Intellectual property theft and business continuity: a case study

Part two of an article in which Allen Johnson shows why intellectual property theft can be a genuine business continuity threat and offers some crisis management lessons from a real-life IP theft situation.

Recap
In part one, the main points were as follows:

- Our [Scenaris] client, a Value-Added Reseller of telecommunications switch technologies, had the majority of its northern office sales force defect to a major competitor, taking with them quantities of company confidential material.

- Leaving en masse on a Friday, they returned the next day and spent four hours in the offices of their employer; where they removed information of considerable commercial value and deleted e-mails, documents and files.

- With our help, the client had developed and implemented a crisis communications strategy, sending an appropriate message to all interested audiences.

- We recommended a lawyer whose specialization is employment law, to our client. The purpose was to pursue the 'traitors' through proper legal process, and our client engaged him.

- The 'traitors' included a 'mole', a young administrator, who they left behind and who kept them informed as to the intentions and actions of our client in pursuing them.

And questions emerged as to how to progress the situation to win:

1. What to do with the traitors?

2. What to do with the 'mole'?

3. How to manage the crisis so as to limit the damage?

4. How do we keep the matter quiet?

What to do with the traitors?
The lawyer advised of how we could gain an insight into what had been taken and how it would be used. He advised against outright confrontation, because that would introduce the unnecessary expense of a clash of lawyers; something that would prolong the process and increase costs. He also knew the firm of lawyers that represented the firm to which the traitors had defected. He advised that the legal firm in question was aggressive and would likely take an offensive approach which would not help us one iota. Instead of going in to attack, he advised professional surveillance; and in so doing, our story slips into the shadowy world of covert activity. And because the salesmen saw and heard nothing, it lulled them into a false sense of security and they started to make mistakes.

Whilst this was occurring, computer forensic technicians were finding and rebuilding files and records that had been deleted from the salesmen's computers. The catch included e-mails to each other, letters to their intended future employer, lists of confidential documents, entire databases, contact details, contractual information, internal memoranda, etc.; enough to make their intentions clear and undeniable.

The surveillance activity, on the other hand, produced a wide range of material. The world of 007 is more sophisticated than the films would have you believe! Rooms were tapped with microphones, meetings between salesmen and prospects were recorded from long range camera where window vibration provided the medium to pick up voice. Trash cans were searched for disposed material, and this proved to be the major source of damning information. The source of the stolen material was easy to prove with some of it being annotated by identifiable handwriting. This discovery gave clear insight as to how the traitors were using the information they had removed. In their boldness, they had been careless with the evidence which was now in our possession.

The lawyer was convinced that the easiest way to conclude matters was to undermine the bond between all conspirators and to do so at a speed that would be confusing. To break the bond between the defectors, he played a masterstroke by devising a plan that was to confuse and mislead them into thinking they would get away with it. Our client arranged a final meeting between his head of human resources and each person; all at the same time and on the same day. These people were still on 'gardening leave' and this was their exit interview, or so they were led to believe. The meeting was to be held at the northern office where the London-based senior managers were unlikely to attend and each culprit turned up at the appointed time, each prepared, each confident and all ready.

When they turned up, they were greeted by smiling faces and shown to a meeting room where they found not the head of human resources but his deputy manager, a mild m anne red, bespectacled lady of advanced years, her grey hair pinned and folded into a bun. There was an overt camaraderie between these conspirators and this was going to be a breeze for them. By their countenance their confidence was high. As they sat collectively in front of her and separated by a highly polished board room table, she asked if they would like coffee or tea, and with their declared preferences, she left the room.

Enter the full complement of the firm’s senior management from a door behind where these men were all seated, filing both sides of the table they smartly moved to the position the HR lady had occupied and sat down. They were all wearing black suits, crisp white shirts and black ties. They looked like mafia or funeral guests, call it what you will but the ‘uniform’ was intended to unnerve by visual impact, and it worked. This shock tactic instantly changed the mood. TC (the CEO) lifted the front cover sheet of a flipchart, revealing a complete list of accusations and invited them to comment. The ringleader took this bull by the horns and began an aggressive repost and insisted on the production of evidence. Our management team placed two flimsy files on the table and invited the accused to ‘come clean’ - this was their final chance. In the belief that these two small files represented the entirety of the evidence against them, they did no such thing; choosing instead to be even more bullish in responses. At this point, the door behind them again opened and four big boxes of materials were wheeled in by a large man who was immediately followed by the employment law lawyer. The boxes contained the collective efforts of the surveillance team and forensic technicians. A summary of the contents of each box was on top and read out aloud. The lawyer continued to further confuse them by ‘lawyer speak’ and then, with his smile now removed, he suddenly upped the ante to a £50,000 out-of-court settlement; which he suggested should be divided between the perpetrators, each in proportion to his direct involvement in the misdeeds. Each senior manager chose a defector and removed him to another room. This tactic completely confused them and severed their alliances at a stroke and they instantly turned on one another; each man doing his own deal. And the matter was settled, with the aftertaste of bitterness, feuding and betrayal between all defecting salesmen. After all, betrayal for personal gain was their driving force in the first place and what the lawyer had done was to use this behaviour by turning it in on them. The case was won.

Furthermore, these men were never going to now work together, thus their use to their new employer was also at an end. Two birds – and one stone.

What to do with the 'mole'?
She was approached, confessed and resigned. However, we got to understand that she had been promised riches aplenty and a new career by the ringleader if she stayed behind to gather and communicate intelligence. To cement her allegiance, she was also told by the ringleader that since she was part of the process, she could not sensibly report the treachery and expect to keep her job. The mole was naïve, vulnerable and trapped.

Her position was completely untenable but because she had been used covertly by both sides, her wrongdoings were known to only ourselves. We explained her position to TC and suggested that he keep her on and that she needed a clear understanding of how he felt about the matter, which he did. She confessed her part in sufficient detail that he knew there was nothing else she was hiding; and she was drowning in a sobbing remorse. She stayed.

How to manage the crisis so as to limit the damage?
Most damage limitation had already been done through the implementation of the crisis communications management process. The salesmen had now also signed an undertaking that they had returned or destroyed all materials and that they could not use any related material for a period of six months. The CEO of the company to which they had defected was made aware of the situation, something of which he confessed he was previously ignorant, although his confession was less than convincing.

How do we keep the matter quiet?
Despite a desire to the contrary, we did not keep it quiet. The only way to keep a secret is to tell nobody; and with twenty or so people in the loop, secrecy was an unlikely and untrusted outcome. Therefore, the managed and purposefully directed release of information proved the favoured option.

Journals and magazines that are industry specific, tend to be rightly focused on the technical subjects which are of interest to their targeted readership, in this case electronics engineers and the like. So when a story as juicy as this comes along, they behave like the tabloid press by sensationalizing the story. "Hold the front page!" And it was duly published front page material, with the traitors and their new employer being named and shamed and with a photograph of the smiling and victorious TC.

And as an added bonus, TC received phone calls from a couple of other competitor CEOs, acknowledging their respective competitive positions in the marketplace, and also congratulating him on his actions.

If I was the CEO of the company to which these salesmen defected, I would dismiss them without delay. Any advantage that these people may have brought with them, was too dangerous, too contaminated and rendered useless. The damage they inflict is too severe, and too lasting. Furthermore, they could repeat their treachery.

As an odd twist of fate, TC’s P.A. left to start a family and the ex-mole was approached to fill the vacancy. She is now TC’s P.A. and if you wanted breathing evidence of unswerving loyalty, she is a shining example.

Justice served on the unjust still has a place, as does compassion.

The employment lawyer became the new external lawyer for TC’s company, displacing the incumbent legal firm and as an added bonus, the firm to which the salesmen were defecting was so impressed, that they hired him too.

And as for us, the rest of the project was boring by comparison, but there was immense satisfaction for a job well done, and we raised a glass or two.

Allen Johnson
Director, Scenaris Ltd
www.Scenaris.co.uk

•Date: 7th July 2006 • Region: UK/World • Type: Article •Topic: Crisis management
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