1st Edition

Trade Secret Theft, Industrial Espionage, and the China Threat

By Carl Roper Copyright 2014
    320 Pages 14 B/W Illustrations
    by CRC Press

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    Although every country seeks out information on other nations, China is the leading threat when it comes to the theft of intellectual assets, including inventions, patents, and R&D secrets. Trade Secret Theft, Industrial Espionage, and the China Threat provides an overview of economic espionage as practiced by a range of nations from around the world—focusing on the mass scale in which information is being taken for China's growth and development.

    Supplying a current look at espionage, the book details the specific types of information China has targeted for its collection efforts in the past. It explains what China does to prepare for its massive collection efforts and describes what has been learned about China's efforts during various Congressional hearings, with expert advice and details from both the FBI and other government agencies.

    This book is the product of hundreds of hours of research, with material, both primary and secondary, reviewed, studied, and gleaned from numerous sources, including White House documentation and various government agencies. Within the text, you will learn the rationale and techniques used to obtain information in the past. You will see a bit of history over centuries where espionage has played a role in the economy of various countries and view some cases that have come to light when individuals were caught.

    The book supplies an understanding of how the economy of a nation can prosper or suffer, depending on whether that nation is protecting its intellectual property, or whether it is stealing such property for its own use. The text concludes by outlining specific measures that corporations and their employees can practice to protect their information and assets, both at home and abroad.

    China: The Red Dragon of Economic Espionage
    Protecting US Intellectual Property Overseas
    Background of the Problem
    London Speaks Out
    What Does China Desire to Be?
    The US Stand on the Nation’s Economy
    China’s Industrial Espionage
    Project 863
    Guidance Projects
    National High-Tech R&D Program
         Getting the Data
         Economic Collection and Industrial Espionage
    A US View—Background of the Problem

    We Are Not Alone: Economic Espionage and the World
    Examples of Attempts to Obtain Economic Information
    Renewed Focus on China

    The Background of Economic Espionage
    Espionage as a Means of Nation Building

    PRC Acquisition of US Technology: An Overview and Short History
    The PRC Government Structure
         COSTIND: The CCP’s Use of Corporations for Military Aims
    CCP Supremacy over the State, the PLA, and the Economy
    Development of the CCP’s Technology Policies
    The 863 and Super 863 Programs: Importing Technologies for Military Use
    The 16-Character Policy: "Give Priority to Military Products"
    The PRC’s Use of Intelligence Services to Acquire US Military Technology
    Overview of Methods Used by the PRC to Acquire Advanced US Military Technology
    Acquisition of Military Technology from Other Governments
    Joint Ventures with US Companies
    Acquisition and Exploitation of Dual-Use Technologies
    Front Companies
    Direct Collection of Technology by Non-Intelligence Agencies and Individuals
    Illegal Export of Military Technology Purchased in the United States
    PRC Incentives for US Companies to Advocate Relaxation of Export Controls
    China’s Efforts to Assimilate Advanced US Military Technology

    Chinese Product Piracy and Counterfeiting
    The Film Industry and Pirated DVDs
    China’s Loose IP Protection Concerns
    IP Theft
    IP Rights
    The Plight of the Copyright Industries Due to Piracy in China
         The Business Software Industry
         The Motion Picture Industry
         The Entertainment Software Industry
         The Book Publishing Industry
         The Recording Industry
         Congressional Hearings on Chinese Piracy
         Breadth of the Counterfeiting Problem

    Who, What, and How China Targets
    Targeted Information and Technologies
    Methods Used to Conduct Such Espionage
    Other Economic Collection Methods
    Other Economic Collection Efforts
    Case Study of a Chinese Collector
    Other Interesting Cases of Chinese Espionage
         Case 1
         Case 2
         Case 3
         Case 4
         Case 5

    The China Spy Guide and Open-Source Information
    Chinese Intelligence Operations
    Chinese Intelligence Collection Organizations
         Chinese Collection Operations
         Chinese Intelligence Collection Trends
    Open-Source Collection
         Benefits of Open-Source Information Collection
         The Changing Nature of Open-Source Information
         Traditional Open-Source Assets
         Electronic Databases
         Commercial Imagery
    Closing Comments

    The Intelligence Cycle and Collection Effort
    Defining Intelligence
    Collection Disciplines
    Computer Intrusion for Collection Operations

    Corporate Rivals
    Nature of the Information

    Sources of Information
    Open Sources of Information
    Classified Government Information
    Paper Shredding
    The Direction of the Collection Effort

    The Economic Espionage Act
    Overview of the EEA of 1996
    Elements Common to 18 U.S.C. §§ 1831, 1832
    Specification of Trade Secrets
    Disclosure Effects of a Trade Secret
    Common Issues and Challenges in Trade Secret and EEA Cases
         Primary Objectives
         Three Parts to Trade Secrets
         Intellectual Property Cases

    The U.S. Response to Economic Espionage
    US Government Awareness
    NACIC Background and the Change to the Office of the NCIX
    An Expanded Outreach to the Private Sector
    No Electronic Theft Act
    Militarily Critical Technologies List
    Espionage and Illicit Acquisition of Proprietary Information
    Policy Functions and Operational Roles
    US Government Support to Private Industry
    Options for Consideration
    CI Community Efforts to Protect Technology

    The DOD View of IP Theft: A Trend Analysis of Reporting on Foreign
    Targeting of US Technologies
    Threat Entities
    DSS Key Findings
    Targeted Technology Concerns
    Overall DOD Concerns—A Summary

    Intellectual Property Rights: Patents, Copyrights, and Trade Secrets
    Types of Patents
    Trademark and Service Marks
         US Trademark Act and Trade Dress
         What Does a Copyright Protect?
    Trade Secrets
    Trade Secret Protection
    China’s IPR Enforcement System

    Internet Exploitation: The Web, Your Computer, Your IT System
    Federal Information Security Management Act
    Sensitive US Internet Traffic Sent to Chinese Servers
    China’s Thinking and Capabilities in Cyberspace
    The Deterrence Effect on the United States

    Protecting Your Data
    Espionage and Foreign Travel
    Elicitation: What Is It?
         Why Elicitation and What Is Its Appeal to Today’s Spy?
         Elicitation Response
         Your Response
         Tips on Deflecting Elicitation Attempts
    Elicitation: An Intelligence Collector’s Viewpoint
    Hosting Foreign Visitors
         Host Responsibilities
    Long-Term Foreign Visitors
    The Technology Control Plan
         Security Reporting Responsibilities
         Espionage Indicators
    Protecting Your IP Rights (IPR) in China
         China’s Current IPR Environment
         The Best Protection Is Prevention
         China’s IPR Enforcement System
         What the US Government Can Do in IPR Infringement Cases
    About Trade Secrets in China
    Strategy Targeting Organized Piracy
    Getting Help to Protect Your Rights
    Your Knowledge of Methods Used in Economic Espionage
         Unsolicited Requests for Proprietary Information
    Espionage Indicators
         Inappropriate Conduct during Visits
         Suspicious Work Offers
         Exploitation of Joint Ventures and Joint Research
         Acquisitions of Technology and Companies
         Co-opting of Former Employees
         Targeting Cultural Commonalities
    The Bottom Line for Protecting against Threats
    Security Precautions as a Business Enabler

    Source Documents and Other Resources
    Appendix A: The Dongfan "Gregg" Chung and Chi Mak Economic Espionage Cases
    Appendix B: Economic Espionage Killed the Company, The Four Pillars Enterprise Case
    Appendix C: Summary of Major US Export Enforcement, Economic Espionage, Trade Secret, and Embargo-Related Criminal Cases, 2007 to the Present
    Appendix D: Special 301 Report, China


    Carl A. Roper is a retired government official who—as a Security Specialist with the Department of Defense Security Institute (DoDSI)—was a lead instructor providing general and specialized security training across the spectrum of government agencies and industry. He developed the DoDSI Risk Management course and was instrumental in enhancing other courses. Mr. Roper is also a retired U.S. Army Counterintelligence Special Agent. As a professional author, he has written numerous magazine articles and security books. He holds a BA from The American University, Washington, D.C., and an MSA from Central Michigan University, and is currently a Security Consultant and Trainer.