Are there risks in competitive intelligence? (Part III)


Competitive intelligence combines secondary and primary research:

  • Secondary research carries almost no legal risk. A competitor’s employees may be listed on LinkedIn. A competitor’s customers may be following that competitor on Twitter, or there may be case studies on that competitor’s website. Information from such public sources is fair game. There are grey areas (for example, if a competitor accidentally uploads confidential documents to a public part of their website, which is then indexed by a search engine), but these are rare and in such cases the experienced analyst should know that if something looks suspect, it is best avoided.
  • Primary research carries some legal risk, if not executed properly. Primary research involves contacting people who may have the information required. For example, to find out how much a competitor pays their salespeople, a researcher could ask existing employees of the competitor, previous employees of the competitor, interviewees who did not become employees, recruitment agencies and other sources. It may be illegal for some of these people to disclose salary details (for example, they may have signed NDAs), whereas others may be at liberty to discuss the information. Because competitive intelligence analysts are not legal experts, it is better to err on the side of caution and speak to only the ‘safest’ of sources. In this example, that may not even be a primary source, but be the secondary information at    

The above sources are a world away from what might start to overlap with corporate espionage - for example, applying for jobs under false guises to elicit salary information. Competitive intelligence stays away from such grey areas.

The flagship legislation for preventing corporate espionage is the Economic Espionage Act of 1996. Its application in different circumstances is beyond the scope of a blog post. Indeed, as it has been sparingly used, many aspects of the Act still need clarification through case law - for example around what constitutes a trade secret and whether it needs to be proved that theft of a trade secret caused damage. In some ways, the Economic Espionage Act should not be a consideration: if an agency starts wondering whether their activities are captured by the Act or are just outside it, they may be pushing the boundaries of safe practice too far already. Competitive intelligence should steer well clear of the Act, not skim around the edges.

The legal risks of competitive-intelligence-gone-wrong are real, but they should not be overstated. Most malpractice of this nature involves employees, and where vendors are involved, these are invariably lesser-known vendors who as a matter of course do not adhere to ethical standards.

(It should go without saying that we are not lawyers...)