ranjit | Feb 19, 2018 | 0
By K S Nayar:
At an international tyre industry exhibition, a rubber technologist with a major tyre manufacturer told me about the culture of secrecy surrounding product development. Even the CEO is barred from visiting the smelly rubber compounding section unless he gets in-house security clearance. The chief compounder and R&D head are provided with 24/7 security.
The scene evoked images of Fort Knox, the US Bullion Depository Building. I admit It is a hyperbole of exaggerated security at top tyre companies. But there is no denying the fact that tyre makers jealously guard their compounding formulae and tyre designs from the prying eyes of others.
Keeping ahead of the competition demands uniqueness in products. For gaining consumer acceptance intellectual property has to be guarded. IP is kept under wrap with the tough armour of ironclad patents. In spite of such secrecy and protective legal cover, leakages do take place.
It is a fact that millions of dollars of R&D efforts are being stolen regularly. While fighting IP court cases constantly drain away financial resources, companies also spend tons of money on monitoring not only their own workers but also scan the cyber world for suspects who might steal the chemistry and engineering of tyres.
It is common knowledge that after motor races there is a rush to collect every gram of tyre debris and scraps. These are taken to labs for analysis to find the rubber, oil, textile, polymers and chemicals that have gone into making the tyre. The search for the competitor’s secret formula is done to develop the best tyre that offers low rolling resistance, better grip, and greater durability.
Amid the race to develop specialised tyres for electric vehicles, which holds the potential to be the highest growth market in coming years, firms indulge in industrial espionage. Today, there is a greater urgency than ever before to protect IP of new types of EV tyres. The struggle goes on to make lighter tyres that generate minimal noise, deliver maximum performance and offer higher range, comfort and durability.
From tread patterns to groove sizes, engineers and compounders are pushing the boundaries. No tyre company can afford to fail in factoring in ‘uniqueness’ in this highly competitive scenario. Many governments have taken a serious view of protecting IP, and law enforces regularly crack the whip against perpetrators of industrial espionage.
The recent US indictment of a former employee of DuPont spinoff Chemours indicates Washington’s determination to fight conspiracies to steal trade secrets. US officials have alleged that there has been an increase in IP thefts.
They assert the US is committed to prosecuting anyone – be they rogue actors or foreign nations – who jeopardises that goes into developing new products and processes. All governments make similar announcements.
Economics of theft
It is said industrial espionage is the easiest way to put a country on a higher economic growth trajectory. Espionage is identified as a new engine for rapid growth. It is considered cheaper and quicker to acquire technology through such questionable means than by training engineers, researchers and R&D personnel.
A recent analysis of more than 150,000 previously classified documents of erstwhile East German spy agency Stasi has revealed that thousands of industrial secrets were stolen from the West. This had saved it billions of dollars and narrowed the productivity gap by some 8.6%. In the computing and electronics sector, it had reduced the gap by almost 26%.
Stealing IP and commercial secrets certainly boost economic productivity in the short-term, but it hurts and undermines long-term investment in R&D. Industrial espionage is ‘R&D on cocaine’, and like the drug it destroys the spirit of innovation.
Despite publically professed stand against industrial espionage, many countries shut their eyes to their nationals engaged in stealing IP. Competitive intelligence and industrial espionage are accepted as unethical and illegal, but most governments acquiesce with such nefarious activities.
They indirectly allow and encourage industrial espionage while professing to subscribe to international conventions on patents, IP protection and treaties. There is an upsurge in such threats.
With the expanding cyber world, the depth and range of industrial espionage and IP thefts have become more sophisticated. The thieves are always a step ahead of law enforcing agencies.
All industries, including tyre manufacturers, are targets of IP thieves. This has to be stopped. Without the development of in-house talent and innovation, no industry can progress beyond a point. Developing human capital is the most enduring way to power economic growth and industry advancement. Knowledge is the most valuable resource in the innovation economy of today. ‘People capital’ is the real engine of speedy economic growth.