Asian business fear former employees, consultants are most likely to steal secrets

Despite a number of high profile hacking cases in recent months, corporates in Asia are most fearful of trade secrets being stolen by former employees, consultants and suppliers, showing that inside knowledge is still a prized commodity.

In a new Baker McKenzie report, The Board Ultimatum: Protect and Preserve,  which examines the role of trade secrets in today’s corporate environment, companies in Asia were the most concerned globally about ex employees stealing and sharing trade secrets (35%), while a further 28% said their relationships with consultants and suppliers posed the greatest threat of trade secret theft. This compared with just 18% who said cyber criminals/hackers were their biggest concern.

The report, which surveyed more than 400 senior executives globally, including 116 in Asia Pacific, found that the vast majority of corporates globally said trade secrets and IP played an important or essential role in their brand value and strategy, and none more so than in Asia, where a full 85% of respondents saw trade secrets and IP as core to their business.

The issue of trade secret and IP protection has been elevated to a top five boardroom concern by 40% of businesses surveyed in Asia. And of the key areas of IP to be protected, companies clearly saw trade secrets as more important than either trademarks, patents or both.

However, the survey also gave cause for concern in terms of the levels of protective measures being taken.

A fifth of respondents in Asia already had confidential information stolen, while another 13% did not know if they had experienced trade secret theft or not. In Asia, there was also the greatest demand for trade secret protection and enforcement to be strengthened by local authorities, and also in key markets including China and India.

Meanwhile, less than a third of businesses kept both an inventory of trade secrets and a plan for how to manage breaches.

Say Sujintaya, Head of Intellectual Property, Asia Pacific, Baker McKenzie, said the attention that companies give to protecting their trade secrets could mean the difference between success and failure.

“While trade secret theft does not often hit the headlines as it is clandestine and sometimes not immediately apparent, when companies clearly lose a long held advantage to a local or international competitor, it is often able to be traced back to an incident of trade secret theft. There are very practical ways that companies can protect themselves, including identifying exactly what trade secrets the business holds, and the value of these secrets. It is then a question of managing access, ensuring contracts with employees and contractors are watertight, and protecting computer networks from a range of cyber threats.”

However, companies were today unlikely to be able to protect against the threat of sustained cyber attacks on their own.

“Companies are on the front line of the battle because they are the victims,” said David Lashway, co-chair of Baker McKenzie’s Global Cybersecurity Practice. “They do have an obligation to identify and protect trade secrets. But if a nation state actor has prioritized stealing their trade secrets as part of its national agenda for economic growth, the idea that a company is going to be able to successfully protect itself by itself is challenging to say the least.”

Recognizing their growing economic importance, the world’s largest economies created new laws to protect this type of valuable information — the US Defend Trade Secrets Act and the EU Trade Secrets Directive, as well as China’s new Cybersecurity Law. All of these laws reinforce the fact that corporate executives can no longer ignore their obligation to safeguard their trade secrets.