Top 10 Most Infamous Cases of Corporate Espionage
#10: IBM vs. Hitachi
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Back in the 1980s, there weren’t anywhere near as many manufacturers of computers as there are today. And when computers were large and expensive, that arguably made the competition even more intense. Perhaps that’s why Hitachi was willing to pay $648,000 to steal important data from IBM in 1981. The theft, in which several Hitachi executives were implicated, was so big the FBI joined the investigation, which culminated in a number of arrests. Hitachi wasn’t the only Japanese company trying to steal from IBM in the 80s; Mitsubishi was at it as well. They probably would have been better off just buying an IBM computer outright and taking it apart.
#9: Unilever vs. Procter & Gamble
Apparently, billion-dollar multinationals go dumpster diving, too. At least, that’s what Procter & Gamble paid outside operatives to do at Unilever’s Chicago offices in 2001. These spies were able to find out important information about Unilever’s upcoming marketing plans simply by searching through the company’s trash cans. However, P&G officials later informed Unilever of the espionage themselves, saying that their staff had been running a “rogue operation”. At least three P&G staff members were fired, and Unilever accepted a payout of around $10 million in compensation.
#8: Avery Dennison vs. Four Pillars
Taiwanese company Four Pillars Limited was so desperate to learn what made Avery Dennison’s adhesives so good that it paid top dollar for the privilege in the 1990s. Unfortunately, this came back to bite them, and both the CEO Pin Yen Yang and his daughter Hwei Chang Yang were found guilty of espionage in the US. They’d paid $160,000 to an employee of Avery Dennison to steal sensitive information. Pin Yen Yang was sentenced to two years probation along with home detention, and his daughter to one year probation. Both faced fines of $250,000 each, despite their attorney’s bizarre defense; she claimed that they’d been fighting “for everyone’s benefit” and implied that they’d been set up by the FBI.
#7: Starwood vs. Hilton
Apparently, being one of the most famous and lucrative hotel chains in the world doesn’t stop you from stooping to spying. In 2009, Starwood Hotels & Resorts Worldwide filed a lawsuit against Hilton, accusing them of espionage. Hilton had poached Starwood executives to help launch a new hotel brand, and one of them allegedly stole thousands of confidential documents on his way out. Starwood claimed that Hilton then used this information to develop their Denizen Hotels, as a knock-off of Starwood’s W brand. It was an embarrassing debacle for Hilton that saw them cancel the rollout of Denizen Hotels and pay Starwood a cool $75 million.
#6: Microsoft vs. Oracle
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One man’s trash is another man’s treasure, especially if you’re a PI hired to bribe janitors into letting you rifle through garbage. In the year 2000, Oracle Corporation, a major software developer and key rival of Microsoft’s, orchestrated just that. It tasked private investigators to get their hands on documents that would demonstrate a link between the Association for Competitive Technology and Microsoft. After Oracle was caught, Oracle's Chairman Larry Ellison insisted that it had been for the public good, accusing Microsoft of trying to monopolize the industry, and exert covert influence in an ongoing antitrust trial. The strange scandal was appropriately dubbed “trashgate”.
#5: GM vs. Volkswagen
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When people quit their job, it’s normal for them to move onto another position within the same industry. But Jose Ignacio Lopez’s jump from General Motors to Volkswagen in 1993 wasn’t quite so simple. Lopez was an important figure at GM, responsible for massive cost reductions. However, according to him, GM reneged on an agreement to build a car plant in the Basque region of Spain, where he’d been born, so he jumped ship, bringing other GM employees with him. GM filed multiple lawsuits, alleging that Lopez had stolen 70 cartons of important documents. After a protracted legal battle, Volkswagen had to settle the suits out of court to the tune of $100 million.
#4: HP vs. HP
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Sometimes you really are your own worst enemy. In 2006, a high-profile leak led to internal scrutiny of Hewlett-Packard’s own directors. But things quickly got murky. HP’s chairwoman Patricia Dunn hired investigators who used fake identities to obtain phone records from HP employees and journalists. When the truth got out, HP was hit with multiple lawsuits as well as criminal charges. While the only person convicted was one of the private investigators, the company had to pay millions in fines and settlements. Dunn was forced to resign, and HP’s reputation was badly tarnished.
#3: Kodak vs. Harold Worden
After working for Kodak for almost three decades, Harold Worden decided to strike out on his own. He established a consulting firm, but then bought confidential data from other former Kodak employees and tried to sell the information to Kodak’s rivals. Rather than purchasing the information from Worden however, they went to Kodak with the news. Kodak worked with the FBI to set up a sting operation and Worden walked right into it. In 1997 he was sentenced to 15 months in prison and a fine of $30,000.
#2: Gillette vs. Steven Louis Davis
Razor blades are a cutthroat business, which is something that Steven Louis Davis found out the hard way when he stole trade secrets in 1997. It was discovered that Davis, who worked as subcontractor for Gillette, had been emailing confidential razor designs straight to the competition – designs that Gillette had spent a whopping $750 million developing. Apparently, Davis did it out of anger against his manager, working conditions, and career opportunities - not that this stopped Gillette from getting the FBI involved. The court was ultimately lenient in its punishment; Davis went to prison for just over two years, a big reduction from the fifty years he was initially facing.
#1: The Great Tea Robbery
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We still feel the effects of this scandal today, since India remains the second-biggest exporter of tea globally. But most tea plants actually originate from China. In the nineteenth century, the East India Company – a British trading company that controlled substantial areas of India while it was under imperial rule – sent Scottish botanist Robert Fortune to steal tea from China. Fortune traveled to China, in disguise, and infiltrated the country’s tea factories. He stole not only the secrets of how tea is grown and blended, but also seeds so that tea could be planted over in India. And this all happened because the British didn’t want to pay China’s prices.
