Economic Espionage and Cybercrime: Evidence and Strategy

Lead Research Organisation: Goldsmiths College
Department Name: Inst for Creative & Cultural Entrep ICCE

Abstract

Each year, criminals steal an estimated £280 Billion of secret information. These crimes are hidden, with the perpetrators potentially thousands of miles away. Where does this crime happen? In the cyber world. Cyber criminals target valuable company assets, as they hack computers and bypass security systems to steal confidential business information, prototype designs, strategic bid information and customer lists. These assets are collectively known as trade secrets, as they derive their value from their secrecy. When this theft is done to benefit foreign countries, it is known as economic espionage. Concerned governments and companies are effecting important changes to combat this problem. Yet, despite the huge economic impact of these thefts, very little is known about them. This research seeks to address this lack of knowledge by investigating data on the theft of trade secrets to understand their economic impact.

Using a unique source of data, this research examines what is actually happening in cybercrime. Analysis of information from court cases generates a systematic understanding of what is stolen, who the criminals are, and how this affects victims and the economy as a whole. By definition, the stolen trade secrets are secret, and therefore very difficult to investigate. This project uses the rare insights and information found in court cases to tease out a better understanding of this cybercrime.

Over the course of this project, a team of researchers will collect and analyse court data. The researchers will use statistical and other analytical techniques to create a robust understanding of trade secret theft and its implications. These findings will be publicised using conferences, seminars, academic papers and social media, so that groups and individuals interested in these topics can engage with this project and the research team.

This research will benefit businesses, policy makers, researchers and the general public. Businesses will have a better understanding of the value of their trade secrets and how best to protect them. Policy makers will be able to develop better policy as the project will generate evidence to ground economic insights and objective analysis into action. These improved policies, which create mechanisms to protect assets, will benefit the economy as a whole, as law and policy will be better tailored to the actual, as opposed to our current theoretical, situation.

Researchers and innovators, from the fashion designer working on their next collection, to the aerospace engineer developing a new aeroplane, will be able to better protect their valuable prototypes, software programs and other trade secrets. Researchers who focus on cyber security and trade secrets themselves, will have improved insights leading to better cyber security systems designs, data to test social policy and estimates of the value of trade secrets. Legal scholars will have access to a rich source of information to combine empirical analysis with theoretical approaches.

Finally, the general public will benefit from enhanced security and improved policy environment. Improved cyber security means better protection of personal data. The policies informed by this research will encourage innovation. Innovation improves lives, as we enjoy new fashions, advanced aeroplanes and new medicines.

However, one group is not likely to benefit: the would-be thieves and corporate spies who target trade secrets.

Planned Impact

This project addresses the UK's £27B annual loss resulting from cybercrime. It is designed to positively impact the economy and innovation. It does so by addressing policy makers, who are the government figures responsible for development of the regulations and laws that govern the economy. A second important group who will benefit from the research are the collective users and researchers of trade secrets and cyber security. Finally, the research speaks to the wider group of the general public.

Trade secrets are a mechanism to protect company secrets like algorithms, recipes (e.g. the Coca-Cola formula), prototypes and customer information. As our economy becomes more digitised, these valuable secrets are increasingly stored in the cyber world and are vulnerable to theft and the loss of secrecy. This project collects court data on cases of cybercrime and trade secrets theft to provide evidence of the real-world impact of this crime. By investigating these at a systematic level, we will have better understanding of trade secrets, their theft and cybercrime, to create better policies, strategies and foster an innovative cyber world.

At a very broad level, this research addresses innovation. Innovation is an important means to drive economic growth. It generates new knowledge, leading to new medicines, better cell phones and new ways of doing things. Trade secrets are an important mechanism to protect innovation as they allow innovators to make money from their research and development. If, for example, a company spends millions of pounds developing safer car tires, and the formula for the tires is stolen and made freely available, the company will have difficulty recouping its investment and may not be able to invest in further innovation. The loss of trade secrets, and the overall cost of cybercrime, inhibits innovation and therefore it is important we understand how this works.

In the cyber world, regulations such as law and government policy shape our interactions and the rules that protect us. The group responsible for developing these rules, policy makers, assess trade secrets and cybercrime challenges to develop a policy environment that accounts for the needs of businesses and consumers. However, we only have theories and anecdotes to inform this decision-making. Instead, this research's analysis will tell us what trade secrets are stolen, how much they're worth and who is stealing them. It is important policy is well informed, or it may have unintended, negative consequences on whistleblowing and employees' ability to move jobs. The research team will be in regular contact with policy makers to convey this information and make better policies.

A second important group is users and researchers of trade secrets. This group ranges from the companies owning the trade secrets, the researchers creating new trade secrets (such as the engineer design a new tire tread) and researchers who study trade secrets and cybercrime. Businesses will benefit from the better understanding of the value of their own trade secrets, and how to strategically protect their innovations. By knowing how trade secrets are stolen, strategies and technical solutions can be developed to better protect these assets. The project will collaborate with researchers and companies to shape the research.

A third group is the general public who contribute to trade secrets by providing personal data and information. When trade secrets are stolen, this can rob consumers of their privacy. The insights from this research will improve cyber security by giving specialists the information to design systems to prevent these thefts. As a result, the public can be more confident that their information and privacy is secure.

Collectively, the research will provide insights to create policies and strategies that encourage economic growth and benefit governments, businesses and consumers.
 
Description Bespoke Training Seminar for Policymakers
Geographic Reach National 
Policy Influence Type Influenced training of practitioners or researchers
Impact By creating a bespoke seminar based on my research examining the interaction of innovation with trade secrets and cybersecurity, I helped train policymakers in the area. The UK government is in the process of developing policy and negotiating trade agreements in the post-Brexit area. Innovation policy, trade secrets and cybersecurity are all on the cards for debate. Insuring that policy makers have a better grasp of the innovation aspects of these policies and their roles in day-to-day business activities, improves the bargaining position of the UK and promotes outcomes that will better serve the economic interests of the nation. This also impacts public institutions in developing their best practices for cybersecurity.
 
Description Informing UK IPO of Economic Evidence for Trade Secrets
Geographic Reach National 
Policy Influence Type Influenced training of practitioners or researchers
 
Description UK Intellectual Property Office (IPO) Research Expert Advisory Group
Geographic Reach National 
Policy Influence Type Membership of a guideline committee
Impact As a member of the REAG, I provide expert advice in identify and shaping research questions and projects to develop evidence for IPO policy-making. The IPO is responsible for the regulatory environment of Intellectual Property Rights (IPR), including: patents, copyright, trade marks, design rights and trade secrets. Impacts can be indirect, but the core impact is supporting the IPO in keeping IPR policy in line with economic goals and changing markets. A specific project currently is looking at the economic role and innovation of trade secrets. This work will inform the UK's position in trade negotiations and policy development in trade secrets. The report is heavily informed by the Fellowship and addresses cybersecurity aspects of this important intellectual asset.
 
Title Economic Espionage and the Theft of Trade Secrets 
Description Detailed catalogue and coding of US federal economic espionage and theft of trade secrets from 1996-2019. At the time of writing, the data collection is complete but coding for some topics is still pending. The database will be made public at the end of the project. The database has been developed with an informal collaboration with Jeremy Wu (George Washington.) 
Type Of Material Database/Collection of data 
Year Produced 2020 
Provided To Others? No  
Impact The database is currently being use to develop working papers and in the DeSilva and Searle (2019) conference paper mentioned in publications. 
 
Description Collaboration with Jeremy Wu (George Washington) for database quality control 
Organisation George Washington University
Country United States 
Sector Academic/University 
PI Contribution Development of the database of the US EEA (Economic Espionage Act) and DTSA (Defend Trade Secrets Act) criminal court cases using the court system provided a different methodology of data collection. The process identified more cases than previous methodologies. Additionally, the data collection provided a difference set of documents and observations by focusing on economic aspects of these cases.
Collaborator Contribution Dr. Jeremy Wu, adjunct faculty at George Washington University, has been identifying EEA and UTSA court cases as a personal project via media and US Department of Justice press releases. Dr. Wu's database contains more media coverage of these cases, and collects slightly different data - including sentencing and the date the case was announced. Dr. Wu has collaborated with the PI to expand and quality control both databases.
Impact The output is an improvement of the database listed in the Research Databases & Models section of this submission.
Start Year 2017
 
Description Criminal Law Reform Now Network member 
Organisation University of Birmingham
Country United Kingdom 
Sector Academic/University 
PI Contribution Providing an intellectual property and economics perspective to the Reforming the Computer Misuse Act Report. Cited as external contributors in final report. Contribution included PI and RA presenting and discussing preliminary findings and methodologies associated with the Economic Espionage and Cybercrime: Evidence and Strategy project. These were discussed at the Symposium - Reviewing the Computer Misuse Act 1990 held at the University of Sussex, August 4, 2017.
Collaborator Contribution Network is lead and run by a group of criminal lawyers, with significant expertise who were responsible for the drafting, editing and production of final report. The contribution of this network is vast.
Impact Providing an intellectual property and economics perspective to the Reforming the Computer Misuse Act Report. Contribution included PI and RA discussing preliminary findings and methodologies associated with the Economic Espionage and Cybercrime: Evidence and Strategy project. Cited as external contributors in final report.
Start Year 2017
 
Description Blog Posts on the IPKat 
Form Of Engagement Activity Engagement focused website, blog or social media channel
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact I have blogged extensively on my research through the IPKat, the world's largest and most popular English-speaking IP blog (subscriber list of 15,000 readers and 20.4k Twitter followers). This work is aimed at encouraging IP legal practitioner and policy communities to go beyond a legal academic analysis and embed economic thinking into their practice and governance, which in turn ensures that the interests of rights holders, creators and consumers are upheld.

Since the last reporting period, I have contributed five blog posts totally approximately 4,000 words including a piece addressing specifically the role of trade secrets in COVID research. Overall, my posts have amassed over 193,000 views and 370 comments as of July 2020, meaning both a large readership and high levels of engagement. To put this in context, over a similar period (2010-2017), the average LSE public facing blog post was read 1,400 times. My challenge to long held beliefs about the economics of trade secrets and intellectual property in general has increased awareness of the economic context of IP law and spurred self-reflection in the IP practitioner community.
Year(s) Of Engagement Activity 2017,2018,2019,2020,2021
URL https://ipkitten.blogspot.com/search/label/Nicola%20Searle
 
Description Contribution to International Institute for IP Management (IP) practitioners event 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Presented academic research on trade secrets on expert panel to an audience of IP management practitioners. As trade secrets and their cyber protection are increasing concerns for practitioners, the talk sparked discussion on the policy and management implications of these trends.
Year(s) Of Engagement Activity 2019
URL https://www.i3pm.org/
 
Description Department for Media, Culture and Sport Away Day 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Presented an overview of the economics of trade secrets and economic espionage project for the DCMS Digital Economy Analysis team. The discussion was a presentation of the project and then a question and answer session to explore themes and emerging questions in cybercrime.
Year(s) Of Engagement Activity 2019
 
Description Invited Presenter at The Center for Intellectual Property (Berkeley) 2020 Forum 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Panel member addressing trade secret management. I contributed to a discussion on academic and practitioner perspective looking at how changes to trade secret policy influence how businesses share knowledge, collaborate and use open innovation. I also responded to practitioner perspectives on trade secret transactions. The forum brings industry partners, colleagues, alumni, and invited guests to address the key industry, university, and policy challenges of the transformation to a knowledge economy. By bringing academic, and particularly economic, research into a community dominated by legal scholars and practitioners, I contributed to a fresh understanding of trade secrets in the digital economy, which allows policymakers to develop informed policy, make legal practitioners more aware of the larger context of their work and raise awareness of the interdisciplinary challenges to the study of the digital economy.
Year(s) Of Engagement Activity 2020
URL https://cipforum.org/program
 
Description Organised Trade Secrets panel at key policy + academic conference (EPIP) 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Organised a Trade Secrets panel at the European Policy in Intellectual Property (EPIP) annual conference in Berlin, Germany. The conference brings together policymakers and academics to discuss policy trends and policy-oriented research.
Year(s) Of Engagement Activity 2018
 
Description Presentation at the Managing Intellectual Property IP Enforcement Forum 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Professional Practitioners
Results and Impact Managing Intellectual Property, a prestigious publication and insights company, invited the PI to speak about the project at its annual enforcement forum in London to the audience of practitioners. Multiple participants requested further information and participated in subsequent research interviews.
Year(s) Of Engagement Activity 2017
 
Description Presentation to law firm 
Form Of Engagement Activity Participation in an activity, workshop or similar
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact Bespoke seminar to private law firm on the economics of trade secrets.
Year(s) Of Engagement Activity 2020
 
Description Second Workshop for Trade Secrets and Innovation for the UK IPO 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Second presentation on trade secrets and cybercrime research to the UK Intellectual Property Office's economists and policy specialists. As this is a globally changing policy area, my presentation helped the audience better understand the challenges policymakers will face.
Year(s) Of Engagement Activity 2020
 
Description UK Intellectual Property Office Seminar 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Presented trade secrets and cybercrime research to the UK Intellectual Property Office's economists and policy specialists. As this is a globally changing policy area, my presentation helped the audience better understand the challenges policymakers will face.
Year(s) Of Engagement Activity 2020