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DON'T WAIT UNTIL THE HORSE IS OUT TO CLOSE THE BARN DOOR

a.k.a. PROTECT YOUR ORGANIZATION'S PROPRIETARY INFORMATION & AVOID
BREAKING U.S. LAW

The other day one of our overseas clients called in a state of near
panic, to ask a question. At issue was whether they had unwittingly
violated U.S. law by transferring technical information to a joint
venture partner in a European country. After hearing a two minute
description, I was able to answer a resounding "Yes"! Such are the
dangers of operating in a global environment. The worst part is that
my client had been lead into their misdeed by following the well
intentioned advice of a Fortune 100 U.S. corporation. One that
certainly should have known better, but obviously does not. The
potential penalties for such errors are daunting and ignorance of the
law is not a defense. For a mere administrative ("civil")
infraction, the penalty is up to $100,000 per occurrence. For
intentional misdeeds, which are accorded criminal penalties, well,
let's not even go there.

Few business executives realize that these laws apply to a far wider
range of products and technical information than the obvious military
armaments. Computer software, including off-the-shelf commercial
office programs for instance, are in many cases subject to export
controls, as are many other seemingly commercial items having a
potential dual use.

In addition to the legal dangers, are those surrounding the loss of
proprietary advantage through the sharp practice of intelligence
gathering by competitors and even industrial espionage.
Interestingly, a recent report out of the U.K. placed France on equal
standing with Russia as an intelligence threat, not for military
secrets, but rather industrial espionage. Unfortunately, most
companies believe that these threats only apply to military, space or
ultra-high technology markets. Not so! Today, businesses in many
run of the mill industries are clearly at risk. Worse yet, many
still do not realize it even after they have been stung. Business
plans, customer lists, technology and other strategic assets can be
lost or severely compromised without even knowing it until long
afterward, if ever. Companies frequently wonder how their foreign
competitors suddenly "got so smart" or why they "seem to know every
move we make."

Both problems are serious, but is there a practical answer short of a
paranoia that inhibits healthy business openness, dialog and
partnering with customers, competitors and suppliers alike? Let's
look at a simple 5 Point Set of Policies that can effectively protect
your organization within just a few weeks and at little or no cost.

1.Education: Every employee of your organization and any independent
contractors working in the facility need to be briefed on the
requirement not to disseminate any technical and /or commercial
information to anyone outside the organization, except on a need-to-
know-basis. This includes everyone from the Chairman and CEO to the
maintenance staff. Few companies realize just how much significant
information can often be parlayed at the local watering hole.
Merely "hanging out at the local lunch or after work gathering spot"
is an old, but tried and true technique that has enabled many a
competitive intelligence gatherer to learn critical information. It
is amazing what one can learn from production workers or
administrative support staff over a beer or two, especially on a
Friday after work. Casual conversation can reveal information such
as production problems, order backlogs, customer and supplier names,
quality problems, new product developments and strategies, capital
expansion plans, hirings, firings, lay-offs and far more.

In addition, management, marketing, technical and contracts personnel
should all be thoroughly briefed on applicable government technical
data export regulations. This mandatory education for all should be
standard for new hires, as well as reviewed periodically at company
meetings and in newsletters and through other means.

Competitive intelligence gathering and industrial espionage are
issues that are seriously underestimated by most companies today,
especially in North America.

1.The Leadership should appoint a single Point Of Contact ("POC")
with an alternate in cases of their absence, who must approve the
export of any documentation. This includes data released in hard
copy, fax, electronically, verbally and by visit, either of foreign
nationals or during visits to foreign companies or government offices.

1.A written policy regarding the exchange of technical data between
the organization's U.S. and any off-shore company owned or
representative offices and personnel.

1.A written policy regarding employees taking technical and business
data, both hard copy and electronic, home or downloading it remotely
to work on after hours.

1.A written policy regarding what types of technical and business
data may be carried on laptop computers and/or downloaded when
outside of the country.

Although not exhaustive, this will form a good basis for beginning a
program to guard against export law violations and loss of
competition sensitive data.


About the Author

John Di Frances is the Managing Partner of DI FRANCES & ASSOCIATES,
LLC founded in 1983. Phone:1-262-968-9850
Fax:1-262-968-9854
208 E Oak Crest Drive
Wales, WI 53183
www.difrances.com
synergy@difrances.com



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