Most corporate detectives avoid terms like spying and espionage, preferring the more dignified label "competitive intelligence." But whatever you call it, snooping on business rivals has become an entrenched sub-industry.

Nearly every large US company has an intelligence office of some kind. Some, like Motorola Inc, have units sprinkled in almost all of their outposts around the world. Their assignment is to monitor rivals, sniff out mergers or new technologies that might affect the bottom line, even to keep tabs on morale at client companies.

Motorola's intelligence unit, seen as a model in the business, was formed in 1982 by a veteran of the Central Intelligence Agency (CIA). Much of this corporate activity is considered ethical, but there is disagreement over when, and how often, it crosses the line into impropriety. Some corporate intelligence types say that the Oracle Corp trash operation was an anomaly, that respectable companies rarely engage in such tactics. "This is the sort of thing that gives legitimate business intelligence a bad name," Kroll Associates Inc, New York, head of corporate intelligence, Alden Taylor, says. "What we do is much closer to specialised management consulting than it is donning Neoprene suits and diving into dumpsters."

Others have had a different experience. "There's a lot of dumpster-diving that goes on; people are always trying to steal customer lists and that sort of thing," 44-year veteran of the private-eye trade and Krout & Schneider Inc, a detective agency in Glendora, California, president, Eddy McClain,says. And as for drawing ethical or legal lines, he adds, "the generally accepted premise is, if the trash is on the curb, it's fair game, but if t's on someone's private property, it's questionable."

Heightening the stakes, a number of foreign Governments regularly dispatch spies to steal American corporate secrets for foreign industry, according to US law-enforcement officials. Recently, Europeans have countered with similar charges about US government spy agencies. Corporate intelligence relies on a slew of tools, some sophisticated, many quite basic. On the simpler side,business sleuths do everything from prowling trade-show floors to combing through `rivals' Web sites and Patent Office filings.

They keep their ears open in airports and onboard flights. But sometimes they go further. They take photographs of competitors' factories, and increasingly, they rely on new data-mining software that permits them to scour the Internet at high speeds for snippets about their rivals.

The aim, Fuld & Co president, Leonard Fuld, says a corporate-intelligence consulting firm in Cambridge, Massachusetts, is to garner every possible public fact about one's market or competitor, and then see the opportunities that others miss. While corporations are littered with former Federal Bureau of Investigation (FBI) and CIA agents, most corporate-intelligence workers tend to be accountants, market researchers and MBAs - people with highly analytical skills that are accustomed to collecting and synthesising vast quantities of information, fast.

There's even a trade association for these professionals, based outside Washington, DC, with 6,900 members. Universities offer courses on competitive intelligence; the University of Missouri at Kansas City teaches enrollees how to do "pipeline analysis" in the pharmaceutical industry, which involves using public sources to suss out what drugs are in a competitor's research pipeline. At Motorola, officials say that based on competitive intelligence, they have revamped significant parts of the company and even chosen new partners, such as Cisco Systems Inc last year.

Now directed by its third ex-CIA operative in a row, the Motorola intelligence team sits in on most business strategy sessions, company officials say. "The concept was to mirror the interaction between the CIA and the White House," says Jan Herring, who formed the Motorola unit in the early 1980s after 20 years at the spy agency. "We provided the best intelligence, and the executives made the decisions."

Fuld voices a common view that the Oracle-Microsoft case represents an unscrupulous fringe of business intelligence - but concedes it's one that is nonetheless alive and well, especially in Silicon Valley. "The high-tech field is more open to this sort of thing because the product life cycles are so much shorter," he says. "That leads to a certain desperateness and haste." But Old Economy companies get in the act, too.

Raytheon Co, a defence contractor, for example, last year agreed to pay a multimillion-dollar settlement to resolve civil allegations that it hired private detectives to eavesdrop and steal confidential documents in an unsuccessful attempt to undermine Ages Group LP's bid for a US military aircraft-service contract. A Raytheon spokesman confirms the settlement but denies the company committed any wrongdoing. The upshot: It's hard to find a consensus on where exactly the ethical and legal lines lie. Stealing or trespassing on a rival's property could be the basis for criminal prosecution.

The Economic Espionage Act, enacted in 1996, specifically makes theft of trade secrets a federal felony. But the justice department says there have been only 22 indictments under the act, with 19 convictions and three cases pending. Still, short of out-and-out theft, it's difficult to separate legitimate from unethical conduct in this murky realm, experts say. Common sense may be the best guide.

"In most cases, people wouldn't have a problem distinguishing what is illegal or unethical conduct vs obtaining information from public sources," says Peter Toren, a New York attorney who formerly prosecuted trade-secret cases at the justice department. Donald Greenwood, a Houston security consultant who has held top security posts at Apple Computer Inc, Compaq Computer Corp and Sun Microsystems Inc, says that such "upstanding companies" would rarely engage in questionable behaviour like rifling garbage looking for a rival's secrets. He says he knows of a number of instances in which Silicon Valley companies that were offered a competitor's trade secrets handed the information back to the competitor, along with the name of the person offering it.

-- (Reuters)