Protection of trade secrets and intellectual assets

According to estimates in the 2002 Annual Report to Congress on Foreign Economic Collection and Industrial Espionage, the cost to American companies of foreign and domestic economic espionage and theft of intellectual property is $300 billion dollars a year and rising. The average cost per incident is $500,000 in non-manufacturing companies, and a whopping $50 million per incident for manufacturing companies. Only a quarter of those in the report were even aware of being victimized!

These off-balance sheet losses represent material changes in your financial condition or operations under the Sarbanes-Oxley Act of 2002. Unfortunately, Sarbanes-Oxley requirements are so new that the majority of organizations have not yet funded a senior operations manager to identify information as needing to be protected, thus leaving this information vulnerable.

Losses come from:

• Losing bids to competitors underbidding you when they know your costs, markups, and final bids.
• Losing customers to competitors who have your customer lists.
• Losing market share to competitors who know your marketing plans.
• Losing sales to because of price to competitors who have stolen your designs and processes, and are able to compete without the time and cost of research and development
• Losing sales to a competitor's customers who are being offered your products by your competitor.
• Laying off employees and closing facilities and companies as competitors take over your market.

Why is economic espionage and information theft so successful?

• 70% of the value of the average company lies in its intellectual properties, making it a target.
• 80% of the threat to these intellectual properties comes from trusted insiders, making it an easy target: Trusted insiders include OEM manufacturers, temporary staff, contractors, vendors, suppliers, consultants, government agents, business partners, accountants, attorneys, security guards, visitors, employees, and a host of others, plus their associates, friends, and family.
• There are between 6,000 and 600,000 incidents a year, virtually guaranteeing that you are being victimized.
• No one in your company is delegated or equipped to prevent or deal with economic espionage and information loss.
• Counter-espionage and OPSEC are too specialized to cost-effectively develop expertise in-house.
• Prior to Sarbanes-Oxley, there was no direct legal liability from these hidden losses, so espionage was generally ignored, making you a safe target.

LUBRINCO helps companies deal with the threat through a program of prevention, detection, and response. We bring to bear a process of education, training, and consulting that deals with:

• Who commits economic espionage, why, and how.
• The costs of economic espionage.
• Things that need to be done before you are the victim of economic espionage.
 
• Counter-economic espionage and OPSEC, the identification and protection of critical information that would give your competitors and adversaries an advantage.
 
• Identifying and protecting intellectual property.
• Protection of on-line data.
• Communicating after a crisis.

If your company would be damaged or put out of business through loss of proprietary information to domestic competitors, or foreign governments, or idealogical opponents, or by others knowing your plans and beating you to market on upcoming products, you cannot afford to ignore this threat.

Contact The LUBRINCO Group about protection of trade secrets and intellectual assets.

Return to LUBRINCO home page