How to keep your competitive intelligence legal (and ethical)

Sometimes when people talk about competitive intelligence (CI) gathering they use terms like “spying” that can feel legally and ethically iffy. In actuality, most competitive intelligence strategies are a normal and expected part of running a business thoughtfully. But some cross a line into territory that could get you into legal hot water.

To avoid that, you need to understand the legality of competitive intelligence strategies—what kind of information gathering practices are OK, and which to avoid.

 

The golden rule of legal competitive intelligence

There’s one main guiding principle you can use to stay on the right side of the law when gathering competitive intelligence: only seek out information that’s publicly available. Anything that a competitor has shared on their website, on their social profiles, in a press release, a brochure, or in any other format that the general public can access is information it’s OK for you to know.

Where you start to run into problems is if you attempt to access information they haven’t already shared with the wider world. That’s where you hit up against laws about trade secrets.
 

Understanding trade secrets

According to Ruth Carter, Esq. of the Carter Law Firm, “a trade secret is something that gives a company a competitive advantage by the fact that it remains a secret.” A well known example is the recipe of Coca-Cola—because the company keeps the recipe hidden away, competitors are expected to respect that as a trade secret.

Almost every business has trade secrets. Any marketing strategies you’ve developed, customer lists you’ve built, or market research you’ve completed count as trade secrets, as long as you haven’t shared them publicly. You don’t have to take special steps to label them trade secrets, as long as you’re clear with anyone who has access to the information that it should be kept internal, that’s enough for it to count.

 

Competitive intelligence practices to avoid

The CI strategies that could get you in trouble mostly fall into three main categories.

1. Trying to get information from current or former employees of your competitors.

If someone from your company reaches out to a competitor’s employee to gain information that’s not publicly accessible, that’s both unethical and illegal. There are various forms that could take:

  • Lying to an employee to convince them that you’re someone safe to reveal information to (like an undercover spy in a movie)
  • Reaching out to a competitor’s disgruntled former employee to see if they’ll share trade secrets
  • Paying an internal source for information only available to insiders
  • Trying to get a competitor’s employee to give hand over sensitive passwords to access their data and products

With all of those examples, it should be obvious you’d be doing something wrong. That at least makes it easy for companies that care about being ethical to avoid most of the CI strategies in this category.

2. Accessing documents or data that’s not publicly available.

Another big no-no is finding sneaky ways to get ahold of internal documents your competitors have. A few ways a shady company might try this:

  • Digging through the trash of a competitor’s office, trying to find something valuable
  • Attempting to hack into their systems to access digital documents
  • Paying someone internal for private documents
  • Breaking into an office to get to documents inside
  • Using a personal connection with an employee to access private documents

It shouldn’t be a surprise to learn that all these strategies are illegal and immoral, and should be avoided.

3. Accepting information that’s not publicly available.

All the tactics in our first two categories require a company actively going out of their way to get private information via nefarious means. But it’s important to know that it’s still against the law if you’re not the one initiating contact. If a source comes to you offering to divulge a competitor’s trade secrets—either because they want money, or they want to get back at the company for some reason—you have a responsibility to say no.

When an admin at Coca-Cola contacted PepsiCo with an offer to sell confidential internal documents and samples, PepsiCo immediately alerted their competitor to the leak. It may seem obvious that’s the right move ethically, but it’s also the one required by law. Accepting stolen trade secrets can lead to a lawsuit and potentially cost your company big. So best to go the PepsiCo route and decline the offer.

 

How to avoid accidentally crossing a line

If you’re reading this, you’re probably a good person who would never try obviously sleazy tactics like those to begin with. But you don’t want to accidentally break the law out of ignorance or a lack of caution.

One of the main ways you could inadvertently cross a line is in the hiring process. Someone that has worked for a competitor is likely to have a lot of the industry experience and relevant skills you’d look for in a new hire, but you can get into tricky territory if you’re not careful.

“You want to be thoughtful when hiring somebody,” says Ruth. That means “asking if there is an NDA (non-disclosure agreement), [or] even more important, a non-compete agreement.”

You need to make sure from the start that it’s even legal to hire them, or you could find yourself in a dispute with your competitor’s lawyers. Whether they have an NDA or not, you want to be proactive about making sure they don’t disclose information you’re not supposed to have. Tell them outright that you expect them to be careful about revealing any trade secrets or internal information about the competitor. That decreases the likelihood they’ll let something slip in a business meeting that puts you in a compromised position.

And while the golden rule of legal CI will generally steer you well, Ruth pointed out some industries have different rules than others. If you work in an industry like law, healthcare, or banking, you may have more stringent guidelines around what’s allowed. Research any industry-specific rules you’re expected to follow, so you don’t risk losing your business license.

 

Competitive intelligence strategies that are legal (and ethical!)

Avoiding most of the illegal and sketchy CI tactics is easy enough. Most companies wouldn’t think to go those routes to begin with. And there are plenty of ways to do legitimate, ethical competitor research that won’t put you on the wrong side of the law. Here are six things you can do.

1. Research a company’s website.

You can absolutely peruse a competitor’s website to see how they talk about their products and what their general positioning is. You can analyze what keywords they’re targeting and what features and benefits they emphasize the most. And you can use what they say on the site to get an idea of what audience they’re targeting.

2. Check out their social profiles and feed.

Social profiles are also fair game! See which social media sites they’re on, and which they’re the most active on. Learn how they describe the company in their bio or About section, and see what kind of updates they share. Analyze which types of posts get the best results on each site. You can use what you learn from their results in your own social strategy.

3. Look into their ad campaigns.

Since ad campaigns are targeted, you may not be able to see precisely what your audience does when they’re perusing the web. But you can probably still glean some insights into what their ad campaigns look like based on what you do see. Try to figure out what keywords they’re targeting in pay-per-click campaigns, and what types of messaging they use.

4. Sign up for their email lists.

It’s also entirely acceptable to see what a competitor is sharing with their email list by signing up for it yourself. If you use your professional email address, they might unsubscribe you if they recognize you as a competitor (which is their prerogative). But email marketing is still public enough that it’s acceptable to get a look at what they’re sending warm leads and customers.

5. Analyze their content marketing.

Content marketing is also public by its nature. You can analyze the content formats they’re using. Do they have a blog, podcast, ebooks, videos? You can learn what keywords and topics they’re covering the most in their content. And you can learn which of their content pieces perform well in the search engines for key terms.

6. Use competitive intelligence software to automate the gathering and consolidation of the (public) info in one place.

That’s a lot of different channels to review, analyze, and stay on top of. It’s also entirely ethical—and just smart—to invest in a competitive intelligence automation tool that helps you keep all this CI information organized. A good competitive intelligence product will automate the monitoring of the different channels for each competitor for you. It will turn the raw information into data that makes it easier to pull out key insights. And it will help you efficiently distribute the most important information to the right people in your organization.

And because it’s built by people who know the competitive intelligence industry, it won’t lead you astray into knowledge sources that fall outside legal access. You can trust that everything you learn is publicly available and fair game to learn from and use.
 

You’ll learn a lot with legal competitive intelligence strategies

You may be surprised just how much you can learn about a competitor’s product, strategy, and marketing approach by monitoring them legally and ethically. You won’t lack for data and insights. If anything, you’ll find yourself wondering why any company would feel the need to venture into the murky waters of illegal strategies, when the right way of doing things yields such useful knowledge.

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