Trade Secrets - How to Handle Information

Since the business owner must protect their trade secrets for a successful trade secrets case, I suggest reading The Financial Post's Andrew Crane discusses how to manage competitive intelligence

But it's not just in the glamorous high-stakes world of F1 where the spectre of industrial espionage raises its head. The American Society for Industrial Security suggests that U.S. companies lose more than US$50-billion every year in proprietary information and intellectual property. Some estimates put the figure even higher, at more than US$300-billion a year. Unearthing accurate statistics in this most sensitive of areas is of course fraught with difficulties, but it is clear that companies in Canada and other leading industrialized countries face similar risks.

Our research at the Schulich School of Business, conducted in partnership with the Institute of Business Ethics and the University of London, has been investigating the ethical challenges in competitive intelligence from those who know best - intelligence professionals themselves, and the people in their organizations whose responsibility it is to ensure compliance with ethical and legal standards. The questions we've asked them, about what can go wrong, why, and how firms can avoid getting into the ethical quagmire, have produced some striking insights.

Perhaps the most surprising finding is that among the troubling incidence of misrepresentation, manipulation, covert surveillance and theft, one of the most common ethical problems in competitive intelligence is the unsolicited discovery of a competitor's trade secrets. Managers in our study repeatedly recounted incidents where sensitive competitor information had been disclosed by customers, suppliers, or disgruntled former employees of their competitors. Sometimes these were not sent purposefully, but were accidentally conveyed by e-mail, or as one corporate lawyer put it, "the mysterious fax problem." Sometimes, simple eavesdropping of one's competitors at a trade show or on the plane can reap precious inside information. Quite simply, information insecurity is widespread, and there is no lack of competitors that might be tempted to take advantage.

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So what can firms do? Our research suggests a range of concrete actions. For example:

- develop clear guidelines and integrate competitive intelligence into the corporate code of conduct;

- extend guidelines to business partners and back up policies with targeted training to those most at risk;

- and facilitate regular reviews of competitive intelligence practices
and guidelines for all departments where competitive intelligence is an issue.

Remember that you can access my trade secret posts by clicking on the "Trade Secrets" link below.