The Dashboard

Curbing Corporate Cloak-and-Dagger

Executives who hear of other companies losing trade secrets through corporate espionage shouldn’t feel too smug. With former intelligence agents working for the competition, the development of high-tech electronic spying equipment and the availability of big bucks, any company could become the victim of corporate spies — possibly without even knowing it. Here are some Web sites on the subject:

Beirne, Maynard & Parsons
www.bmpllp.com/files/1152638118.pdf

Glenna Rodgers and Scott D. Marrs write in “Trade Secrets and Corporate Espionage,” published in ACC Docket, about the importance of protecting company secrets. The detailed article includes sidebars with a sample employee confidentiality agreement and a sample confidentiality policy reminder, as well as a sample exit interview acknowledgement.

The SANS Institute
www.sans.org/reading_room/whitepapers/engineering/512.php

“Corporate Espionage 201″ is a white paper that details some of the techniques used by corporate spies. The article gives some practical advice on how to avoid becoming the victim of spying eyes. “If confidential material or valuables must be left in a hotel room, businessmen should not keep them in the room safe. The safe’s key is rarely changed and once it has been copied, that safe can be opened by anyone who can access the room. A possible alternative to the room safe is to place valuables in a zip lock bag and pin it to the very top, reverse side of the drapes, making sure the bag is NOT visible from the outside of the window.”

Business Week
www.businessweek.com/technology/content/sep2006/tc20060929_557426.htm

The article titled “Spy vs. Spy: Corporate Espionage” includes a slide show on high-tech spying. One of the devices discussed is a $500 wireless camera hunter and viewer that can detect any hidden cameras or bugs that have been planted in a conference room or office. The device also can show on its screen what is being recorded by the detected camera.

KMWorld
www.kmworld.com

A search for “corporate espionage” on this site returns a detailed two-part discussion. “Many companies support multimillion-dollar intelligence programs and covert research directed at their business competitors. Attacks can be single events or ambitious campaigns sustained over time. The line between legal and illegal intelligence gathering is hazy. Case studies and lawsuits are imperfect guides, because companies that have lost information are loath to admit they were victimized. And because a number of organizations within a company may monitor competitors, corporate governance is unlikely to catch — or stop — every effort that crosses the line,” the first part reads.

Portfolio.com
ww.portfolio.com

Searching this site for “corporate espionage” provides a link to an article titled “Spy vs. Spy” that tells of corporations’ reliance on former government intelligence personnel. “From New York and London to Moscow and Beijing, today’s corporations are venturing into a netherworld populated by former agents who have been schooled in the arts of detection and deception by the C.I.A., the F.B.I., Britain’s secret services, and the former Soviet Union’s K.G.B.”

About.com
bizsecurity.about.com/od/physicalsecurity/a/Espionage.htm

One of the suggestions in “Top 10 Ways to Combat Corporate Espionage” covers security audits: “Tests, assessments and audits determine how the security policies, processes, technology hold up if you really are targeted by a bad guy. A third party assessment will gauge how easy it would be for an intruder to walk in your front door and leave with all your company assets. Physical security audits are as important as digital security assessments.”

–Joe Borders

Clause for Concern

Arbitrate or litigate? Parties now need to make a choice and stick with it, thanks to a May 2 decision from the Texas Supreme Court, Perry Homes, et al. v. Robert E. Cull, et al. The upshot is that parties that delay too long cannot reap the benefits of the discovery process during litigation, then use facts gleaned in that process to better their chances of a successful outcome in arbitration. In the 5-4 decision, the high court hands a victory to the defendant-businesses — Perry Homes and two warranty companies — and for the first time interprets what constitutes a waiver of arbitration, their attorney says. According to the Texas Supreme Court’s opinion in Perry Homes, in 1996, the Culls bought a house from Perry Homes for $233,730. A home warranty the Culls purchased from Home Owners Multiple Equity Inc. and Warranty Underwriters Insurance Co. included a broad arbitration clause, providing that all disputes the Culls might have against Perry Homes or the warranty companies were subject to arbitration. Over the next several years, the home had structural and drainage problems. When the Culls sued the defendant-businesses in state district court in 2000, the warranty companies (but not Perry Homes) immediately requested arbitration. The Culls opposed it, and none of the parties pressed the trial judge for a ruling on the arbitration issue. After most of the discovery was completed and the Culls’ suit was set for trial, the Culls changed their minds about litigating and asked the trial judge to compel arbitration. On Dec. 6, 2001, four days before trial, the judge ordered arbitration, because the defendant-businesses had not shown their case was prejudiced by their participation in pretrial proceedings. A year later an arbitrator awarded the Culls $800,000. The defendant-businesses asked the trial judge to vacate the award, arguing that the case should never have been sent to an arbitrator, because the plaintiffs had proceeded too far in the litigation. The trial court declined to vacate the arbitration award, as did Fort Worth’s 2nd Court of Appeals. The defendant-businesses then appealed to the Texas Supreme Court. In a majority opinion, Justice Scott Brister wrote that the Culls — who wanted to avoid the delays of an appeal — waited too long to compel arbitration, thereby waiving that option and prejudicing the defendant-businesses. The high court vacated the award and remanded the case to the trial court. The plaintiffs “got extensive discovery under one set of rules and then sought to arbitrate under another. They delayed disposition by switching to arbitration when trial was imminent and arbitration was not,” Brister wrote for the majority. Referring to the waiver-of-arbitration issue in Perry Homes, Geoffrey Bracken, a partner in the Houston office of Gardere Wynne Sewell who represents the defendants, says, “The problem with Texas jurisprudence up to this point in time is you’ve had [appellate courts define] what’s not waiver, but you never had the highest court in the state articulating what is waiver, particularly in regard to a plaintiff.” He adds. “From that standpoint, it’s a pretty noteworthy decision.” But Thomas Michel, a partner in Fort Worth’s Griffith Jay & Michel who represents the plaintiffs, says he is disappointed with the decision. “The majority’s opinion states that there was prejudice without pointing to any prejudice in the record,” says Michel, who adds that his clients are still deciding whether to ask the high court for a rehearing or to go back to the trial court for trial.

–John Council