SKOPJE, Macedonia, May 14 (UPI) -- There is no end to the twists and turns of industrial espionage cases and to the creativity shown by the activity's perpetrators.
Last June an indictment was handed down against Nicholas Daddona. He stands accused of a unique variation on the old theme of industrial espionage: he was employed by two firms -- transferring trade secrets from one (Fabricated Metal Products) to the other (Eyelet).
Jungsheng Wang was indicted last year for copying the architecture of the Sequoia ultrasound machine developed by Acuson Corporation. He sold it to Bell Imaging, a Californian company which, together with a Chinese firm, owns a mainland China corporation, also charged in the case.
The web of collaboration between foreign -- or foreign-born -- scientists with access to trade and technology secrets, domestic corporations and foreign firms, often a cover for government interests -- is clearly exposed here.
Kenneth Cullen and Bruce Zak were indicted in April 2001 for trying to purchase a printed or text version of the source code of a computer application for the processing of health care benefit claim forms developed by ZirMed. The legal status of printed source code is unclear. It is undoubtedly intellectual property, but of which kind? Is it software or printed matter?
Peter Morch, a senior research and development team leader for CISCO was accused in March 2001 for simply burning onto compact discs all the intellectual property he could lay his hands on with the intent of using it in his new workplace, Calix Networks, a competitor of CISCO.
Perhaps the most bizarre case involves Fausto Estrada. He was employed by a catering company that served the private lunches to Mastercard's board of directors. He offered to sell Visa proprietary information that he claimed to have stolen from Mastercard. In a letter signed "Cagliostro," Fausto demanded $1 million. He was caught red-handed in an FBI sting operation in February 2001.
Multinationals are rarely prosecuted even when they are known to have colluded with offenders. Steven Louis Davis pleaded guilty on January 1998 to stealing trade secrets and designs from Gillette and selling them to its competitors, such as Bic Corporation, American Safety Razor, and Warner Lambert. Yet, it seems that only he paid the price for his misdeeds -- 27 months in prison.
Nor are industrial espionage or the theft of intellectual property limited to industry. Mayra Justine Trujillo-Cohen was sentenced in October 1998 to 48 months in prison for stealing proprietary software from Deloitte-Touche, where she worked as a consultant, and passing it as her own. Caroll Lee Campbell, the circulation manager of Gwinette Daily Post, offered to sell proprietary business and financial information of his employer to lawyers representing a rival paper locked in bitter dispute with GDP.
Nor does industrial espionage necessarily involve clandestine, cloak-and-dagger operations. The Internet and information technology are playing an increasing role.
In a bizarre case, Caryn Camp developed in 1999 an Internet-relationship with a self-proclaimed entrepreneur, Stephen Martin. She stole her employer's trade secrets for Martin in the hope of attaining a senior position in Martin's outfit -- or, at least, of being richly rewarded. Camp was exposed when she misaddressed an e-mail expressing her fears -- to a co-worker.
Steven Hallstead and Brian Pringle simply advertised their wares -- designs of five advanced Intel chips -- on the Web. They were, of course, caught and sentenced to more than five years in prison. David Kern copied the contents of a laptop inadvertently left behind by a serviceman of a competing firm. Kern trapped himself. He was forced to invoke Fifth Amendment Constitutional protections during his deposition in a civil lawsuit he filed against his former employer. This, of course, provoked the curiosity of the FBI.
Stolen trade secrets can spell the difference between extinction and profitability. Jack Shearer admitted to building an $8 million business on trade secrets pilfered from Caterpillar and Solar Turbines.
U.S. Attorney Paul E. Coggins stated: "This is the first Economic Espionage Act case in which the defendants pled guilty to taking trade secret information and actually converting the stolen information into manufactured products that were placed in the stream of commerce. The sentences handed down today (June 15, 2000) are among the longest sentences ever imposed in an economic espionage case."
Economic intelligence gathering -- usually based on open sources -- is both legitimate and indispensable. Even reverse engineering -- disassembling a competitor's products to learn its secrets -- is a gray legal area. Spying is different. It involves the purchase or theft of proprietary information illicitly. It is mostly committed by firms. But governments also share with domestic corporations and multinationals the fruits of their intelligence networks.
Former and current intelligence operators, political and military information brokers, and assorted shady intermediaries, all switched from dwindling Cold War business to the lucrative market of "competitive intelligence."
This transition fosters international tensions even among allies. "Countries don't have friends, they have interests!" -- screamed a Department of Energy poster in the mid-'90s. France has vigorously protested U.S. spying on French economic and technological developments -- until it was revealed to be doing the same. French relentless and unscrupulous pursuit of purloined intellectual property in the United States is described in Peter Schweizer's "Friendly Spies: How America's Allies Are Using Economic Espionage to Steal Our Secrets." "Le Monde" reported in 1996 about intensified American efforts to purchase from French bureaucrats and legislators information regarding France's WTO, telecommunications and audio-visual policies. Several CIA operators were expelled.
Richard Dreyfuss, writing in "Mother Jones," accused the CIA of actively gathering industrial intelligence (i.e., stealing trade secrets) and passing them on to America's Big Three carmakers. He quoted administration officials as saying: "(the CIA) is a good source of information about the current state of technology in a foreign country. We've always managed to get intelligence to the business community. There is contact between business people and the intelligence community and information flows both ways, informally."
The Commerce Department's Advocacy Center solicits commercial information thus: "Contracts pursued by foreign firms that receive assistance from their home governments to pressure a customer into a buying decision; unfair treatment by government decision-makers, preventing you from a chance to compete; tenders tied up in bureaucratic red tape, resulting in lost opportunities and unfair advantage to a competitor. If these or any similar export issues are affecting your company, it's time to call the Advocacy Center."
(This is Part 2 of a survey of industrial espionage; Part 1 appeared Monday, Part 3 will appear Wednesday.)
