Traditionally, companies gather information on their competitor’s marketing activities, advertising strategies and organizational structure, or perform some form of industry-wide benchmarking. Recently, however, companies have started to engage in more formal competitive intelligence activities. “Competitive intelligence” is the process whereby a firm monitors its competitors (and the marketplace as a whole) by collecting information, analyzing the information and then disseminating the information to decision makers within the firm. The widespread use of formal competitive intelligence departments and employees dedicated to such monitoring is probably less than two decades old.
Engaging in competitive intelligence is not the same as, or synonymous with, engaging in economic or industrial espionage or the misappropriation of trade secrets. (As a review, a “trade secret” is information that an owner has taken reasonable steps to keep secret, and from which the owner derives economic value as a result of the information not being generally known by the public. “Confidential information,” on the other hand, simply refers to information that an owner has taken reasonable steps to keep confidential.)
As a relatively new discipline, there are few standards for competitive intelligence professionals to follow. The following general types of activities, however, raise potential ethical and legal concerns and should be avoided in the course of performing competitive intelligence activities:
- Misrepresentation of Identity – when an information gatherer or competitive intelligence professional is asked their identity and they do not correctly and fully reveal their identity.
- Misrepresentation of Intent – when an information gatherer or competitive intelligence professional misrepresents their intent to a target in the course of gathering competitive intelligence.
- Inducement –when an information gatherer offers inappropriate benefits in return for information from others in possession of confidential or trade secret information.
- Covert Information Gathering – when information is being gathered while the targeted person/firm is unaware of its collection and such person/firm would have to develop elaborate defenses to protect its confidential or trade secret information.
- Unsolicited Information – when confidential or trade secret information is received by an information gatherer that is not actively seeking it.
Engaging in the general types of activities listed above can have serious legal consequences for a firm and even the individual employee who obtains any competitor’s confidential information or trade secrets. Such negative consequences include liability under the federal Uniform Trade Secrets Act and applicable state statutes protecting trade secrets and unfair competition, susceptibility to breach of contract claims, and running afoul of the Economic Espionage Act of 1996.
