In an apparently unprecedented power move, the intelligence chiefs from the so-called Five Eyes gathered on a stage at Stanford University in California last fall to fire a shot across the bow of China Inc. and the raging problem of intellectual property theft by state-linked firms. Citing a 1,300% increase in such investigations in the U.S. over the past several years, FBI Director Christopher Wray called the Chinese government the biggest threat to Western innovation.
All of which raises an intriguing governance question: How should boards, with their mandates to oversee risk management, differentiate unethical industrial espionage from legitimate competitive intelligence ? While that case is a clear instance of corporate wrongdoing—espionage seemingly endorsed by board leadership, no less—pinpointing unethical access to corporate secrets isn’t always so straightforward. As Sheppard points out, there are lots of ways companies gather information on their rivals that don’t quite fit into the realm of open-source data but isn’t theft, either. “There’s been reverse engineering of products for years,” he says, offering one example.
Calof shares another tactic: “I can sit at a booth at a trade show and write down every question I get at my booth and who it’s coming from. I’ll see a pattern in those questions. Why is that competitor at the workshop, at the guest speaker event, asking those four questions?” A rival’s new hires can offer yet another set of clues about the company’s direction, he says.
AI on its own, however, is only half a loaf for CI professionals, warns Calof. “The big thing with AI is not collection; it’s analysis,” he says. “For it to do a good job with analysis, it’s got to have clean data. And how does it get clean data? Well, we need people who can figure out what’s good and what’s bad. If you just go to the internet and scrape it, good luck.”
While it would be difficult to argue that published news stories in a company’s CI dossier on a rival are evidence of corporate espionage, the firm’s hands may not be completely clean if it’s using AI to obtain or analyze copyrighted content.
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