I can give a first hand account of a $2 billion theft of proprietary
information to illustrate how these exaggerated figures get manufactured.
Back in 1989 I worked at a Toronto software development company that did
lots of work with the Unix operating system, and licensed the Unix source
code from AT&T for about $60,000 a year.
Night after night someone was logging in to the computers from a dialup line
to download chunks of the Unix source code. Somebody at the company noticed
this, called in the police, who traced the connection to an ex-employee,
raided his house and seized his home computer. Apparently the ex-employee,
a software development manager, who had recently left the company, missed
having access to the Unix source code and wanted to grab a copy of it for
personal study. Satisfied that the source code had been recovered, and that
this wasn't a case of espionage or sabotage, the company would have been
happy to let the matter drop.
But the cops insisted on laying charges and it appears that they leaked the
story to the media. All three Toronto newspapers (Toronto Sun, Toronto Star,
and the Globe & Mail) reported that the police had foiled a $2 billion theft!
Why wasn't this as a $60,000 theft of a commercial source code license?
Or at the very most a $500 theft of an educational license, since the
ex-employee's intended use was only to study it?
Well it seems that the police had called up AT&T and asked them "How much is
Unix worth?" The answer was $2 billion. AT&T gave Unix an asset value of
$2 billion on their books. The police equated a little mischief to the cost
of acquiring total ownership of AT&T's Unix System Laboratories and all its
intellectual property!
In this case, the large corporation gave an accurate estimate to a bogus
question. It was law enforcement (and sloppy fact checking by the media)
that twisted the story.
But you know, even the $2 billion asset value seems suspect to me now
because AT&T sold Unix to Novell in 1993 for just $270 million (see
http://www.att.com/press/0693/930614.ulb.html). Novell in turn sold it to
SCO in 1995 for a paltry $54 million (6M SCO shares at about $9 each is $54M,
see http://www.novell.com/company/ir/96annual/mandis.html). But if AT&T
overestimated by tenfold, the police still exaggerated by 4 million fold. [S Harris via risks-digest Volume 21, Issue 21]
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