Industrial Spying and the Marketing Business: Are You Safe?

Corporate Espionage is Illegal in the U.S., but Breaches Still Happen

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CHICAGO (AdAge.com) -- It's not easy being a corporate spy these days. Just ask Joya Williams, the Coca-Cola Co. administrative assistant arrested with two accomplices
A former Burger King marketing executive recalled that about once a year during his tenure there he would receive a full or partial McDonald's marketing plan. He assumed the information was from disgruntled McDonald's employees and forwarded the unopened package to the BK legal department.


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for trying to peddle to Pepsi secret Coca-Cola documents that may well have been chock-full of marketing intelligence, given that Ms. Williams worked for Javier Sanchez-Lamelas, global brand director for the Coke trademark.

Pepsi informed Coke
If so, Pepsi never knew. It quickly informed Coke, which, thanks to the 1996 Economic Espionage Act, is now the commonplace response when such a situation arises. Foreign companies and governments allow intelligence forces outside the U.S. to help companies spy on competitors. But in the U.S., the 1996 act makes a federal crime of the theft or misuse of trade secrets. "Most corporate practitioners of competitive intelligence would find this really suspicious and not touch that information," said Alex Graham, executive director of the Society of Competitive Intelligence Professionals.

Richard Taylor, senior VP-brand marketing for America Online, recalls that when he was at Burger King, about once a year he would be forwarded a full or partial marketing plan, and he assumed the information was from disgruntled McDonald's employees. He would forward it to the legal department unopened. "For the most part, companies and their employees do the right thing," said Mr. Taylor, but he added, "that said, I'd hate to rely on that, so I'm glad there are security checks and balances."

Biggest threat: employees
While there have been stories over the years of organized criminals who have infiltrated companies, the bigger threat lies within company ranks. One security expert recounted a case where an internal member of the Motorola U.K. security team tried -- and failed -- to sell the company's European marketing plan to the highest bidder after failing a urinalysis.
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Breaches still happen here, too. U.S. companies lost up to $59 billion in proprietary information and intellectual property according to a 2002 survey by the American Society for Industrial Security International and PriceWaterhouseCoopers (a 2005 update is expected in September). ASIS's study found insiders are involved in incidents as much as 69% of the time.

While most people think information loss is TV-drama fare, "the fact is the loss of information by carelessness happens every day," said security consultant Richard Heffernan, president of R.J. Heffernan and vice chairman of the ASIS Information Asset Protection Council.

P&G and Unilever policies
Procter & Gamble Co. and Unilever have policies forbidding employees or employees of marketing agencies to work on laptops in airplanes because of the risk of espionage. But the policy is not always heeded: In one case, information displayed on a laptop that included P&G intelligence on Unilever's Sunsilk hair-care brand provided information for an Ad Age story.

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Several Ad Age staff members contributed to this report
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