Trade Secrets

Trade Secrets This country’s economy thrives on its trade secrets and without them the economy would lack its competitive edge and economic value. The trade secret laws date back to Roman law which punished a person who forced another person to reveal secrets relating to his masters commercial affairs. The current trade secret laws evolved in England during the Industrial Revolution and the first reported trade secret case in the United States was Vickery versus Welch in 1837. In 1979 the National Conference of Commissioners of Uniform State Law imposed the Uniform Trade Secrets Act which has now been adopted by a majority of the states. In previous years these laws have been modified to meet the needs of our growing technological society by incorporating such things as the Invention and Nondisclosure Agreement and intellectual property laws.

Trade secret laws protect a companys information that is not publicly known therefore allowing a competitive and economic edge over their competition. Intellectual property violations fall under the trade secret laws which are used to determine if a company or individual has compromised any information of another company or individual. The issue of ownership of intellectual property is not only a legal issue but also an ethical issue that engineers face in their careers. In the case of Vermont Microsystems, Inc. (VMI) versus Autodesk, Inc.

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the court determined that Autodesk violated the trade secret laws despite the warnings by VMI. In doing this they not only compromised themselves legally and economically but also ethically. Otto Berkes developed a Display List Driver while working for VMI. After completing that project he took a position at Autodesk in the fall of 1991. At that time the president of VMI sent a letter to Autodesk warning that Autodesk should be careful because Berkes was privy to VMIs trade secrets. However, in March of 1992, Berkes lobbied the management of Autodesk to include the display list driver in R12 windows.

He then became directly involved in working on the specifications for a prototype of the display list driver. In designing this prototype he used two algorithms, the triangle shading algorithm and the BPS algorithm, that he had developed while working for VMI. Soon after, VMI learned Berkes was working on the development of the display list driver for Autodesk. VMI once again warned Autodesk, via a written notification, that they were at risk of trade secret violation. In October 1992, Autodesk and VMI met to attempt to resolve their differences.

VMI offered to transfer all technology to Autodesk for 25.5 million dollars. After receiving VMIs proposal Autodesk considered proposals from other companys in order to replace the display list driver Berkes had developed. Autodesk rejected all proposals including the offer made by VMI and apparently for economic reasons decided to go ahead and ship their current version of the display list driver despite the ethical and legal ramifications. The issue the court had to determine was whether or not trade secret misappropriation occurred. It was VMIs responsibility to prove to the court that a trade secret misappropriation had occurred. In complying with these laws, VMI submitted evidence of eleven instances of trade secret misappropriation. The first instance was the issue of the overall architecture.

The courts felt that VMIs next eight instances were incorporated into that of the first instance. In comparing Autodesk and VMIs architecture the variables, parameters, structures, and implementation of management functions of the two software programs were almost, if not, identical. The add-on software that Berkes designed, for both Autodesk and VMI, included the same functions and tools. Everything from the management of bounding boxes to the location of entities was identical. There were such similarities between the design of both companys products that the courts could not help but rule that Autodesk had violated the trade secret laws for the first instance.

The last two instances of trade secret misappropriation were the triangle shading and BPS algorithms. The triangle shading algorithm was so close to that of VMIs that one expert witness reported that “the resemblance goes right down to the names of variables, names of macros, and even many of the comments. Another pronounced the algorithms identical” (United State District Court for the District of Vermont 1996, 8). Concerning the BPS algorithm, Berkes filed a counterclaim against VMI, claiming that he was entitled to use BPS algorithm even if VMI has the same technology. He argued that he had developed the software on his own time and was therefore entitled to use it as he pleased.

It can be argued that an employee has the right to carry his knowledge, skills, and experience from one employer to the next. However, in that statement there is a “legal fine line” as to exactly what is the employees and what is the employers. The law attempts to define this “legal fine line” by stating that if the product has an economic value and is not known to the public then it can be considered information that is protected by the trade secret laws. The court ruled against Berkes because he developed, discussed, and tested the algorithm while being paid by VMI and using VMIs equipment. He did not develop the BPS algorithm on his own accord and therefore was not entitled to hold the rights to this algorithm.

If Berkes had developed the display list driver and its algorithms on his own time and with his own resources it would have been another story. Instead, knowing he was being paid by a company and using their resources he had no right to disclose this information to Autodesk. Not only was he being paid by VMI and using their resources but he was discussing and brainstorming with other employees of VMI. Although he may have developed the display list driver, he developed it with the help of VMI employees. Although Autodesk was held liable, Berkes held some of the responsibility. When Autodesk initially hired him they placed him in a position that was not in conflict with his previous position at VMI. Three months later it was Berkes who went to the company to ask to be placed in a position that directly conflicted with his previous position at VMI.

Once he obtaine …