Industrial Espionage Fact #3
In 2004 Air-Canada Used Undercover Investigators

In 2004, Air-Canada’s use of undercover investigators disguised as garbage collectors highlights the complexities of industrial espionage cases.

Canada lacks an equivalent to the U.S. Economic Espionage Act, leading to challenges in addressing economic espionage, trade secret theft, and legal protections for businesses.

Air Canada employed undercover private investigators

In a notable case, Air Canada employed undercover private investigators disguised as garbage collectors to retrieve documents from the residence of a former executive. Through electronic reconstructions of shredded papers found in household trash, Air Canada revealed that the executive had extensively accessed their internal website over a span of 10 months. This clandestine activity culminated in the development of a data-collecting software program, prompting Air Canada to label the process as ‘corporate espionage on a massive scale.’

Air Canada vs WestJet case

In response, WestJet initiated a countersuit, alleging that Air Canada also utilized private investigators camouflaged as garbage collectors. The incident underscored the lengths to which businesses would go to gain a competitive edge, often involving covert tactics.

At the core of this espionage was a password-protected Air Canada website, initially intended for employee use to check seat availability. Air Canada contended that WestJet exploited the accessed data to fine-tune schedules and fares, leading to deprivation of passengers and profit. The password was originally obtained by a former WestJet employee, who later shared it with a company founder, further implicating high-level awareness of the espionage at WestJet.

Such cases exemplify the covert strategies and high-stakes competition that can characterize industrial espionage in the business world.

Legal framework in Canada

The absence of a comprehensive federal law targeting economic espionage, similar to the U.S. Act, underscores the need for a more tailored legal framework in Canada. While Canada has regulations under the Criminal Code, civil remedies, and intellectual property laws, they may not offer the same focused approach as the U.S. legislation.

A case in point is the 2006 settlement involving WestJet Airlines and Air Canada, wherein WestJet agreed to pay 15.5 million Canadian dollars to settle allegations of spying on Air Canada’s internal website. The incident reflects the ongoing battle between businesses to protect sensitive information.

Challenges persist in prosecuting economic espionage due to Canada’s legal limitations. Despite the impactful outcomes of espionage actions, information is not always treated as tangible property under the Criminal Code. While there are avenues for civil actions, they have their limitations, leaving a gap in addressing this evolving threat.

Canadian business owners face a complex landscape of economic and industrial espionage, hindered by a variety of factors including legal gaps, jurisdictional complexities, resource constraints, and a lack of widespread awareness.

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