Corporate espionage happens between companies in the same country, but it is also one of the key weapons in international trade disputes. For instance, did you know that China has been accused of stealing U.S. intellectual property worth an estimated $200-$650 million annually, according to CNN? And according to a March 2019 report by CNBC, one out of five U.S. companies claim to have had IP stolen by China within the last year.
Owning the rights to an idea can be a tricky prospect, and there are many ways in which bad actors skirt around intellectual property laws in order to share protected ideas.
One of those ways is by convincing an employee to steal a company’s secrets – information, patents, technology, etc. – and send it back to a competitor.
Such was the case with Shan Shi, a China-born, naturalized U.S. citizen who was recently convicted by a District of Columbia court of conspiracy to steal trade secrets from his employer. Shi was alleged to have helped Chinese manufacturer CBM-Future New Material Science and Technology Co. (CBMF) poach employees from Houston-based Trelleborg Offshore as a way of accessing proprietary technology behind syntactic foam, a material used in fossil fuel drilling and military applications.
According to the Department of Justice, CBMF hired employees from Trelleborg and required them to share models, ingredient lists, data and formulas regarding the technology. Using that information, CBMF was able to build its own factory in China to manufacture a similar version of the foam, which it could then sell at a significantly lower price, undercutting the costs of U.S. companies and leading to instability in the industry.
The interesting thing about this case is that Chinese leadership seems to make little effort to conceal their IP crimes. China publicly stated that the creation of syntactic foam was one of its national priorities. This leads many to question on just how grand a scale Chinese attacks on American commerce are occurring, and further, how to combat them. Prosecuting a government for cybercrime and IP theft is a far different prospect than prosecuting a company.
It remains to be seen how many more attempts to steal U.S. innovation are on the horizon. China has been one of the main culprits, but it is by no means the only country engaging in these actions. The Department of Justice and U.S. cybersecurity experts are working together to develop new technologies and techniques to fight against them on all fronts.