The question is vague regarding type of article – for example, a newspaper or magazine article or a more in-depth scholarly article from an academic or professional journal – so for purposes of discussion a February 2013 newspaper article will be used. [See “U.S. Seeks to Tackle Trade-Secret Theft by China,” Reuters, February 20, 2013; www.reuters.com/article/2013/02/21/us-usa-trade-secrets-idUSBRE91J0T220120221]
Theft of trade secrets – or proprietary information – has been a major problem for U.S. companies for decades. During the Cold War, the intelligence services of the Soviet Union and its satellites (e.g., East Germany) placed a great deal of emphasis on stealing American trade secrets to benefit their own industries and to incorporate sensitive technological information into weapon systems, thus both saving billions of dollars on research and development costs and rapidly and significantly improving the quality of their military hardware. In addition, many countries spy on each other for the purpose of attaining trade secrets that can be used to improve their own products and make them more competitive in world markets.
With the Cold War’s end, what is called “economic espionage” has not only continued, but has increased, especially with regard to China and the high priority it places on stealing trade secrets. Additionally, the process of globalization and elimination of trade barriers between nations has increased the flow of propriety information across national borders. Which brings us to the newspaper article. The Chinese intelligence services are extremely active in western countries, including the United States, as well as in Japan and South Korea. These activities extend to the Chinese military’s large cyber-espionage operation involving large numbers of computer technicians who specialize in hacking into the computer networks of privately-owned corporations. The Reuters article quotes U.S. Attorney General Eric Holder as stating that “a hacker in China can acquire source code from a software company in Virginia without leaving his or her desk.” The article describes a new initiative by the Administration of President Barak Obama to counter the threat of foreign, especially Chinese, economic espionage. The scale of the problem was expressed by former Director of Central Intelligence Michael Hayden: “You’ve got a nation-state taking on private corporations. That’s kind of unprecedented . . . We have not approached resolution with this at all.”
Another article that provides useful information on the problem of protecting trade secrets is at www.huffingtonpost.com/brad-reid/trade-secrets-may-be-lost_b_1518756.htm. This article involves court decisions regarding Fail-Safe and A.O. Smith, which battled each other in court regarding allegations of theft of trade secrets, and references the Uniform Trade Secrets Act that was established to define and protect proprietary information, a subject covered also in the attached eNotes document on “proprietary information.” This article discusses trade secrets from a domestic civil law perspective rather than focusing on the problem of economic espionage. In this particular case, the U.S. Court of Appeals for the Seventh Circuit decided that companies must hold themselves responsible for the protection of sensitive information by adopting basic measures, such as requiring the use of reciprocal confidentiality agreements.