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Trade Secret Theft, Industrial Espionage, and the China Threat


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Table of Contents

China: The Red Dragon of Economic Espionage
Protecting US Intellectual Property Overseas
Background of the Problem
London Speaks Out
What Does China Desire to Be?
The US Stand on the Nation's Economy
China's Industrial Espionage
Project 863
Guidance Projects
National High-Tech R&D Program
Getting the Data
Economic Collection and Industrial Espionage
A US View-Background of the Problem

We Are Not Alone: Economic Espionage and the World
Examples of Attempts to Obtain Economic Information
Renewed Focus on China

The Background of Economic Espionage
Espionage as a Means of Nation Building

PRC Acquisition of US Technology: An Overview and Short History
The PRC Government Structure
COSTIND: The CCP's Use of Corporations for Military Aims
CCP Supremacy over the State, the PLA, and the Economy
Development of the CCP's Technology Policies
The 863 and Super 863 Programs: Importing Technologies for Military Use
The 16-Character Policy: "Give Priority to Military Products"
The PRC's Use of Intelligence Services to Acquire US Military Technology
Overview of Methods Used by the PRC to Acquire Advanced US Military Technology
Acquisition of Military Technology from Other Governments
Joint Ventures with US Companies
Acquisition and Exploitation of Dual-Use Technologies
Front Companies
Direct Collection of Technology by Non-Intelligence Agencies and Individuals
Illegal Export of Military Technology Purchased in the United States
PRC Incentives for US Companies to Advocate Relaxation of Export Controls
China's Efforts to Assimilate Advanced US Military Technology

Chinese Product Piracy and Counterfeiting
The Film Industry and Pirated DVDs
China's Loose IP Protection Concerns
IP Theft
IP Rights
The Plight of the Copyright Industries Due to Piracy in China
The Business Software Industry
The Motion Picture Industry
The Entertainment Software Industry
The Book Publishing Industry
The Recording Industry
Congressional Hearings on Chinese Piracy
Breadth of the Counterfeiting Problem

Who, What, and How China Targets
Targeted Information and Technologies
Methods Used to Conduct Such Espionage
Other Economic Collection Methods
Other Economic Collection Efforts
Case Study of a Chinese Collector
Other Interesting Cases of Chinese Espionage
Case 1
Case 2
Case 3
Case 4
Case 5

The China Spy Guide and Open-Source Information
Chinese Intelligence Operations
Chinese Intelligence Collection Organizations
Chinese Collection Operations
Chinese Intelligence Collection Trends
Open-Source Collection
Benefits of Open-Source Information Collection
The Changing Nature of Open-Source Information
Traditional Open-Source Assets
Electronic Databases
Commercial Imagery
Closing Comments

The Intelligence Cycle and Collection Effort
Defining Intelligence
Collection Disciplines
Computer Intrusion for Collection Operations

Corporate Rivals
Nature of the Information

Sources of Information
Open Sources of Information
Classified Government Information
Paper Shredding
The Direction of the Collection Effort

The Economic Espionage Act
Overview of the EEA of 1996
Elements Common to 18 U.S.C. 1831, 1832
Specification of Trade Secrets
Disclosure Effects of a Trade Secret
Common Issues and Challenges in Trade Secret and EEA Cases
Primary Objectives
Three Parts to Trade Secrets
Intellectual Property Cases

The U.S. Response to Economic Espionage
US Government Awareness
NACIC Background and the Change to the Office of the NCIX
An Expanded Outreach to the Private Sector
No Electronic Theft Act
Militarily Critical Technologies List
Espionage and Illicit Acquisition of Proprietary Information
Policy Functions and Operational Roles
US Government Support to Private Industry
Options for Consideration
CI Community Efforts to Protect Technology

The DOD View of IP Theft: A Trend Analysis of Reporting on Foreign
Targeting of US Technologies
Threat Entities
DSS Key Findings
Targeted Technology Concerns
Overall DOD Concerns-A Summary

Intellectual Property Rights: Patents, Copyrights, and Trade Secrets
Types of Patents
Trademark and Service Marks
US Trademark Act and Trade Dress
What Does a Copyright Protect?
Trade Secrets
Trade Secret Protection
China's IPR Enforcement System

Internet Exploitation: The Web, Your Computer, Your IT System
Federal Information Security Management Act
Sensitive US Internet Traffic Sent to Chinese Servers
China's Thinking and Capabilities in Cyberspace
The Deterrence Effect on the United States

Protecting Your Data
Espionage and Foreign Travel
Elicitation: What Is It?
Why Elicitation and What Is Its Appeal to Today's Spy?
Elicitation Response
Your Response
Tips on Deflecting Elicitation Attempts
Elicitation: An Intelligence Collector's Viewpoint
Hosting Foreign Visitors
Host Responsibilities
Long-Term Foreign Visitors
The Technology Control Plan
Security Reporting Responsibilities
Espionage Indicators
Protecting Your IP Rights (IPR) in China
China's Current IPR Environment
The Best Protection Is Prevention
China's IPR Enforcement System
What the US Government Can Do in IPR Infringement Cases
About Trade Secrets in China
Strategy Targeting Organized Piracy
Getting Help to Protect Your Rights
Your Knowledge of Methods Used in Economic Espionage
Unsolicited Requests for Proprietary Information
Espionage Indicators
Inappropriate Conduct during Visits
Suspicious Work Offers
Exploitation of Joint Ventures and Joint Research
Acquisitions of Technology and Companies
Co-opting of Former Employees
Targeting Cultural Commonalities
The Bottom Line for Protecting against Threats
Security Precautions as a Business Enabler

Source Documents and Other Resources
Appendix A: The Dongfan "Gregg" Chung and Chi Mak Economic Espionage Cases
Appendix B: Economic Espionage Killed the Company, The Four Pillars Enterprise Case
Appendix C: Summary of Major US Export Enforcement, Economic Espionage, Trade Secret, and Embargo-Related Criminal Cases, 2007 to the Present
Appendix D: Special 301 Report, China

About the Author

Carl A. Roper is a retired government official who-as a Security Specialist with the Department of Defense Security Institute (DoDSI)-was a lead instructor providing general and specialized security training across the spectrum of government agencies and industry. He developed the DoDSI Risk Management course and was instrumental in enhancing other courses. Mr. Roper is also a retired U.S. Army Counterintelligence Special Agent. As a professional author, he has written numerous magazine articles and security books. He holds a BA from The American University, Washington, D.C., and an MSA from Central Michigan University, and is currently a Security Consultant and Trainer.

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