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Economic espionage has captured the attention of the United States government as a potential threat to the country's prosperity and national security. One court case involving an engineer stealing trade secrets from his employer's system and sharing them with a competitor after leaving the company underlines the importance of protecting intellectual property (see right-hand box for details of the case).

Silicon Valley Engineer Stole Trade Secrets by Copying them onto a Laptop

A California project engineer was convicted of stealing trade secrets and sharing them with a competitor he later obtained a job with.

Suibin Zhang was sentenced on February 25 following his conviction on five felony counts of theft of trade secrets by a federal district judge.

Evidence at trial showed that Zhang, 44, of Belmont, California, was employed as a Project Engineer at Netgear Inc., in San Jose. His position gave him access to the secure database of Marvell Semiconductor Inc., which supplied some of the switches and transceivers used in Netgear products.

On March 8, 2005, Zhang accepted a position at Broadcom Corporation (Broadcom), which is also Marvell's chief competitor. Beginning the very next day, March 9, 2005, and continuing on two other days before he left Netgear, Zhang used his Netgear account to download and steal trade secret information found in dozens of documents, datasheets, hardware specifications, design guides, functional specifications, application notes, board designs, and other confidential and proprietary items from Marvell.

Zhang loaded the Marvell trade secrets onto a laptop issued by Broadcom, where they continued to reside until the FBI served search warrants at Zhang's home and at Broadcom and took possession of his laptop.

Zhang was sentenced to serve three months in prison, to be followed by a three-year term of supervised release. Among the conditions of supervised release are that he will perform 200 hours of community service. The defendant was also ordered to pay $75,000 in restitution to the victim, Marvell Semiconductor Inc. on or before May 31, 2013.

Judge Ronald M. Whyte stated that Zhang's conduct was "unacceptable" and that he hoped his sentence would carry a "strong deterrent message."

Earlier, Judge Whyte found Zhang guilty of three counts of theft and copying of trade secrets for downloading the trade secrets from a secure database, one count of duplication of trade secrets for loading those trade secrets onto a laptop provided by his new employer, and one count of possession of stolen trade secrets.

"The protection of intellectual property rights, especially in Silicon Valley, is of vital importance to the economic security of our region," said United States Attorney Melinda Haag. "I certainly hope the court's sentence sends a strong message that in addition to the personal, professional, and financial costs, which are significant in themselves, these offenses result in prison time."

Although companies take steps to protect their trade secrets and intellectual property, it is often not enough to prevent critical information from being stolen.

Trade secrets must be protected. If a company fails to limit trade secret access to only those with a "need to know," a defense attorney can attempt to place doubt in the minds of a jury regarding the defendant's guilt. In other words, if you don't take steps to keep a trade secret a secret, you may lose the rights to it.

Make sure you have strongly worded non-disclosure agreements, as well as other policies and procedures concerning your ownership of trade secrets and proprietary company information. These agreements should be signed by employees indicating that they read and understand them. Outside contractors that need access to sensitive business operations should also sign confidentiality agreements.

Here are some other best practices that can also help prevent intellectual property theft:

  • Monitor employees' e-mail as well as the frequency and amount of data that they access on company's servers. Some companies also disable the USB ports on employees' computers using a range of tactics from squirting glue into the port, to physically removing the connection.

  • Appropriately identify your company's intellectual property. This may be harder than it sounds since your assets may not be clearly defined. Patented technology is obviously a form of intellectual property. However, what constitutes a trade secret is less clear. Contact your attorney for answers as well as steps your company needs to take to stake claim to a trade secret in a court of law.

  • Determine how effectively your company is in protecting its intellectual property. Before changes can be made to the way your company guards its intellectual assets, you must first determine what measures currently exist. Protecting intellectual property requires aligning people, processes and technology in an effective, fully integrated anti-theft program. Assess your current program, and then develop a list of improvements to be prioritized and implemented.

  • Make sure you're ready to respond. In the event that intellectual property is stolen, who within the organization will coordinate the company's response? When will the board be notified? How will you avoid alarming employees? These are all important questions to answer before a potential theft takes place.

  • Are your people aware of potential threats? In most cases when intellectual property is stolen, an employee is involved in the process. To help combat theft, make sure executives, senior management and frontline employees are fully aware of what constitutes the company's intellectual property as well as what they are expected to do to ensure its protection.

    Communicate with your staff some of the steps your organization is taking to prevent, detect and investigate intellectual property theft. Doing so heightens the perception by employees that if they attempt to steal intellectual property, they will quickly be discovered.

  • Are you sharing too much information with third parties? Companies inadvertently share elements of their intellectual property with potential employees, customers and even the media. Prepare an inventory of the touch points that the company has with third parties and determine what, if any, details about your intellectual property might be unintentionally making their way into the public domain.

    Watch what employees disclose at industry trade shows. Review technical literature, service manuals, press releases and other material distributed outside the company. Similar reviews should be made of filings with the SEC or patent applications.

These are only some of the steps you can take to secure your company's intellectual property portfolio. Protection can only be accomplished if your company invests the time and effort to implement a fully integrated program.

As the case in the right-hand box shows, an employee can steal vast amounts of intellectual property. Some employees will always find the path of least resistance to commit intellectual property theft. Invest the time today to uncover the paths before your employees steal information that is critical to your success and survival.


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