Intangible Assets At Risk: Foreign Economic Collection and Industrial Espionage

Michael D. Moberly   November 18, 2009

Since 1995, the Office of the National Counterintelligence Executive (ONCIX), has been mandated to gather data and submit a report (annually) to Congress on the state of (a.) foreign economic intelligence collection, (b.) industrial espionage, and (c.) export control violations.  Data for the report is collected from government agencies that comprise the counterintelligence community. 

What’s new in ONICIX’s most recent report (unclassified version) are remarks regarding (1.) ‘the increasing new modes of communication and social netorking providing uncharted opportunities for (a.) transferring information, and (b.) spying by enterprising foreign intelligence services’, (2.) ‘companies encouraging (a.) outsourcing of (their) R&D, and (b.) establishing foreign bases of operation providing foreign entities with more opportunities to target U.S. information and technologies, and (c.) mask their collection activities’.  A consequence is that ONCIX’ report states it is ‘increasingly difficult to fully (accurately) measure the extent of espionage and illegal acquisitions (of U.S. trade secrets).

In contrast, the Department of Defense’ Personnel Security Research Center (PERSEREC) produced a 2005 study (report) titled ‘Technologicial, Social, and Economic Trends That Are Increasing U.S. Vulnerability To Insider Espionage’.  I am not suggesting that ‘insider’ (threats, risks) are synonymous with economic-industrial espionage or export control violations as a means to (illegally) acquire trade secrets.  What I am suggesting is that the PERSEREC study findings exacerbate – make significantly more complex the challenges most every company faces relative to its ability to sustain (indeterminate) control, use, ownership, and value of its most valuable assets, i.e., intellectual property, trade secrets, proprietary information, know how, and other intangible assets, e.g.,

1. Fewer employees are deterred by a traditional sense of (employer) loyalty.

2. Employees are more inclined to view espionage (theft of information assets) to be morally justifiable if sharing those assets will benefit the world community or prevent armed conflict.

3. For employees engaged in multi-national trade and transactions there is greater inclination to regard unauthorized transfer of information assets and technology as a business matter, rather than an act of betrayal or treason.

4. A growing allegiance exists among employees to the/a global community, i.e., an increasing acceptance of global as well as national values.

5. Tendency for employees to view human society as an evolving system of ethnically and ideologically diverse and inter-dependant people which makes illicit acts (i.e., theft of trade secrets) easier to rationalize.

As increasing percentages of most company’s value, sources of revenue, sustainability, and foundations for future wealth creation (in global, knowledge-based economies) lie in – are directly related to intangible (information-based) assets and intellectual property, to be sure, the challenges conveyed in ONCIX’s report are formidable and will persist!

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