Spy.vs.Spy — Dynamics Of Trade Secret Protection.


The ongoing case of Purolite vs. Thermax is yet another addition to the long litany of cases pertaining to the area of Trade secret Protection. This one comes with an interesting cross-border aspect. Purolite, a world leader in the water treatment business has slapped a Corporate Espionage suit on the Indian held company Thermax. Both Companies engaged in similar areas of core competencies, it is alleged that Thermax instigated employees of Purolite to steal Intellectual Property that constitute vital Trade Secret of the 200 million Purolite Corporation.

Purolite states that the implications for the company as a result of the theft of its data and technology is ‘catastrophic.’Proceedings well underway in a Philadelphia District Court,Thermax is facing charges under the Computer Fraud Act and Racketeer Influence and Corrupt and Organizations Act.

Money Control.com, Indias’answer to Bloomberg, came up with a startling expose early last month, on ‘Cos hiring MBA students to gain trade secrets of rivals’states,

This may be the darkest secret of corporate India. Several Indian companies are stalking B-school campuses and hiring students with the sole aim of gaining trade secrets of their rivals, reports CNBC-TV18.

Corporate Espionage, a popular theme with pulp fiction writers and makers of celluloid seems to playing out in real life in many a murky Corporate War. Theft of Trade Secret is a popular ploy (reverse engineering being the other) that firms employ to directly dent its competitors’ operations. Hitherto, hackers were employed to infiltrate company networks to poach and facilitate data theft of competitors. The current trend doing the rounds is even more sinister. Rookies are planted by rival companies who act as decoys to snoop and swoop on trade secrets. Hackers are passé. Rookies are in.!

A few bad apples are by no means a reflection of the Indian talent pool or its integrity quotient. Nevertheless it is a wake up call for India Inc.to work on its redressal mechanism to counter data theft. Besides India better watch out for the implications of the USTR 301 Special Report. Jayant , your post is brilliant and provides penetrating insights on the matter. Largely relying on contractual provisos up until now, data theft has now been made a criminal offence that could invite criminal liability.. Legislations and Policy initiatives apart, companies need to look at internal restructuring of systems architecture to fortify the business against potential threats. The problem and solution lies within!

Matt Kolon, V.P, Technology Operations,Juniper Networks, in a recent article published in the Outlook Business magazine suggests a three pronged approach to plug vulnerabilities in internal networks that act as gateways for potential Trade Secret leaks.

1. Controlling Internet Access

2. ControllingUser behaviour

3. Control access to internal resource


Access Control is Key and access control costs money!

A simple heartwarming doggy analogy could help throw some light on the economics of Trade Secret Protection:-

(Besides with some of the Indian Courts resuming work after the summer break and key decisions awaited, we could all do with an infusion of humor in our lives):

What would be a judicious fencing cost that would be required to prevent your neighbor’s dog from messing up your hybrid blooms? A neat picket fence painted green built around your garden should suffice. A signboard is optional! You can’t teach the old dog new tricks and besides dogs can’t read signboards anyways! As much as it sounds absurd by any calisthenics of logic to build a dyke to protect your garden, so also the budget allocation for Trade Secret safeguards calls for congruity with company bottomlines.Simple economic rules apply. A risk- return; cost-benefit analysis could help determine an optimal standard of protection that is to be employed. What the law expects of employers is that ‘reasonable precautions against disclosure’ was adopted by the employer to prevent data theft. It is not expected of employers to either do a Pink Panther or invest in the latest stealth technology.

Shaken but not stirred, the Axiom’ Trust but Verify’ is likely to resonate through the troubled corridors of Corporate India.

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