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Industrial espionage was once simply of concern to national governments and their defense sectors. Not anymore.

Origins Of The Threat

Globalization of the world economy, overseas outsourcing of production and R&D, foreign workers and researchers in U.S. facilities, digitization of information and the proliferation of high-speed Internet have all increased the risk to companies’ IP. Foreign competitors realize it is not only faster and cheaper to steal IP, but relatively low-risk as well. Countries like China and Russia sanction and support cyber and traditional spies in their efforts to steal foreign technology and know-how.

The Face Of The Threat

Industrial spies can access and pilfer voluminous quantities of sensitive corporate data at relatively low risk of detection or prosecution. Malicious actors can range from government-sponsored, professionally-trained, and well-funded cyber warrior organizations using state-of-the art techniques to remotely access corporate networks down to a disgruntled company employee (an “opportunistic insider”) seeking to parlay the stolen trade secrets of Company A into a new, better-paying job at Company B.

Who Is At Risk

Since 2000, American firms in the pharmaceutical, clean energy technology, biotech, and tire manufacturing industries (to name but a few) have learned very costly lessons about the growing threat posed by industrial espionage.

What Is At Risk

A company’s intellectual property (IP) includes any proprietary information that helps provide that firm with its competitive advantage, market share, and profitability. As recent history has shown, loss of IP through theft can devastate a company – sometimes to the point of threatening its continued viability.

The Worst Offenders

In countries like Russia, France, and Israel, industrial espionage is known to be an accepted practice. But the undisputed heavyweight champion of industrial espionage is the Peoples Republic of China (PRC). One May 2013 U.S. government report states that while more than 90 nations are known to have targeted U.S. corporate trade secrets, as much as 80% of American IP theft cases trace back to the PRC. Five years ago, the cost of Chinese espionage to U.S. firms was estimated at over $48 billion dollars, with clean energy, semiconductors, and pharmaceuticals the most heavily-targeted industrial sectors. Since then, the problem has only gotten worse, and the “target list” longer.

In additional to state actors, there are other groups that pose an industrial espionage threat to U.S. firms. These include hackers, criminal organizations, and persons acting on behalf of a rival firm. While their capabilities may vary, their intent is the same: To steal your company’s IP.

Why Prevention Is Preferable To Reaction

Theft of a company’s IP is difficult to detect, attribute, and satisfactorily remediate. Legal recourse is extremely expensive and time-consuming, and even a favorable judgment does not begin to make up for the financial and other losses suffered.

With respect to IP protection, an ounce of prevention truly is preferable to a pound of cure.

Cipher’s Integrated IP Protection Solution

A multi-faceted, existential threat demands a multi-faceted, comprehensive, and systematic solution. Cipher’s Integrated IP Asset Protection Solution is a risk-based, coordinated approach to securing critical IP.  We start by assessing the risk to your IP.  From there, we develop a strategic risk management framework that enables smart decision-making and efficient application of limited resources.  We develop tailored protective measures based on the assessed risk.  These protective measures fall into five categories:

1. Physical Security

2. Personnel Security

3. Cyber Defense

4. Counterespionage

5. Crisis Response

Our experience has taught us that successful IP protection strategies are built on the solid foundation of a “Culture of Awareness” within your organization.  Our security awareness and counter-intelligence training solutions sensitize employees to the threat, provide them with tools to successfully recognize potential threats, and teach them how—and to whom—those issues should be reported.

For a more in-depth look at intellectual property concerns, please download our free white paper:

As a full service competitive market intelligence consulting firm, Cipher offers global strategic research, consulting services and award-winning, customized software systems. Key members of Cipher’s IP Protection team include individuals possessing decades of relevant experience in:

- Educating Fortune 100 firms about the industrial espionage threat

- Partnering with U.S. intelligence and law enforcement agencies as part of their corporate outreach efforts

- Setting up and operating overseas operations

- Helping Fortune 100 firms develop and implement IP protection strategies and programs

- Training business travelers, executives and other corporate personnel on how to detect and defeat social engineering

For more information about our customized solutions, contact Cipher Systems, LLC at info@cipher-sys.com or 888.899.1523.