What is Economic Espionage
Economic espionage is the unlawful targeting and theft of critical economic intelligence such as with trade secrets and intellectual property. Economic espionage may include the clandestine acquisition or outright theft of invaluable proprietary information in a number of areas including technology, finance and government policy. Economic espionage differs from corporate or industrial espionage in a number of ways – it is likely to be state-sponsored, have motives other than profit or gain (such as closing a technology gap), and be much larger in scale and scope. Recognizing the threat from such activity, the U.S. signed the Economic Espionage Act into law in October 1996, which criminalized misappropriation of trade secrets and gave the government the right to pursue such cases in the courts.
Breaking Down Economic Espionage
The Federal Bureau of Investigation (FBI) defines economic espionage as such:
"Economic espionage is foreign power-sponsored or coordinated intelligence activity directed at the U.S. government or U.S. corporations, establishments, or persons, designed to unlawfully or clandestinely influence sensitive economic policy decisions or to unlawfully obtain sensitive financial, trade, or economic policy information; proprietary economic information; or critical technologies. This theft, through open and clandestine methods, can provide foreign entities with vital proprietary economic information at a fraction of the true cost of its research and development, causing significant economic losses."
Economic Espionage in Practice
According to the FBI, foreign competitors conduct economic espionage in three main ways:
- By recruiting insiders working for U.S. companies and research institutions that typically share the same national background.
- Using methods such as bribery, cyber-attacks, “dumpster diving” and wiretapping.
- Establishing seemingly innocent relationships with U.S. companies to gather economic intelligence including trade secrets.
The FBI recommends that to counter this threat, companies should take a number of steps that include implementing a proactive plan to safeguard trade secrets, securing physical and electronic versions of intellectual property, and training employees.
Economic Espionage Impact
Economic espionage is especially prevalent in technology. A 2003 report by the Commission on the Theft of American Intellectual Property estimated that economic espionage of intellectual property has an economic impact of about $300 billion per year and costs the U.S. job market about 2.1 million jobs.
In November 2011, the U.S. accused China of being the world’s “most active and persistent” perpetrator of economic espionage, and also identified Russia as one of the most aggressive collectors of U.S. economic information and technology. The problem's scale was evident in subsequent media reports that said hundreds of leading U.S. companies had been targeted by overseas entities for economic espionage. Many cases of economic espionage may go unreported, as companies who fall victim to it may suffer a loss in stock value if they report such a breach.