Who is Stealing Your Trade Secrets? An Overview of Key Threats

September 29, 2015
Categories: Intellectual Property, Intellectual Property Protection, IP Protection, Trade Secret Theft

Every company has trade secrets – for some, they may be special manufacturing processes, for other organizations, trade secrets could include product formulae, customer lists, software code or marketing strategies. The more valuable the assets, the more likely they are to be targeted by a growing list of bad actors.

What are the threats? The CREATe – PwC report identifies a range of players, motivations and methods. Here is a list of those with a track record of attacking companies, have the capabilities to do so and the intent to steal business critical information.  These bad actors include:

  • Malicious insiders
  • Organized crime
  • Foreign intelligence services
  • Competitors
  • Hacktivists

Each group targets and steals companies’ trade secrets for various reasons. Some seek personal financial gain, while others hope to advance national interests or political and social causes.

How do they do it? Social engineering schemes such as tailored spear-phishing campaigns that implant malware to steal trade secrets, or duping employees to elicit sensitive corporate data exemplify the means by which these actors engage in trade secret theft.  Constantly evolving technologies in smart phones, laptops, and tablets that employees use for work provide additional vectors for threat actors to access a company’s secrets.

Companies able to understand who may seek to steal their trade secrets are better able to view those secrets through the lens of a threat actor, and therefore apply appropriate resources to enhance their security. Here are more details about each type of threat.

Malicious Insiders
Current and former employees, third parties acting as consultants or lawyers, and suppliers often have unique access to corporate trade secrets and other information that, if released, could inflict significant harm on a company. The threat from malicious insiders is all the greater because insiders often cooperate with other threat actors who can provide money, other resources, or ideological motivation.

Case in point:

  • An employee of a large U.S. futures exchange company pleaded guilty in late 2012 to stealing more than 10,000 files containing source code for a proprietary electronic trading platform. Prosecutors estimated the value of these trade secrets between $50 and $100 million. The employee said he and two business partners had planned to use this source code to develop their own company.

Cultural and technological factors may heighten the threat from insiders. Employees, particularly those with sought-after skillsets – are often lured to competitors. Employees today also move jobs more frequently today . Additionally, the growing prevalence of “bring your own device” policies and the ease and speed with which employees can move data across multiple programs and applications hampers security and monitoring efforts.

Nation States
Nation states have unmatched resources and capabilities for stealing trade secrets, and usually want to acquire foreign trade secrets to strengthen their existing military capabilities and bolster national champion companies in the global marketplace. Many foreign intelligence and security services attempt to acquire trade secrets on behalf of their governments, commonly using covert means to acquire trade secrets and sensitive economic information. Nation states may also use other national agencies, regulatory powers, or state-supported organizations.

Competitors can target companies’ trade secrets independently or with assistance from national governments. Often times, competitors will target employees who may be disgruntled or have ties to the competitor’s home country. They will seek to gain their involvement through bribery, extortion, or the promise of a new job. Even when acting independently of national governments, corporate competitors often have the resources to exercise state-like power.

Case in point:

  • In a case involving Asian and North American chemicals companies, the Asian firm is alleged to have hired current and former employees of the North American company as consultants in order to have them reveal confidential and proprietary information. This enabled the Asian company to replicate a proprietary manufacturing process and earn at least $225 million in proceeds from the theft of the trade secrets.

Transnational Organized Crime (TOC)
Transnational Organized Crime (TOC) groups have successfully attacked numerous corporate information technology networks to access payment systems, and steal personally identifiable information, personal health information, and payment card information inflicting massive financial damage on their targets. As TOC groups expand their activities beyond long-standing activities such as gambling or racketeering, many well-established groups are increasingly serving as facilitators that enable other threat actors, such as unscrupulous competitors or intelligence services, as they attempt to steal trade secrets.

Hacktivists seek to expose sensitive corporate information—potentially including trade secrets—to advance political or social ends. These groups have used cyber intrusion skills and data gleaned from disgruntled insiders to obtain and publish sensitive business information of key executives, employees, and business partners.  As with Transnational Organized Crime groups, hacktivists have the technical knowledge and capabilities to steal trade secrets, and they could partner with other threat actors for ideological or financial reasons.

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Gaining a better understanding of those trying to steal trade secrets can help to guide how to improve strategies to mitigate risks. To learn more, download the CREATe – PwC report or get in touch –

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