Cyber Strategies for a World at War

OPEN SOURCE AGGREGATION & ANALYSIS

Attorney General Eric Holder Speaks at the Administration Trade Secret Strategy Rollout

Department of Justice
February 20, 2013

Thank you, Victoria, for those kind words – and thank you all for being here. It’s a pleasure to welcome you to the White House today – and a privilege to stand with so many friends, key partners, and indispensable allies in introducing the Administration’s strategy for combating the theft of trade secrets.

As Victoria just mentioned, this work is a top priority for President Obama, for the entire Administration – and of course for the dedicated men and women at the Department of Justice. I’m deeply proud of the contributions that my colleagues have made in developing this strategy – and the pivotal role that the Department will play in its implementation. And I’m confident that – as we bring government agencies and additional private sector partners together to put these plans into action – we’ll continue strengthening national efforts to protect the rights, safety, and best interests of American consumers, innovators, and entrepreneurs.

Particularly in this time of ongoing economic recovery, this work is more important than ever. Despite the challenges of recent years, American companies remain the most innovative in the world. They are responsible for many of the most important technological advances the world has ever seen, an overwhelming number of the 100 most valuable brands, and almost 30 percent of global research and development spending.

This level of innovation and the investments that make it possible benefit consumers, create jobs, and support our economy. For instance, in 2011, companies in Silicon Valley added over 42,000 jobs and recorded a growth rate more than three times that of the U.S. economy as a whole. But, as any of the corporate leaders in this crowd can attest, this prosperity is a double-edged sword. And it inevitably attracts global rivals – including individuals, companies, and even countries – eager to tilt the playing field to their advantage.

By corrupting insiders, hiring hackers, and engaging in other unscrupulous and illegal activities, these entities can inflict devastating harm on individual creators, start-ups, and major companies. As one private security expert has said of the largest U.S. corporations, there are only “two categories” of companies affected by trade secret theft – “[T]hose that know they’ve been compromised and those that don’t know yet.”

This is because, as new technologies have torn down traditional barriers to international business and global commerce, they’ve also made it easier for criminals to steal trade secrets – and to do so from anywhere in the world. A hacker in China can acquire source code from a software company in Virginia without leaving his or her desk. With a few keystrokes, a terminated or simply unhappy employee of a defense contractor can misappropriate designs, processes, and formulas worth billions of dollars.

Some of these criminals exploit pilfered secrets themselves – often by extorting the victim company or starting their own enterprise. Others try to sell the illicit information to a rival company, or obtain a bounty from a country interested in encouraging such theft. And all represent a significant and steadily increasing threat to America’s economic and national security interests.

Fortunately, the women and men of the Justice Department are working tirelessly to prevent, combat, and punish these serious crimes. Thanks to the efforts of 40 prosecutors and four computer forensic experts serving in the Computer Crime and Intellectual Property Section, and more than 230 specially-trained prosecutors stationed at U.S. Attorneys’ Offices around the country, including 25 Computer Hacking and Intellectual Property – or “CHIP” – units, I’m pleased to report that we’re fighting back more aggressively, and collaboratively, than ever before. And with approximately 240 FBI agents in the field dedicated to investigating IP crime, along with officials from U.S. Immigration and Customs Enforcement, and 20 additional state, federal, and international law enforcement agencies that are partners at the IPR Center, we are poised to build on our recent successes.

I’m proud of the outstanding work that these professionals are leading every day, in offices all across the country. But I also recognize – as I know you all do – that the Justice Department won’t be able to continue making the progress we need, and that our citizens and companies deserve, on its own.

We need to increase cooperation and coordination between partners at every level of government. We need to improve engagement with the corporations represented in the room today. We need to find ways to work together more efficiently and effectively – by following the road map set forth in the Administration’s new, comprehensive strategy. And we need to do so starting immediately – because continuing technological expansion and accelerating globalization will lead to a dramatic increase in the threat posed by trade secret theft in the years ahead.

In fact, by 2015, experts believe that the number of smart phones, tablets, laptops, and other internet-access devices in use will be roughly double the total that existed in 2010. In the same period, the proliferation of cloud-based computing will significantly enhance flexibility and productivity for workers around the world. But these same forces will also create more access points and vulnerabilities that allow criminals to steal confidential information.

Just as increasing globalization will enable American companies of all sizes to benefit from foreign technical experts and research and development activities in other countries, the sharing of trade secrets with entities operating in nations with weak rule of law may expose them to intellectual property losses. Any resulting cost advantages will likely be more than offset by losses in proprietary company information.

Unfortunately, these projections aren’t merely hypothetical. We’ve seen this phenomenon before – including in the late 1990s, when I had the privilege of serving as Deputy Attorney General. Between 1997 and 2000, internet usage in the United States more than doubled – and this massive technological shift also brought about major changes in the nature of crime. For instance, in 1999 alone, we saw a 30-percent spike in intellectual property cases over the previous year. In order to fight back, in July of that year I announced the Department’s first major IP Strategy, known as the Intellectual Property Rights Initiative.

Of course, we’ve all come a long way since then. As critical technologies have advanced, criminals have adapted accordingly. Our need to keep pace with these changes remains imperative. And the stakes have never been higher.

In some industries, a single trade secret can be worth millions – or even billions – of dollars. Trade secret theft can require companies to lay off employees, to close factories, to lose sales and profits, to experience a decline in competitive position and advantage – or even to go out of business. And this type of crime can have significant impacts not only on our country’s economic well-being, but on our national security – allowing hostile states to obtain data and technology that could endanger American lives; expose our energy, financial, or other sensitive sectors to massive losses; or make our infrastructure vulnerable to attack.

In response, the Justice Department has made the investigation and prosecution of trade secret theft a top priority. This is why the National Security Division’s Counterespionage Section has taken a leading role in economic espionage cases – and others affecting national security and the export of military and strategic commodities or technology. It’s also why, in 2010, I established an internal Task Force on Intellectual Property – led by Deputy Attorney General Jim Cole and other senior Department leaders – to improve and expand our enforcement efforts in this area. And it’s why the FBI has increased its focus on trade secret theft and its use of sophisticated tools and techniques in conducting national security and criminal investigations.

Of course, most trade secret matters are dealt with in civil court. But when the Justice Department receives referrals, we investigate and, when appropriate, prosecute those matters fairly and completely. And, although the primary legislation creating criminal liability for these acts is less than 20 years old, federal law enforcement officials have established a remarkable record of success in this area.

In the decade between 2001 and 2011, we secured well over 100 convictions in cases involving criminal trade secret thefts, and 6 convictions in economic espionage cases. For instance, in December 2011, a federal court in Indiana sentenced a man from China to more than 7 years in prison – after his conviction on charges of economic espionage on behalf of a foreign university tied to the Chinese government. Last September – in New Jersey – a jury convicted another Chinese native of trade secret theft and other charges for stealing information from a defense contractor about the performance and guidance systems for missiles and other military hardware. And last November – in Michigan – a former General Motors engineer and her husband were convicted of conspiring to steal more than $40 million worth of trade secrets from GM, with intent to use them in a joint venture with an automotive competitor in China.

In these and many other cases – as we’ve refined our approach and increased our understanding of these crimes and those who commit them – the Department has also gathered valuable intelligence about foreign-based economic espionage. We’ve forged strong relationships with law enforcement partners, private sector experts, and international allies. And we’ve begun to raise awareness about the devastating impact of these crimes – and to encourage companies to report suspected breaches to law enforcement – so violators can be caught, brought to justice, and kept from striking again.

As we carry this work into the future – thanks to the support and assistance of everyone here today, and the cutting-edge strategy we’re committed to implementing – I’m confident that we’ll continue to make great strides in the fight against trade secret theft. We’ll keep improving our ability to crack down on intellectual property infringement and economic espionage. And together we’ll ensure that the United States is, and always will be, the world leader in innovation.

/////////////////

Attendees of the Justice Department announcement received copies of the following report:

FOREIGN SPIES STEALING US ECONOMIC SECRETS IN CYBERSPACE

 

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Filed under: Business, China, cyber security, Doctrine, government, Internet, News, Policy, Politics, Strategy, Technology, Threats, , , , , , , , , , , , , , ,

China Responds To Mandiant Accusations Through State Media

Xinhua
February 20,2013

China defense ministry refutes cyber attack allegations

China’s military spokesman said on Wednesday that the country’s armed forces had never backed any hacking activities, denouncing U.S. cyber security firm Mandiant’s report as groundless both in facts and legal basis.

China’s laws ban any activities disrupting cyber security and the Chinese government always cracks down on cyber crimes, Geng Yansheng, spokesman with the Ministry of National Defense, said at a briefing.

Mandiant on Monday released a report which alleged that a secret Chinese military unit in Shanghai was behind years of cyber attacks against U.S. companies.

Geng said Mandiant’s report was groundless in fact because it came to the conclusion that the source of attack came from China simply because of the discovery that attacks were linked to IP addresses based in China.

First, as known to all, it is so common for hacking attacks on the Internet to take place by peculating IP addresses that “it happens almost everyday,” according to the spokesman.

Second, there has been no clear and consistent definition of cyber attacks around the world. The report lacks legal basis to assert cyber espionage only by cataloguing some routine cyber activities, he said.

Third, cyber attacks are transnational, anonymous and deceptive with their source often difficult to identify. Releasing irresponsible information will not help solve problems, Geng added.

The spokesman further said China actually is a major victim of cyber attacks.

[Continue reading…]

Filed under: China, cyber war, government, Internet, Military, News, , , , , ,

Congressional Open Hearing: Cyber Threats and Ongoing Efforts to Protect the Nation

Mandiant’s groundbreaking report that alleges China’s government is responsible for persistent, long-term hacking and cyber espionage, has the following quote:

“China’s economic espionage has reached an intolerable level and I believe that the United States and our allies in Europe and Asia have an obligation to confront Beijing and demand that they put a stop to this piracy. Beijing is waging a massive trade war on us all, and we should band together to pressure them to stop. Combined, the United States and our allies in Europe and Asia have significant diplomatic and economic leverage over China, and we should use this to our advantage to put an end to this scourge.”

— U.S. Rep. Mike Rogers, October, 2011

Representative Rogers’ quote comes from this congressional testimony:

House Permanent Select Committee on Intelligence
Chairman Mike Rogers Opening Statement
Open Hearing: Cyber Threats and Ongoing Efforts to Protect the Nation
October 4, 2011

*Remarks as Prepared

Introduction: The House Permanent Select Committee on Intelligence meets today in open session to convene a hearing on cyber threats and ongoing efforts to protect the nation. There are a wide range of cyber issues being debated these days. I would like to focus our discussion at today’s hearing, however, on cyber information sharing, and in particular, what the Intelligence Community might be able to do to assist the private sector in defending their networks.

The Speaker has asked Congressman Mac Thornberry of this Committee to lead the efforts of the House on the broader range of important cyber security issues, and his Task Force has done some very important work in thinking through some of these difficult problems. He has the full support of the House Intelligence Committee as he does his work, and I hope this hearing will be of benefit to the work of the Task Force.

Our witnesses for today’s hearing are The Honorable Michael Hayden, Mr. Arthur Coviello, and Mr. Kevin Mandia.

General Hayden has had a very long and distinguished military career. His assignments include serving as director of the National Security Agency, and director of the Central Intelligence Agency. He also served as the Principal Deputy Director of National Intelligence, and he is no stranger to the significant cyber threats we face from nation states like China.

Mr. Coviello is the Executive Chairman of RSA Corporation, a company which plays an important role in helping secure both private and government networks and systems.

RSA’s business alone would probably be sufficient to qualify him to testify before the Committee on cyber, but RSA was also the target of a significant cyber attack recently, and therefore serves as a useful case study of the state of our cyber security efforts.

Mr. Kevin Mandia is the Chief Executive Officer of MANDIANT, an industry leader in cyber incident response and computer forensics. Mr. Mandia deals with the consequences of advanced cyber espionage against American companies every day, and we look forward to his observations on the threats we face, as well as what we can do to better cope with them.

Read the complete testimony at the U.S. House of Representatives website.

Filed under: Business, China, government, Intelligence Community, Internet, Politics, Technology, Threats, , , , , , , , , , ,

Mandiant Exposes Persisten Hacking Authorized By Chinese Government

Mandiant, an information security company, has been in the news lately as the go-to cybersecurity company after high profile newspapers like the New York Times, Washington Post, and others were allegedly attacked by Chinese hackers. The New York Times alleged they were attached by China in retribution for the newspaper exposing government corruption at the highest levels.

Today, Mandiant has done something unusual for the hyper-secret world of cyber espionage and counter-espionage: they went public with accusatory reports and videos that shows a “day in the life” of a typical Chinese hacker.

The following is available from Mandiant’s website:

From the report:

Since 2004, Mandiant has investigated computer security breaches at hundreds of organizations around the world. The majority of these security breaches are attributed to advanced threat actors referred to as the “Advanced Persistent Threat” (APT). We first published details about the APT in our January 2010 M-Trends report. As we stated in the report, our position was that “The Chinese government may authorize this activity, but there’s no way to determine the extent of its involvement.” Now, three years later, we have the evidence required to change our assessment. The details we have analyzed during hundreds of investigations convince us that the groups conducting these activities are based primarily in China and that the Chinese Government is aware of them.

Read the full report:
Mandiant Report

Filed under: Analysis, Business, China, cyber security, cyber war, government, Military, News, Technology, Threats, , , , , , , , , , , , , ,

Global Trends

"The nature of conflict is changing. The risk of conflict will increase due to diverging interests among major powers, an expanding terror threat, continued instability in weak states, and the spread of lethal, disruptive technologies. Disrupting societies will become more common, with long-range precision weapons, cyber, and robotic systems to target infrastructure from afar, and more accessible technology to create weapons of mass destruction."
 
Global Trends and Key Implications Through 2035 from the National Intelligence Council Quadrennial Report GLOBAL TRENDS: The Paradox of Power

A World at War

The World is at War. It is a world war that is being fought right now, in real time, virtually everywhere on the planet. It is a world war that is, perhaps, more encompassing and global in nature than any other world war in history because, not only is it being fought by nations and their governments, it is also being fought by non-state actors such as terrorists, organized crime, unorganized crime, and many other known and unknown entities. It is a total world war being fought every day on the hidden and dark battle fields of the cyber domain. It is a war that, according to some intelligence estimates, has the potential to be as nearly as serious and as deadly as a nuclear war... [MORE]

 


 


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Kurt Brindley is a retired U.S. Navy Senior Chief who specialized in the fields of tele-communications and C4SRI systems Upon retirement from the navy, he spent nearly a decade as a defense industry consultant. He now writes full time... [MORE]


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