• WisBusiness

FBI expert warns biotech firms of threat from espionage
5/8/2013

Foreign espionage made headlines in the Badger State last month when a Chinese scientist was arrested for allegedly stealing cancer research at the Medical College of Wisconsin.

But that’s just the tip of the iceberg, a FBI counter-intelligence expert told a meeting of biotech officials Tuesday morning.

Speaking to BioForward members at Madison’s University Research Park, Special Agent Byron Franz said U.S. companies and universities lose more than $250 billion worth of intellectual property each year to foreign competitors and government spy agencies.

And China, which has emerged as this country’s main economic rival in recent decades, is the main economic espionage culprit, he said, with Russia coming in second.

On Monday, the Obama administration accused China’s military of mounting cyber attacks on U.S. defense contractors and government computer systems, motivated in part by a desire to map “military capabilities that could be exploited during a crisis.”

Franz, a Russian speaker who has a UW-Madison law degree, said the Medical College of Wisconsin case broke after FBI agents met with college officials who were concerned about espionage. He declined to discuss the case, however, and would not speculate about possible additional arrests.

Franz, who has 16 years of experience working with trade-secret theft, said the FBI wants to work with biotech firms large and small to help them protect their intellectual property. And he said many other countries -- not just China and Russia -- would like to get their hands on U.S. firms’ inner workings.

“The vast importance of the things you are developing for our economy ... is not lost on us,” he said. “The FBI realizes the precious resources you are creating with your inventiveness and ingenuity. Unfortunately, our competitors know you’ve got nifty stuff and they don’t want to develop it themselves.

“So what are they gonna do?” he asked.

“They’re going to steal it,” explained Franz, who listed a number of ways -- both high- and low-tech -- that companies and governments use to extract information from computers, phones, printers ... and people.

“Your industry is under attack and they are out to get you,” he said. “But we are here to help protect you.”

Franz urged scientists and biotech executives to continue to invent, communicate with each other and attend foreign conventions, “just do it smartly.”

Using an exaggerated Russian accent, he said a KGB spy operative was recorded in the 1980s telling a Cuban counterpart that the Soviet Union only needed to recruit three U.S. generals to defect to win the Cold War.

They were General Electric, General Motors and General Dynamics.

“This is what we’ve always faced,” he said of the KGB, which has since been renamed. “Their job is and always has been to steal stuff, your stuff. And don’t think it’s all a spy game about stealing missiles and tanks.

“It’s where the money counts,” he said. “The Soviets appreciated the significance of the bottom line. Every time this stuff gets stolen, people lose their jobs and our economy is weakened. We become a second-rate nation, bit by bit.”

He said many companies do not take steps to protect themselves because they think they are too small or not important enough to matter. And even when they do put on some controls, they are inadequate so “they are still ripped off,” he said.

“Make no doubt about it, your stuff is being targeted,” he stated. “We have to protect those gestating ideas of tomorrow.”

Franz said it will take a partnership between private industry, academia and the FBI to stop this threat.

“We’re in this together,” added Franz, who said he’d met with UW-Madison Chancellor David Ward, as well as the heads of the Medical College of Wisconsin, UW-Milwaukee, Marquette and many companies to urge them to bring any concerns to his agency.

He said both outsiders and insiders are targeting companies and researchers.

“And they don’t wear ninja costumes or wear a head piece and go into file drawers,” he said. “I wish they were because it would make my job and your job easier.”

The outsiders, he said, are foreign governments and companies, and even domestic competitors.

“Make no bones about it, foreign governments are directly in bed with their corporations,” he said. “If you are traveling abroad and you make a visa application that says you work for XYZ Biotech Corp., that’s not being ignored.

“They have months to prepare before you go over there, they have time to peruse your web site. They are targeting you. There is no church-state division in most countries for stealing this stuff.”

-- By Brian E. Clark
For WisBusiness.com

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