Design Ethics – Intellectual Property Theft

DesignEthics-HeaderAs a designer working in a hi-tech company how would you feel if you and your team worked on a project for months maybe even years to developed a new product only to have it copied and reverse engineered with profits pocketed by another company? Not only that but your stolen invention was poorly redesigned and built without safety regulations in an effort to cut costs and in effect became a hazard by putting people’s health and safety in danger? My guess is that you wouldn’t take too kindly to this, I don’t think anyone would. There is no question that the United States produces the most intellectual property in the world. Intellectual Property Theft from inventions, industrial designs, and trade secrets are a worldwide problem. Individuals and corporations are affected financially and can threaten national security and public safety. Working in the Silicon Valley for 25 years I have seen my share of shady design engineering activities from individual engineers to a whole upper management team.  Without going into a long winded philosophical debate or an extensive behavioral study as to why IPT occurs, my focus is more on identifying IPT in the workplace and the dilemma of work ethics that is placed upon the employees involved. According to a study conducted by Carnigie Mellon University on IP theft it was stated that trade secrets and internal business information are the most frequently attacked assets.

ORGANIZATIONAL BEHAVIOR AROUND IPT

Put yourself in a position as a corporation there is nothing more startling then a once trusted employee leaving the company with knowledge of crucial trade secrets with every intention of turning over this expertise to the competition. Disgruntled longtime employees finally fed up with their salary will take their expertise to the highest bidder. Hungry startup companies breaking into the industry will coerce these employees in an effort to bypass months and possibly years of developing a system. There is absolutely nothing wrong with this, the issue is in how the transfer of information takes place. In the many years I have worked in the Silicon Valley I was happy to have had to opportunity to work on a diverse variety of hi-tech projects from semiconductor equipment development, medical technologies, electronic consumer goods, to projects for the Department of Defense, and I foundthat all industries have a natural process of developing their products. In my own terms the three main phases are Conceptual Design, Engineering Development, and Production Manufacturing. As simple as I can explain it a Conceptual Design is an idea shared with the engineering group to brainstorm development possibilities. Engineering Development is the research and development stage were the idea is fabricated, tried and tested before final product. Production Manufacturing is release from engineering into final production for manufacturing and sustaining engineering. Not to go into great detail and get off track from the main topic of IPT. The brief explanation of these 3 phases was necessary to illustrate the natural order of hi-tech development so to compare to any deviations from this natural process that will expose suspicious behaviors of IP theft. One behavior under scrutiny is Reverse Engineering. The reverse-engineering process involves measuring an object and then reconstructing it as a 3D model. From the Wikipedia on explanation of the legality involved with reverse engineering:

In the United States even if an artifact or process is protected by trade secrets, reverse-engineering the artifact or process is often lawful as long as it is obtained legitimately. Patents, on the other hand, need a public disclosure of an invention, and therefore, patented items do not necessarily have to be reverse-engineered to be studied. (However, an item produced under one or more patents could also include other technology that is not patented and not disclosed.) One common motivation of reverse engineers is to determine whether a competitor’s product contains patent infringements or copyright infringements.

Research and Development (R&D) does not mean reverse engineer and steal. There is a considerable gray area around whether reverse engineering is legal or not. From Wikipedia:

Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a  license.
Here’s the bottom line if you have permission then it’s legal, if not then you are stealing. Here is the California Civil Code that best describes reverse engineering.

California Civil Code Section 3426.1
As used in this title, unless the context requires otherwise: (a)“Improper means” includes theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means. Reverse engineering or independent derivation alone shall not be considered improper means. (b) “Misappropriation” means: (1) Acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means; or (2) Disclosure or use of a trade secret of another without express or implied consent by a person who: (A) Used improper means to acquire knowledge of the trade secret; or (B) At the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was: (i) Derived from or through a person who had utilized improper means to acquire it; (ii) Acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use; or (iii) Derived from or through a person who owed a duty to the person seeking relief to maintain its secrecy or limit its use; or (C) Before a material change of his or her position, knew or had reason to know that it was a trade secret and that knowledge of it had been acquired by accident or mistake. (c) “Person” means a natural person, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture, government, governmental subdivision or agency, or any other legal or commercial entity. (d) “Trade secret” means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

Reverse engineering and IPT happens all too often. The theft of trade secrets, proprietary products and parts, comes at a high price. Not only impacting the rightful owners, it costs legitimate businesses billions of dollars in lost revenue, drives up consumer prices, robs the U.S. and global economies of vital jobs and tax revenues, reduces product safety, and sometimes even puts lives at risk. So how can you tell if IP theft is being committed at your company? Some of the obvious things I look for when a new project has been started is how the design review is conducted. A design review is a brainstorming session of ideas. This is the time when everyone discusses research and development strategies. If the strategies discuss indirectly copying a competitors system then for me that draws a red flag. Read between the lines, I look for deviation from the natural flow of developing a system I had mentioned earlier. A few times I have joined a company in situations were upper management and even CEOs give direction to copy the competitors system to bypass the time it takes to research and develop a system. They could be under pressure to produce results to the corporate investors within a certain time period and in order to meet those deadlines they resort to cutting corners like buying or leasing a competitors system, taking it apart, copying it, and reproducing the system on their companies drawing format. The proprietary note on the drawing format claims ownership to the part. The gray area of reverse engineering is when a system is taken apart and analyzed and through self discovery has determined how the system works. This is most appropriate when the threat of national security is at stake like for instance a new weapon of mass destruction from a hostile country has been acquired and public safety is at risk. But for a hi-tech company to acquire a competitor’s system with the sole purpose of copying the technology for their own use is bending the rule to the extreme. Signs that draw up a red flag for me are hand sketches, recently hired engineers from a competitor company, drawings from another company, service manuals from another company, and the absence of safety regulations incorporated into the development of the system. When I see a hand sketch with today’s CAD technology available I ask why? This tells me someone took apart a system and sketched the parts on paper. When I see new engineers from a competitor company this tells me that they’re either disgruntled or coerced by the company for the purpose of acquiring the technology. When I see drawings and service manuals from the other company this tells me the intent is to copy the system and when I see the lack of health and safety regulations being incorporated this tells me the company is rushing through copying the system because they believe these regulations have already been thought through from the originating company. As a designer there have been times when I was called upon to create drawings from copying existing systems on the manufacturing floor. Some of these systems were bought or leased from another company. I never felt comfortable doing this because it was out of character with the majority of experience i’ve had developing systems throughout the Silicon Valley.

“When a company culture is based on deviation then a company of deviant employees will be developed”.

One of the key weapons in combating this international crime problem is the National Intellectual Property Rights Coordination Center, or IPR Center. The center, which is hosted by U.S. Immigration and Customs Enforcement (ICE), brings together 17 different U.S. federal law enforcement agencies (including the FBI, ICE, and U.S. Customs and Border Protection) charged with investigating these violations, along with global partners from Canada and Mexico. It operates as a true task force—taking advantage of the expertise of its member agencies to conduct investigations, coordinate enforcement actions, share information, provide training and outreach, and build government/industry partnerships. To help spread the word about its work and gather tips and information, the IPR Center has just launched a new standalone website at www.iprcenter.gov. The site includes an overview of the center, news releases, a photo/video gallery, published reports in an easy-to-use document viewer, and an electronic form for the general public, industry and trade associations, law enforcement, and government agencies to report intellectual property rights violations.

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tedvisaya

I am an accomplished Senior Designer with an extensive background in demanding, fast-paced R&D environments throughout the Silicon Valley. I have many years of success contributing to the design of semiconductor equipment, medical devices, and Military Defense projects.

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