Industrial Espionage

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Industrial Espionage

• Michael Chwang
• Alfredo Cuaresma
• Meissa Dia
• Ashley Fabeck

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What is Industrial Espionage?

• The collection of information (most often trade
  secrets) of a company in an unethical/unlawful
  manner for personal gains or a competitive edge.
• Trade secret A secret that gives a company an
  edge over its competition. i.e. softdrink
  formulas, fastfood restaurant secret sauce, etc.

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Increase in Espionage

• Computers and the internet.
• Hesitancy to Report theft.
• Lack of company resource to pursue such matters.

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Examples of Industrial Espionage

• Computer hacking
• Bribery
• Quitting a job while taking important information
  and use it elsewhere.

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Case Study

• Steven Davis V. The Gillette Company Illegal
  sales of Gillettes Mach3 razor design.

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Steven Davis

• Process control engineer
• Employed by Wright Industries, Inc. a company
  contracted by Gillette for development.
• Davis was contacted by Gillette for design of a
  new shaving system.

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The Gillette Company

• Headquarter in Boston, Mass.
• One of the main providers of shaving goods in the
  market.
• Contacted Davis for development of new razor.

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What happened?

• This new project was considered to be the utmost
  secret by both Gillette and Wright Industries,
  Inc.
• After being removed from the project by Gillette
  and fearing job security, Davis sold the trade
  secret of the Mach3 shaving system to major
  competitors Warner-Lambert Co. (think Schick
  razors), Bic, and American Safety Razor Co.
• In 1997, Davis was arrested by the FBI and plead
  guilty to charges with 5 counts theft and
  disclosure of trade secrets, he has been
  sentenced to a 2year and 3 month and a fine of
  250,000 on each count of violation.
• Gillette suffered a lost of at least 1.5
  million.

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Legal Issues

• The Economic Espionage Act of 1996
• Signed by President Clinton on October 11, 1996.
• Made theft and misappropriation of company trade
  secrets illegal.

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Professional Issues

• Gillette
• Want to keep their trade secrets private.
• Need trade secrets to remain competitive.
• Using ideas to stay innovative.
• Competitors
• Need ideas to stay competitive.
• Save time and money on RD.
• Davis
• Worried about job security.

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Ethical Issues

• Should we use knowledge we obtained from work for
  personal gain?
• Should companies perform background search before
  accepting submissions from designers?
• The competition is just going to end up copying
  it after the new shaver is released.

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Stake Holders

• Gillette They spent time and money in RD for
  the new razor.
• Davis He was worried about his job.
• The Competition They need as much as possible
  to remain in the market.
• The consumer The quality and price of the
  shaver would change.

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Possible Actions

• Davis could have ask for re-evaluation of his
  performance on the project.
• Competition
• Make their own products.
• Join forces.
• Reverse engineer.
• Keep no secrets.

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Consequences

• If everyone designed their own products, there
  will be more choices for the consumer, leading to
  better designs.
• Joining forces might not lead to high profit.
• If companies kept trade secrets, the similar
  technologies might not develop as fast.
• However, with no secrets, competition will be
  non-existent.

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Individual Rights/Fairness

• Davis had a right to protect his financial
  security.
• The consumers have a right to choose.
• Gillette has the right to profit from their
  innovations.
• Gillette has the right to their designs.

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Common Good

• Keeping trade secrets would give people more
  choices.
• It can make people more comfortable.
• Price drop.
• With no secrets, other innovations can come from
  it to help advanced society.

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Final Decision

• Davis should not have sold Gillettes secret to
  the competition.
• The competition should have been cautious.
• The result was a lose lose situation for both
  Gillette and Davis.