Are You A Target?
As a result of the global shift toward economic and technological
competition, some foreign countries are becoming increasingly engaged
in economic and industrial espionage. Foreign targeting of US
technology and economic and proprietary information is a growing
concern. Economic and industrial espionage against the United
States by foreign entities, both government-sponsored and private,
threatens US economic competitiveness and results in the loss of
millions of US dollars and thousands of jobs annually.
The United States continues to be the preeminent world power.
It has vital economic interests and military responsibilities
around the globe. The protection of trade secret information,
critical technologies, and proprietary information is an integral
part of US economic security. Due to the importance of maintaining
US economic competitiveness, current policy is to treat foreign
threats to the economic well-being of the United States as a national
security issue. As a result, economic security is directly
linked to, and inseparable from, national security.
Foreign countries, including some traditional allies, continue
their attempts to collect information against US interests.
While foreign efforts persist, the US Intelligence Community has
detected no significant change from past patterns in both the
nature and extent of the threat or in the type of technologies
being targeted and collection methods employed. As in previous
years, over a half dozen nations continue to be the most active
collectors of US proprietary information and critical technologies.
These nations gather information through both open and legal means
as well as through clandestine efforts. They target industries,
the US Government, and US persons in an effort to support their
nations' economic and military priorities and to avoid the time
and expense of advanced research and development.
Targeting and Collection
Military Force modernization, economic competition, and commercial
modernization drive foreign collection efforts. As a result, dual-use
technologies - those with civilian and military applications - are
consistent targets of foreign collection.
Clandestine collection efforts continue; however, consistent
with traditional espionage operations, a significant majority
of foreign collection is initially conducted through legal and
open means. This activity may be a precursor to economic espionage.
Practitioners of economic and industrial espionage seldom
use one method of collection. Instead, they employ a number
of collection techniques in a concerted effort that combines legal
and illegal, traditional and more innovative methods. Espionage
and other illegal collection methods include agent recruitment,
use of US volunteers and co-optees, surreptitious entry, theft,
and computer intrusions. Legal collection methods include joint
ventures, use of foreign students, scientific exchanges, Internet
access, exploitation of cultural or ethnic affinity, mergers and
acquisitions, visits to US facilities, and unsolicited requests
It is imperative that US companies have a well-rounded internal
security system and corresponding policies to reduce the potential
for loss of sensitive information. Nations that fear falling
behind in technological expertise and efficiency may resort to theft
as a way to level the playing field. In February 1999, the FBI and
the US Chamber of Commerce announced that US companies lose about
$2 billion a month to corporate espionage. About 95 percent of the
losses go undetected or are suppressed by companies that do not
want customers and shareholders to know of their vulnerabilities
or fear they may be forced to reveal even more information in the
discovery phase of a criminal action. Yet, unreported foreign economic
espionage attempts or cases that are not prosecuted are likely to
further embolden foreign adversaries.
1999 Landmark Cases
Avery Dennison Corporation
In April 1999, two Taiwan executives and a Taiwan company were
convicted of theft of trade secrets under the Economic Espionage
Act of 1996. Pin Yen Yan, president of Four Pillars Company,
and his daughter Hwei Chen "Sally" Yang were accused of stealing
Avery Dennison adhesive formulas and innovations with the help
of an Avery Dennison employee. This case marks the first conviction
of foreign individuals or a foreign company that has gone to
trial under the Economic Espionage Act of 1996. The Yangs each
face a maximum penalty of 10 years in prison and $250,000 in
fines. Four Pillars Company could be fined up to $5 million.
In April 1999, Hsu Kai-Lo, technical director of the Yuen Foong
Paper Company of Taiwan, pleaded guilty to one count of conspiracy
to acquire a trade secret. Hsu attempted to steal the formula
for Taxol, a cancer drug patented and licensed by the Bristol-Myers
Squibb Company. Another defendant, Jessica Chou, is believed
to be in Taiwan and is considered a fugitive by US authorities.
Taiwan has no extradition treaty with the United States.
The Year 2000 Problem
The extensive Y2K remediation efforts currently underway in the
United States also offer significant opportunities for some countries
to target US Government and private sector information systems for
the purpose of gaining access to critical technologies and sensitive
commercial and proprietary information. Some foreign-manufactured
software, or foreign experts hired to fix Y2K problems, could pose
a threat to the security of sensitive information.
The Economic Espionage Act of 1996
While the Economic Espionage Act of 1996 provides severe sanctions,
it is company responsibility to take reasonable measures to safeguard
trade secret information. To report violations or to obtain
additional information about the Act, please contact the local FBI
Awareness of National Security Issues and Response (ANSIR) coordinator.
Telephone numbers for FBI field offices are listed in most telephone
directories and on the FBI home page: www.fbi.gov.