knowing who the real beneficiary of any misappropriated – stolen information-based intangible assets is, understanding how such assets will (can) be used or applied, once acquired and delivered, particularly if there are dual-use features involved, is useful. Still it remains challenging to objectively quantify, in dollar terms, the adverse economic, including competitive advantage, reputation, market share, etc., consequences attributed to any single event or collective loss.
Economic and competitive advantage adversaries…
I do believe reframing conventional economic espionage activities in a context of ‘economic and competitive advantage adversaries’ has substantially greater relevance in today’s increasingly competitive, aggressive, predatorial, and winner-take-all global business transaction, R&D, and new product launch environments.
Too, as the global economies’ become increasingly intertwined, yet overwhelmingly dominated by highly valuable intangible assets, particularly intellectual, structural, and relationship capital, achieving most any economic and/or competitive advantage is all but sure to outweigh the relatively minimal risk associated with most targeting and intelligence collection-acquisition initiatives. In other words, it has become obvious to me and I’m sure others as well, that the significant potential benefits of securing an economic and/or competitive advantage in a specific market or industry sector exceeds, intellectually at least, most costs and/or risks.
To anyone paying more than passing attention to economic (cyber) espionage today, they should recognize the adverse activities described above, as evolving from primarily targeting defense and national security projects to an unrelenting, costly, and inevitable risk for most any (public-private) commercial entity, regardless of size or industry sector, in which valuable intangible assets are being produced and applied. It is the intellectual, structural, and relationship capital which have become the globally universal forms of currency, often with company and/or country specific application and relevance.
Extrapolating costs of economic espionage…
As for extrapolating the costs – losses of economic espionage (acts of economic and competitive advantage adversaries) to a single company or to an individual country’s economy, either as a whole or to a specific industry sector, such analysis comes with a host of challenges, not the least of which is the often subjective nature of the calculations which, it’s not unrealistic to assume, are embedded with various corporate, government, policy, and political agendas.
Interestingly, in the 25+ years that I, and numerous others, many of whom have become colleagues, have been examining and consulting in the economic espionage arena, there is little that I can readily point to insofar as objective methodologies to measure…
- the specific damages and/or costs to a targeted/victim company.
- how to specifically attribute –differentiate the source of those losses to acts of economic espionage, and then
- extrapolate that data to either the U.S. or other country’s economy as a whole.
….aside from using the ‘contributory value’ approach.
Go fast, go hard, go global…
For example, the full range of economic – competitive advantage repercussions from a single incident/act of ‘economic espionage’ is challenging to fully grasp, in part due, I suggest, to the go fast, go hard, go global business transaction environment which most businesses now routinely function and the multitude of valuable intangible assets being produced.
Exacerbating this phenomena is the reality that a company’s awareness of trade secret – intangible asset theft or compromise seldom, in my experience, emerges immediately. Thus, its adverse economic – competitive advantage consequences to the victim company can only be objectively calculated if the consequences can be specifically attributable to an economic – competitive advantage event and should be done so in both strategic (long term) and near term contexts.
My rationale is that a single (stolen, misappropriated, compromised) trade secret and/or proprietary information (intangible asset) frequently involves multiple iterations and combinations of intellectual and structural capital being embedded which, in a strategic context, may be applicable to variety of products and/or services in different industry sectors.
It’s worth reminding readers of the globally universal economic fact, that today, 80+% of most company’s value, sources of revenue, and ‘building blocks’ for growth, profitability, competitive advantage, and sustainability lie in – evolved directly from intangible assets.
I am not suggesting that the loss, theft, or compromise of a single trade secret or intangible asset is immeasurable. Rather, I am suggesting that measuring the real economic loss to a company must include objective near and long term calculations which can only come, in my view, from recognizing that trade secrets (proprietary know how) can readily become embedded with not just one, but numerous (proprietary) intangible assets.
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