If you think it's a recent development that companies such as Procter & Gamble Co. have spied on their competitors, check the court records for 1943.

        A P&G employee that year bribed a worker for Lever Brothers to steal several bars of a soap under development called Swan. P&G used the formula to improve its own Ivory soap and ended up paying Lever $5.675 million for infringing on its patent. (That's the equivalent of $57.89 million today.)

        History repeated itself Thursday, when Cincinnati-based P&G agreed to pay Unilever, the renamed and now worldwide Lever Brothers, $10 million to settle another case of corporate espionage. This time, Procter reported the infractions, which included a contractor rummaging through trash outside a Unilever office in Chicago.

        The episode makes it clear that competitive intelligence, a multimillion-dollar industry, is a fact of life for big corporations and will continue to be long after the latest P&G-Unilever brouhaha has faded from memory, experts in the field say.

        “Why would they stop?” asked James Atkinson, president of Granite Island Group in Massachusetts, a consultant who serves as a “spy-hunter” for companies around the world.

        “Every company spies on every other company,” he added. “If you get caught, you get embarrassed.”

        Corporate espionage has been around for decades, as the Lever Brothers/P&G case in the 1940s demonstrates. But the increase in activity prompted Congress to pass the Economic Espionage Act in 1996, which carried criminal penalties for theft of intellectual property.

        In 1997, estimates of stolen intellectual property from U.S. corporations reached as high as $25 billion.

        P&G has declined to talk about the latest incident with Unilever, and Unilever officials also seemed determined to put it behind them.

        But the two companies are not alone. There have been a handful of recent high-profile cases of corporate espionage, including:

        • A former top official at General Motors Corp. was accused by rival Volkswagen AG of stealing confidential documents.

        • Fruit of the Loom is suing competitor Gildan Activewear Inc., charging that Gildan stole trade secrets, according to reports last spring.

        • Johnston Industries Inc. in Columbus sued Milliken & Co. in 1998, charging theft of confidential information. The suit charged that one Milliken employee posed as a student researching a paper.

        • Top executives at Avanti, a high-tech company in California, were the subject of criminal charges in 1997, accused of stealing lines of computer code from competitor Cadence Design.

        Mr. Atkinson said he has seen several cases of clients caught snooping and then paying millions of dollars to privately settle the case.

        Corporate espionage is common enough that “that Dumpster (outside Unilever's offices in Chicago) should have been locked up, and anything that was in there should have been shredded,” he said.

        Competitive intelligence can take many forms, Mr. Atkinson said. Many are legal, such as searching the Internet for court records that might reveal little-known information about a rival.

        But others are not so legal, he said, including:

        • Sending investigators to videotape action at a rival's testing facility, such as a track for automakers.

        • Hiding outside a rival executive's home to see comings and going.

        • Luring a key employee to another job and persuading him or her to bring a list of contacts or trade secrets.
       

The soap wars

        The case between Lever Brothers and P&G in 1943 went through a trial and appeal before being privately settled. It provides an eerie parallel to the current dispute.

        It also shows the impact corporate espionage can have. Using the patent technology P&G acquired and then paid millions of dollars for, Ivory soap has become one of the company's standard-bearers and one of the most familiar brand names in America.

        Swan would never prove a serious threat to Ivory.

        “Despite Lever's monetary victory in the courts, Ivory won in the marketplace,” reads the P&G-approved corporate history, Eyes on Tomorrow.

        Court papers describing the case make it clear that P&G's corporate espionage caused the patent infringement. The trial court ruled for P&G, but a federal appeals court overruled that decision and ruled that Procter infringed on the Lever patent.

        “According to (Unilever), Mr. Deupree (Procter president Richard Deupree) was quite disturbed over the idea that Lever would put a soap on the market to compete with Old Ivory Soap, and Mr. Deupree admitted that, as early as 1937, Procter had procured sample cakes of the new (Lever) soap,” reads a part of the appeals court decision.

        A P&G spokeswoman was quick to point out differences in the current dispute and the 1943 case.

        “The difference is that today, we went to Unilever and reported it,” she said. “When we find we have done something that's wrong, we're going to fess up and tell people.”

        Those admissions apparently kept Procter from paying a higher price, including a potential Unilever lawsuit.

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