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Christopher Burgess
Contributing Writer

Industrial espionage in Finland — sometimes crime does pay

News Analysis
Sep 14, 20173 mins
Data and Information SecurityDLP SoftwareLegal

Six years after the incident, 10 trusted insiders were convicted of industrial espionage but received only suspended sentences and fines.

Justice served sometimes takes a bit of time. Such was the case of industrial espionage and outright thievery that occurred in Finland in 2010-2011. It took the prosecutors six years to garner the conviction of 10 defendants charged with industrial espionage.

Tenacious as they were, the sentences meted out were minimal by any standard, and some would argue that in this instance, the adage “crime doesn’t pay” does not apply.

The crime: Trusted insiders take thousands of documents

Ten individuals left the employ of Nokian Tyres, and these trusted insiders took with them thousands of Nokian Tyres documents to their new employer, Black Donuts Engineering. Black Donuts was founded by former Nokian Tyres employees following a reduction in force within the Nokian Tyres research and development team.

Finnish news outlet YLE notes that in November 2011, a criminal complaint was filed against Black Donuts and its CEO (the former head of Nokian research and development) for industrial espionage.

At the time of the criminal complaint, Nokian Tyres asked for many million euros in compensation.

The prosecution: Throw the book at the defendants

The prosecution charged the individuals with the theft of tens of thousands of documents containing “business secrets related to tire technology and product development” and taking these documents to a new enterprise with the purpose of using them to compete against Nokian Tyres.

The prosecutors, TyrePress tells us,  requested the courts throw the book at the defendants, requesting “imprisonment, business prohibitions, fines, fines imposed on a corporation, and loss of benefits from criminal activities for the defendants.”

The sentences: Slaps on the hand

The 10 defendants were all found guilty of industrial espionage. Eight were given suspended prison sentences (the longest of which was 18 months) — they are walking the streets in the same manner as they did before they perpetrated the crime. Two were given fines. All 10 guilty, all 10 back in the work force. Three Black Donuts execs were banned from “owning or running business for between 3-5 years” and are permitted to continue to work at Black Donuts in a “lesser role.”

Previously, one sub-contractor had pleaded guilty to “theft of information” and was given a 14-month suspended sentence.

Nokian Tyres, though requesting millions in compensation, received only their legal expenses. 

The firm, Black Donuts was fined €300,000, ordered to forfeit €537,000 to the government, and told to reimburse Nokian Tyres €600,000 in legal expenses.

Add it all up, and Black Donut Engineering parted with €1,437,000. 

Lesson learned: Protect your intellectual property  

From this seat, it appears that in this instance, crime has not been deterred. Those convicted remain in the industry, and the company that benefited from the theft of the intellectual property remains in business.

In essence, Nokian Tyres (which Bridgestone, the world’s largest tire manufacturer, owns a 14.6 percent stake) finds itself having to compete against its own technology.

The cost of the technology acquisition is the amount of the fines, forfeitures and reimbursements — €1,437,000. Some may take the position that Black Donuts got a bargain, as Rubber & Plastic News, tells us in 2014, tire makers were laying down $8.6 billion in new projects.  

To avoid allowing an unscrupulous competitor to benefit from your R&D, ensure the crown jewels of your company’s future are protected — protected during the ideation process through the product’s end of life.

Rare is the instance where information taken via the five-fingered discount costs more than making the financial investment in original R&D. Therefore, one should assume if you have something new, shiny and unique, an entity is looking to acquire it — either legitimately or via skullduggery.

Christopher Burgess
Contributing Writer

Christopher Burgess is a writer, speaker and commentator on security issues. He is a former senior security advisor to Cisco, and has also been a CEO/COO with various startups in the data and security spaces. He served 30+ years within the CIA which awarded him the Distinguished Career Intelligence Medal upon his retirement. Cisco gave him a stetson and a bottle of single-barrel Jack upon his retirement. Christopher co-authored the book, “Secrets Stolen, Fortunes Lost, Preventing Intellectual Property Theft and Economic Espionage in the 21st Century”. He also founded the non-profit, Senior Online Safety.

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