Espionage a reality in the corporate world

Corporate espionage has always been in existence. Now it has just been professionalised. In 1811, American Francis Cabot Lowell travelled to England and ripped off the plans for the Cartwright loom, which he memorised while touring a factory. With it, Lowell brought the blueprints for America’s industrial revolution.

In order to have a clearer understanding of the key issues addressed in this instalment, it is imperative that we familiarise ourselves with the key terms synonymous with corporate espionage.

Confidential: items or information that are secret and to which access is limited to certain people within an organisation. Company documents often are marked confidential to denote that they are proprietary.

However, confidential information isn’t necessarily a trade secret. To be a trade secret, it also must have value to the company’s competitors. A confidential customer list, for example, wouldn’t be protected if the company’s clients were obvious to everyone else in the industry.

Copyright: an exclusive legal right to reproduce, publish and sell the matter and form of a literary, musical or artistic work. Some companies copyright instruction manuals and training videos.

Intellectual property ideas, processes, slogans or other intangible property that are created at an organisation and give it added value or an edge over competitors.

Non-compete agreement: a written agreement in which an employee agrees not to compete with his or her employer by working for a competitor or becoming a competitor, usually for a specified period. These agreements are often tied to pay or severance packages.

Non-disclosure agreement: a written agreement in which an employee agrees to keep specific information confidential during and after his or her employment, or suffer damages as specified.

Patent: a legal right or privilege that gives an inventor the exclusive right to make, use or sell an invention for a specified period of time. Patents can be obtained on products, but often on processes as well, such as a patented process to manufacture a new drug or toaster.

Trade secret: any formulas, ideas, customer lists, documents or knowledge that are proprietary to an organisation and generally not known in the industry. A company generally must make efforts to keep this information confidential and prove that the information gives it a competitive edge.

Trademark: a registered word or device (logo) that points to origin or ownership of merchandise to which it is applied and gives the owner the legal right to proceeds from making or selling it.

While corporate espionage may assume violation of any of above aspects, this article seeks to dwell more on corporate espionage involving trade secrets.

In today’s hyper-competitive, copycat global economy, protecting such trade secrets as formulas, processes, customer lists, ideas developed at work and other intellectual property has become a major concern for employers.

There are many reasons why. For one, today’s work force is highly mobile.

Moreover, Zimbabwean firms face increasingly competitive pressures as the recession lingers and budgets remain tight.

At the same time, corporate downsizing and cutbacks of the past three years have thrust droves of professionals back onto the job market. In many cases, experienced employees have had little choice but to go to work for a competitor or begin consulting in their field.

If they haven’t been educated about what protected trade secrets are (and sometimes even if they have), it is not unusual to find them using proprietary knowledge or information from their former jobs. It is hard to put something as intangible as a formula in someone’s head under lock and key.

How much of what they know is proprietary? How much of what’s in a person’s head belongs to him/her? Despite the difficulty, a growing number of employers are looking for new ways to protect what gives them an advantage, which is the possession and use of knowledge. Traditionally, this responsibility has fallen to corporate legal departments or outside lawyers. However, a handful of organisations have realised that safeguarding trade secrets goes beyond stopgap legal measures.

It is starting to be recognised as a classic human resources (HR) problem. I believe that HR managers can play a significant role in the protection of intellectual property. Why? The issue of safeguarding trade secrets is, at heart, a personnel issue.

Competitive advantage is built around knowledge, and knowledge is generated by people. It is important to manage not only the knowledge, but also the people who are creating it.

In many ways, the role HR departments can play in a corporate campaign to eliminate trade-secret theft is similar to their involvement with wrongful termination cases. Where the legal department handles an employee lawsuit and may explain the fine points of the law, HR personnel are responsible for making sure that an employer documents the reasons for firing an individual and handles the termination according to company policy and national statutes.

The HR department also attempts to help create an environment in which employees feel that their work is valued and that they are treated fairly. In the same vein, HR can ensure that employees are educated about what information is proprietary and that security measures are followed. HR staff can also follow up with employees who are departing to remind them of responsibilities and ensure that they are not taking information or property with them.

Finally, HR can help set up reward and compensation systems to give valuable employees due recognition of their achievements, reducing their need to look for this elsewhere.

However, in the zeal to protect their trade secrets, companies may neglect the other half of the equation — how to prevent their own employees from using proprietary data from other companies. Companies need to realise that misappropriating trade secrets can come back to haunt them. The best approach is for HR to deal with the issue while interviewing new employees.

lAnthony Jongwe is a Harare-based human resources consultant. He can be contacted on e-mail: workforcesolutions1997@yahoo.co.uk

Source: The Financial Gazette