In Depth

Industrial Espionage: Secrets Stolen, Fortunes Lost

How industrial espionage and intellectual property theft destroy businesses and endanger the global economy.

By Richard Power and Christopher Burgess

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In January 2005, Russian Prime Minister Fradkov requested Russia's internal security service (FSB) to increase its efforts to assist Russian commercial enterprises. This was tantamount to a public declaration that Russian government's intelligence and security services engage in collection and reporting activities in support of Russian commercial enterprises.

Cleveland Clinic Foundation

In May 2001, the U.S. attorney in Ohio indicted Takashi Okamoto and Hiroaki Serizawa for the theft of intellectual property belonging to the Lerner Research Institute of the Cleveland Clinic Foundation, charging that the two then provided the stolen research to a research facility owned by the government of Japan.

TsNIIMASH-Export

In 2005, state-owned Russian space technology company TsNIIMASH-Export's director, his deputy and an aide were arrested by the FSB, and charged with embezzlement and the selling of secret Russian space technology to China.

Coca-Cola in India

In 1977, Coca-Cola controlled the Indian cola market, but a new industry minister told Coca-Cola officials to divest and transfer their intellectual property (the syrup formula) to their Indian partners. Coca-Cola opted to leave.

Abbot, Merck and Gilead in Brazil

In 2005, the Brazilian Ministry of Health presented Abbot Laboratories of Chicago with an ultimatum: Reduce the price of Kaletra (an effective AIDS/HIV drug), or we will break the patent and produce the drug ourselves.

Roche in India

Despite requests from a number of countries to allow generic production of the anti-bird flu drug Tamiflu, Roche stands firm on not relinquishing the patent, which is protected into 2016, and demanding a licensing fee.

Where Does It End?

Attacks on intellectual property, whether covert or overt, have profound consequences and sweeping implications.

A lawless world, in which government intelligence services routinely insinuate themselves into competition between commercial enterprises in the private sector, and internationally recognized patents can be unilaterally disregarded by governments, whether motivated by the social good or geopolitical ambition, will certainly not contribute to the establishment of peace and prosperity for all nations. Nor does a lawless world, in which private-sector corporations can move freely and globally, without restraint, conscience, accountability or international oversight, lead us any closer to that lofty goal.

The United States has no program or policy to provide economic or industrial competitive intelligence to U.S. businesses. The country's economic policy precludes it.

U.S. governmental efforts are focused on the protection of intellectual property owned by U.S. persons or U.S. corporate entities, and keeping the economic pitch level as U.S. corporations compete within the global marketplace.

Discussion points have been made both for and against allowing U.S. governmental agencies and departments, such as the Department of State, Department of Commerce, the National Intelligence Director and the various agencies that make up the U.S. intelligence community, to devote resources and provide economic intelligence to U.S. persons or corporations.